At the Center’s recommendation, both the House and Senate included a provision in their regulatory reform bills that could save money for many small nonprofits with fewer than three employees. Under state law, any employer with three or more employees is required to purchase workers’ compensation insurance. The definition of “employee” in the current law includes nonprofit board officers, meaning that small nonprofits with three or more board officers (i.e. almost all nonprofits) are required to take on an often unnecessary expense.
In 2011, the N.C. House of Representatives overwhelmingly passed H.B. 886, which would bring the North Carolina corporate tax deduction for charitable contributions into conformance with federal law. This would help more small businesses contribute to nonprofits. The N.C. Center for Nonprofits encourages the N.C. Senate to pass this bill during the 2012 short session.
An Essential Role for Nonprofits
Why should your nonprofit get involved?
- It strengthens your nonprofit’s voice. Elected officials know who votes. They pay less attention to communities with low voter turnout.
The N.C. General Assembly is considering a bill (H.B. 482) that would create new penalties for nonprofits and businesses that improperly classify their workers as independent contractors rather than employees. Nonprofits that misclassify their employees and fail to provide benefits such as workers’ compensation or unemployment insurance benefits could face fines ($1,000 per misclassified worker) and could be barred from state contracts for five years.
The General Assembly is in the final stages of its efforts to restructure North Carolina's tax system. The House and Senate are considering different version of legislation (H.B. 998) to lower tax rates and simplify the state tax system. It is essential that tax reform not harm nonprofits. Specifically:
On May 19, the House of Representatives gave final approval to its version of the state budget (H.B. 1030) for FY 2016-17. Overall, the House budget, which passed with a 103-12 vote, would maintain or increase most state funding for nonprofits. Some highlights for nonprofits include:
Why Is Nonprofit Tax Exemption Essential for North Carolina?
1. It protects taxpayers.
- Nonprofits provide essential services that government would have to provide otherwise. Tax exemption costs much less than the cost of government having to provide the services itself.
- Nonprofits provide public benefits in exchange for tax exemption.
- Organizations may choose not to locate in counties or states that do not grant tax exemption. This is a potential loss for the people and economy in those locations.