View this email in your browser           Special Edition   This Special Edition presents breaking news from late last week:   Congress Passes Bipartisan Spending, Tax Legislation; Charitable Giving Incentives Made Permanent Late last Friday, President Obama signed into law bipartisan legislation that funds the government through the current fiscal year (until September 30, 2016) and changes a significant number of tax provisions. The massive bill addresses numerous policy issues of interest to charitable nonprofits, ranging from funding for mission-related programs to restoring and making permanent three expired incentives for charitable giving. Two bills passed the House as separate measures that were subsequently merged and approved by the Senate as the Consolidated Appropriations Act, 2016. See summaries ofspending provisions and of the tax provisions for full details.   Three charitable giving incentives are restored and made permanent in the tax portion of the law, originally titled theProtecting Americans from Tax Hikes Act of 2015 (PATH Act): The food donation tax deduction provision raises the cap on giving and allows small businesses donating wholesome excess food to a qualified nonprofit to take the same enhanced tax deduction that C corporations have been permitted to take since 1976. The provision also raises the ceiling for business donations from 10 percent to 15 percent of adjusted gross income and helps farmers and ranchers through a new special rule for valuing food inventory. (Sec. 113) The enhanced tax deduction for conservation easement donations has helped America’s land trusts work with farmers, ranchers, and other modest-income landowners to increase voluntary land conservation by a third, to over a million acres a year when the tax incentive is in effect. (Sec. 111) The IRA charitable rollover option, which allows individual taxpayers aged 70½ and older to donate up to $100,000 from their individual retirement accounts (IRAs) directly to charitable nonprofits, has provided needed support for the work of social service programs, religious organizations, arts and cultural institutions, schools, healthcare providers, and other charitable organizations — all of which benefit Americans across the country. (Sec. 112) The package does not include the streamlined foundation excise tax provision from the America Gives More Act nor a revision sought by community foundations to expand the IRA rollover. Nonprofits and foundations active on those issues are vowing to continue the advocacy efforts in the New Year.   The bill contains many other provisions important to nonprofits, including those serving low-income families. For instance, it makes permanent three key enhanced tax credits that were scheduled to expire at the end of 2017: the child tax credit (Sec. 101), the American Opportunity tax credit (Sec. 102), and the earned income tax credit (Sec. 103). A dozen “integrity” provisions were included to reduce concerns over perceived fraud and abuse in those programs (Secs. 201-212).   The Consolidated Appropriations Act, 2016, includes a provision that temporarily stalls further action by the Internal Revenue Service on proposed revisions to regulations governing partisan political activities of 501(c)(4) social welfare organizations (Sec. 127). The law also freezes funding for the IRS at 2015 levels, except for added resources to support taxpayer services, fraud detection, and cybersecurity.     IRS Proposed Gift Substantiation Regulation More than 37,000 concerned individuals and organizations submitted comments on the proposed gift substantiation regulation, and virtually all that are viewable expressed a common theme: it is a very bad idea for nonprofits to be asking for donors’ Social Security numbers, maintaining that personal information in their files, and submitting it to the IRS. In the view of many, “never is the better answer” when the question is whether individuals should give their Social Security numbers to people claiming to be soliciting on behalf of a charity.   The question arose in September when the Treasury Department and Internal Revenue Service published proposed regulations to permit, but not require, charitable nonprofits to file a new, separate information return with the IRS (in addition to the Form 990) by February 28 every year to substantiate contributions of more than $250 in value. The new informational tax return (“Donee Report”) would require the nonprofit using it to collect the donor’s name, address, and Social Security number (SSNs) or other taxpayer identification number. Nonprofits taking this option would also be required by that date to provide a copy to each donor listed (but only the portion that contains “information related to that donor”).    