Last updated: July 15, 2021
David Heinen, Vice President for Public Policy and Advocacy
Over the past six months, the Center's weekly policy updates have mentioned a variety of state bills that could affect the operations of nonprofits. We know that many nonprofits are interested in some or all of these bills, so here is a quick update on the status of legislation affecting nonprofits.
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Charitable solicitation modernization. The House has unanimously passed a bill (S.695) that would modernize the North Carolina charitable solicitation statute by: (a) raising the threshold for exemption from charitable solicitation licensure (from $25,000 in contributions to $50,000 in contributions per year); (b) aligning charitable solicitation filing extensions with automatic extensions for 990 filings; and (c) eliminating the requirement that nonprofits have their charitable solicitation forms notarized. The Center recommended this bill and is advocating for the Senate to vote on it this summer. Let us know if this bill would help your nonprofit. If it does, we may ask you to reach out to your state senator (we’ll provide tips on how to reach them and what to say).
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Local government funding of nonprofits. Two NC House committees have approved a bill (S.473) that would require a local government elected official who serves on a nonprofit board to recuse themself from the decision to provide government funding to that organization. The Senate approved the bill last month after adopting a Center-recommended amendment to remove a problematic provision in the original version that could have prevented county and municipal governments from engaging in grants and contracts with many nonprofits. The Center is working with legislators, state agencies, and local governments on another clarifying amendment to provide necessary protections for local elected officials who serve on nonprofit boards. The bill still needs approval of one more committee before consideration by the full House. The House could pass the bill as soon as next week.
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Health insurance options for nonprofits. This spring, the NC Senate unanimously approved a bill (S.228) that would allow North Carolina nonprofits and small businesses to offer exclusive provider benefit (EPO benefit) plans for their employees. EPO benefit plans are typically 15-20% less expensive than other health insurance plans and allow participants to use a limited network of local health care providers while paying the full cost for any out-of-network health services other than emergency care. Potentially, this legislation could provide a meaningful and affordable health coverage option for some nonprofits. The House hasn’t yet considered the bill, but the Senate included the EPO language its version of the state budget, and there is a good chance it could pass this year.
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Donor privacy. The NC Senate has approved a bill (S.636) that would: (1) prohibit nonprofits from disclosing “the identity of any person donating monies or other tangible goods to the nonprofit corporation” if a donor notifies the nonprofit that they would like their identity kept confidential; and (2) prohibit state officials from providing Schedule B of nonprofits’ Forms 990 or 990-EZ (the attachment that includes donor information) in public records requests. The Center worked with the bill's sponsor on an amendment (which passed) that addressed nonprofits’ concern about a provision in the original version that could have created new fundraising burdens – and potentially legal liability – for many 501(c)(3) nonprofits. The House could take up this bill later this summer.
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Remote meetings and electronic voting. This spring, both the NC House (H.B. 320) and NC Senate (S.410) unanimously passed bills that would make it easier for nonprofits with members to conduct meetings remotely and for nonprofit board members to use email to take action by unanimous written consent. Although legislators in the House and Senate agree on the substance of the bills, neither chamber has been willing to take up the version passed by the other chamber. The Center continues to work with legislators to ensure that one of these bills becomes law this year.
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Improving nonprofit corporation laws. Bills in both the NC House (H.B. 696) and NC Senate (S.540) would modernize the North Carolina Nonprofit Corporation Act to bring the state’s nonprofit statute into better alignment with best practices for nonprofit organizations. One House committee has already unanimously approved the bill, and it still needs approval of two more committees before the full House votes on it. The Center recommended this bill and is working with legislators to get it passed this session.
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Student debt. A NC House bill (H.B. 707) that would establish a Student Borrowers' Bill of Rights was approved by a House committee last month. This proposal would create several new protections for student borrowers and add new regulation for student lenders. This could help more North Carolinians – including many nonprofit workers – access the Public Service Loan Forgiveness (PSLF) Program, which helps make nonprofit careers sustainable for many workers with college debt. The bill has its next committee hearing on July 20, and the full House could take it up later this summer.
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Sales tax exemption. A Senate proposal (S.441) would exempt most 501(c)(3) nonprofits from paying sales and use tax when they purchase goods and services. Under current law, charitable nonprofits pay sales tax and can apply for refunds from the NC Department of Revenue. Sales tax exemption would save nonprofits time and money. This proposal wasn’t included in the Senate budget (which included all of the Senate’s proposed tax law changes), so it’s unlikely to pass this year. However, the Center is working with legislators on getting it passed in 2022.
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Retirement options for nonprofit employees. A NC House bill (H.B. 899) would create a new state-run retirement program for workers at small businesses and nonprofits that do not offer employer-provided retirement benefits. The NC Work and Save Program would allow workers to use payroll deduction to contribute to their individual retirement accounts (IRAs), making it easier for many nonprofit employees to plan for retirement savings and to make regular contributions to their IRAs. The Center supports this bill since it could help many small nonprofits offer retirement benefits to their staff for the first time. One House committee has already approved the bill, and it would need to get through two more committees before the full House considers it.
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Sales tax exemption for nonprofit fundraising events. A NC Senate proposal (S.440) would exempt nonprofits from collecting and remitting sales tax on the ticket price or admission fees from most fundraising events. This clarifying change would help nonprofits use more of the revenue from their fundraising events for programs and services related to their missions. This proposal also wasn’t in the Senate budget, so it probably won’t be considered until 2022.
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Tax credit for charitable contributions. A NC Senate bill (S.504) would create a new state tax credit for charitable contributions by individuals who use the standard deduction. This could help encourage North Carolinians to give more generously to support the work of nonprofits serving communities throughout the state. While this bill would help nonprofits raise more money to support their programs and services, it is unlikely to pass because legislative leaders are opposed to creating new state tax credits.
If you have questions about the status of these or other bills – or about advocacy strategies on legislation that your nonprofit supports or opposes – feel free to reach out to us for additional information or assistance.