As Governor Roy Cooper and state legislators develop policy solutions to best equip North Carolina to handle the COVID-19 pandemic, it is essential that they take action to support the operations of the thousands of nonprofit organizations in the state that are struggling. Nonprofits provide essential services in communities in all 100 counties of North Carolina, often in partnership with the public sector. Nonprofits are also a substantial employer, comprising more than 10% of North Carolina’s private workforce. It is in everyone’s best interest to maintain a thriving nonprofit sector in our state.
The North Carolina Center for Nonprofits has been seeking input from nonprofits about the ways that the COVID-19 pandemic is affecting their organizations and the communities they serve. The Center has identified a wide range of policy solutions (updated on April 14, 2020 based on input from nonprofits and the Center's analysis of the CARES Act) that would be immensely helpful to the nonprofit sector. The Center will make additional suggestions for policy solutions as we continue to learn more about the hardships nonprofits are facing during the pandemic.
On May 11, the Center shared with all 170 state legislators a letter from a group of 460 nonprofits with six concrete policy solutions state legislators can implement to help charitable organizations and the communities they serve during the COVID-19 crisis:
- Protect self-insured nonprofits from unemployment liability. Many 501(c)(3) nonprofits elect to reimburse the state for the cost of their employees’ unemployment claims rather than pay state unemployment tax. The CARES Act provides funding to cover half of the costs of these nonprofits’ COVID-19 related unemployment claims, but still leaves these organizations with significant financial liability. Without assistance in covering the costs of these unemployment claims, many nonprofits that provide health care, food assistance, affordable housing, childcare, and other critical services will have to end or curtail services later this year. State legislators can prevent further economic harm to these nonprofits either by covering the other half of the costs of their COVID-19 related unemployment claims or by giving them more time to reimburse the state.
- Exempt charitable nonprofits from paying sales tax in 2020. The COVID-19 crisis has forced many nonprofits to exhaust their financial reserves. A temporary provision allowing for point-of-sale exemption from sales tax would help improve nonprofits’ immediate cash flow.
- Include nonprofits in small business relief. Like small businesses, many nonprofits need immediate financial support to continue to operate and provide services. As the General Assembly develops or expands loan programs, grants, or other measures to help small businesses, it is essential that nonprofits have full access to these programs.
- Bolster charitable giving incentives. The CARES Act created a temporary above-the-line charitable deduction for 2020, capped at $300. While nonprofits appreciate this measure, the $300 cap is unlikely to generate nearly enough new or increased donations to help nonprofits weather this crisis. A temporary non-itemizer state tax credit for charitable contributions would help increase private giving this year.
- Facilitate remote meetings of nonprofit boards. Some nonprofits are unable to conduct board meetings remotely and therefore are unable to take essential actions to ensure that their organizations can continue to provide programs and services. Legislators can solve this problem by temporarily amending the NC Nonprofit Corporation Act to allow all nonprofit boards to take action by email by unanimous written consent and to conduct meetings by remote communications such as conference calls.
- Seek input from nonprofits. Charitable nonprofits work directly with a wide range of people in all 100 counties of the state. As legislators consider additional state policy changes and funding to address the COVID-19 crisis, it is essential that they consult with nonprofits to fully understand the current needs of communities through North Carolina.