Opposition to the proposed rules was broad-based and consistent. A set of joint comments submitted by the 215 nonprofits expressed concern that the collection of SSNs would “expose the public to increased risk from identity theft, impose significant costs and burdens on nonprofit organizations, and create public confusion and disincentives for donors to support the work of nonprofits.” See also the joint news release from Independent Sector and the National Council of Nonprofits. In separate detailed comments, the National Council of Nonprofits challenged the procedural irregularities in the rulemaking process and demonstrated that the proposal to collect SSNs runs counter to IRS’ own advice, the policies of law enforcement agencies across the country, and clear directives from the federal government and Congress.   The National Association of State Charity Officials (NASCO) expressed similar concerns about the likelihood of identity theft, stating that “based upon our experience in regulating charities and charitable fundraising, many donors, particularly elderly, will fall for this scheme and could wind up victims of both fraudulent charitable fundraising and identity theft.” The charity regulators went farther, warning nonprofits that voluntarily adopt the proposed voluntary reporting regime: “Nonprofits that collect social security numbers and fail to protect or improperly protect that data could be subjecting themselves and their boards to regulatory and legal action for a breach of their fiduciary duties.”   The proposed regulation also drew negative responses from Capitol Hill. On December 17, Representatives Keith Rothfus (R-PA-12) and Brian Higgins (D-NY-26) introduced theCharitable Giving Privacy Protection Act (H.R. 4281), a bipartisan bill designed to prevent the IRS from requiring or accepting donor Social Security numbers as part of the gift substantiation process. This narrowly crafted bill would fix the primary problem raised by the nonprofit community concerning the need for protecting donors, nonprofits, and the public from identity theft. See the news release on the bill. Another bill introduced by Senator Pat Roberts (R-KS) seeks to block the rulemaking.     2016 Public Policy Agenda The board of directors of the National Council of Nonprofits approved the 2016 Public Policy Agenda  that will guide the advocacy priorities of the nation’s largest network of nonprofits. The agenda sets priorities in six focus areas: tax policy, budget and spending, employment, public-private partnerships and government contracting, nonprofit advocacy rights, and public trust and nonprofit independence. Among other changes and updates, the revised public policy agenda more overtly expresses opposition to so-called “taxpayer bill of rights” (TABOR) and other budget gimmicks that limit the options for policymakers to address critical and immediate needs in their communities.   The 2016 agenda also recognizes the growing attention at the state and local levels to various proposed employment policies, such as hiking the minimum wage and requiring paid leave. The policy agenda makes clear that “federal, state, and local government changes to employment laws and rules … affect the work of and people served by charitable nonprofits differently depending on each organization’s mission and focus area.” As the Council of Nonprofits stressed when nonprofits were submitting comments on the proposed changes to federal overtime policy, the agenda encourages frontline nonprofits to conduct mission-based analyses to determine how proposed employment policy proposals will affect the people they serve and the ability of the organization to meet those needs. The policy agenda goes on to make clear that “fundamental fairness dictates that any changes in governmental employment policies should incorporate revisions to existing and future contracts and grants through which charitable nonprofits perform services in communities on behalf of governments.”  Spending/Tax Legislation Proposed Gift Substantiation Rules 2016 Public Policy Agenda ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦    Worth Quoting “Charities can confidently plan and expand the good work they do.” - Senator Ron Wyden (D-OR), ranking member of the Senate Finance Committee, quoted in ajoint news release with the chairmen of the Senate Finance and House Ways and Means Committees, December 15, 2015, singling out the permanent extension of the charitable giving incentives for special note as a key achievement in the PATH Act.   “Charitable nonprofits are an essential element of our society that positively affect the lives of millions of Americans. This commonsense bipartisan legislation will serve to better protect these valuable organizations and their supporters and ensure that they can continue to provide important services to communities across the country.”   - Representative Keith Rothfus (R-PA-12) announcing the introduction of the Charitable Giving Privacy Protection Act(H.R. 4281); see related article.     Worth Reading Charitable Community Applauds Congress’s Historic Deal on Tax Incentives for Charitable Giving, December 18, 2015, news Release of 16 nonprofit organizations celebrating the passage of the PATH Act (incorporated into the Consolidated Appropriation Act, 2016).   Legislation Introduced To Block IRS’s Donor SSN Rule, Andy Segedin, The NonProfit Times, December 18, 2015, reporting on legislation to prevent the IRS from requiring or accepting Social Security numbers as part of the gift substantiation process.   Bill Texts Worth Studying   Consolidated Appropriations Act, 2016, the bill passed by the Senate and signed by the President that contains both og the following tax and spending bills as passed by the House:   Protecting Americans from Tax Hikes Act of 2015 (PATH Act)   Omnibus Appropriations Act of 2015       Numbers in the News   318 to 109 PATH Act House Vote (Vote Count)   316 to 113 Omnibus House Vote (Vote Count)   65 to 33 Combined PATH/Omnibus Senate Vote (Vote Count)   More Numbers in the News 37,937 Number of comments submitted in response to the Treasury/IRS proposed Gift Substantiation Regulation. Those publicly viewable are almost universally negative.     Nonprofit Events January 9, Session Line Up, Minnesota Council of Nonprofits January 11, 2016 Legislative Preview, Maryland Nonprofits January 14, Nonprofit Day at the State House, Maine Association of Nonprofits  Publishing Note The next regularly scheduled edition of Nonprofit Advocacy Matters will be published on Monday, January 11, 2016. Watch for updates and breaking news on the Council of Nonprofits' Twitter pages (@NatlCouncilNPs and@buildnpcapacity) unless there is a need for another special edition.   Happy Holidays     Share this newsletter with your staff, board, and nonprofit colleagues         Did you receive this email from a friend? Sign up now to receive this free e-newsletter every other Monday. © Copyright 2015 National Council of Nonprofits. All rights reserved  1001 G Street NW | Suite 700E | Washington, DC 20001 | www.councilofnonprofits.org

National Council of Nonprofits: Nonprofit Advocacy Matters

View this email in your browser           Action Alert: IRS Reporting Proposal Threatens Donor, Nonprofit Security The Internal Revenue Service is proposing a voluntary nonprofit reporting regime that encourages nonprofits to ask for, store, and report donor Social Security numbers. The proposed regulations would give nonprofits the option of filing a separate new information return with the IRS and individual donors by February 28 every year to substantiate contributions of more than $250. A similar mandatory proposal was considered and rejected in the past based on numerous legal, policy, and confidentiality problems it raised. Learn more about the proposed regulations, read an analysis by the National Council of Nonprofits, and find out what you can do to take action against it before December 16 on behalf of donors, nonprofits, and the public. Charitable Giving Incentive Renewal Caught Up in Year-End Legislative Rush Congress returns after the Thanksgiving break with several must-pass bills – an omnibus spending bill to fund the government past December 11 and transportation legislation are at the top of the list – leaving little room or time for negotiation of a tax measure to renew numerous expired tax provisions. Caught up in the tax discussion are key charitable giving incentives: the IRA rollover and enhanced deductions for food inventories and land conservation easements. Although time is short, policymakers are negotiating on a deal to restore retroactively for 2015 and renew most of the 50+ expired tax provisions through 2016 or 2017, make some of them permanent, and add measures that are priorities for President Obama, including making permanent the expanded Earned Income Tax Credit that expires at the end of 2017. The good news for nonprofits is that the components of the House-passed America Gives More Act are considered likely to be included, but only if a deal is reached. Time to Take Action: It appears likely that the charitable giving incentives will be included as part of the larger package restoring various tax provisions temporarily for 2015 through 2016 or 2017. Making the giving incentives permanent - which is a high priority of many in the nonprofit community - will require a significant grassroots push. Readers are encouraged to contact their Representatives and Senators and insist that the components of the America Gives More Act be included and made permanent in any tax bill passed this year. Learn more about how to take action. Car Donation Simplification Bill Introduced Citing the burden on nonprofits and the disincentive to donors, Members of Congress have introduced legislation to simplify the process for valuing cars donated to charitable nonprofits. The “Charitable Automobile Red-Tape Simplification Act,” or “CARS Act” (H.R.3917), would allow taxpayers donating vehicles valued between $500 and $2,500 to cite the pricing-guide value of a donated car on tax returns. Under current law, donors may only deduct the sales price actually obtained by the charity to which the car was donated. The existing process, in effect since 2005, has resulted in fewer donations of cars to support the work of charitable nonprofits and has added to the administrative burdens and costs for nonprofits. The new legislation was introduced by Reps. Todd Young (R-IN) and Linda Sanchez (D-CA), and boasts 19 bi-partisan co-sponsors, many of whom serve on the House tax-writing committee, the Committee on Ways and Means. Governors Order Nonprofits to Deny Services to Syrian Refugees More than 30 governors have declared that their states will not accept refugees from Syria, claiming security concerns following the Paris terrorist attacks, and several are ordering nonprofits to cease refugee resettlement efforts in their states. Recently, New Jersey Governor Christie ordered nonprofit organizations to notify the state of any Syrian placements in the state. In what is expected to be the first of several letters to nonprofits in Texas, the state Health Commission is threatening to sue the International Rescue Committee in an attempt to force the nonprofit to comply with an order from Governor Abbott that nonprofits not assist Syrian refugees. Aid to refugees from other countries are not affected by the Governor’s order, raising equal protection concerns, among many others. Indiana Governor Pence also ordered state agencies to stop resettlement procedures for Syrian refugees, and Indiana’s Division of Family Resources reportedly sent letters to two nonprofits, ordering them to suspend resettlement efforts for families due to arrive soon. "We're saying he doesn't have the right," Carleen Miller, executive director of Exodus Refugee Immigration, said of the Governor's action. "He's actually interfering with our contractual agreements with the U.S. government." The American Civil Liberties Union is seeking a federal court injunction against Governor Pence’s actions asserting that immigration policy is a federal matter beyond the authority of state governors. The federal government informed many nonprofits last week that the actions and objections of the governors are not controlling. "States may not deny (Office of Refugee Resettlement)-funded benefits and services to refugees based on a refugee's country of origin or religious affiliation,” wrote Robert Carey, director of the office. He went on to explain, “Accordingly, states may not categorically deny ORR-funded benefits and services to Syrian refugees," adding that states and agencies that do not comply would be violating the law and "could be subject to enforcement action, including suspension or termination." Connecticut Spending Cap Unenforceable, Says State Attorney General The spending cap that has guided budget decisions in Connecticut since the early 1990s is unenforceable, according to a formal opinion issued by state Attorney General George Jepsen, underscoring how the gamesmanship usually associated with creating arbitrary budget restrictions often produces confusion and problems. In 1991, Connecticut’s General Assembly established a statutory cap designed to limit growth in most budget appropriations to increases in personal income or inflation; spending could not exceed the cap unless the Governor declared a “fiscal emergency” and 60 percent of legislators in both the House and Senate agree to the extra spending. After that statutory cap was enacted, voters approved an amendment that created a parallel constitutional spending cap. The problem, according to Attorney General Jepsen, is that the General Assembly failed to implement the constitutional amendment, because it never defined the key terms by a three-fifths vote in both chambers, as required. The Attorney General’s opinion also found that the statutory cap set in 1991 is not enforceable today, reaching the same conclusion as an opinion of the Montana Attorney General in 2005 that prior legislatures cannot bind the authority of subsequent legislatures without specific constitutional authority. The Connecticut decision will likely color future debates on spending caps and other budget gimmicks. Cities Seize on New Jersey Judge’s Opinion Against Nonprofit Property Tax Exemption One judge’s decision – some call it precedent setting, many others say it’s an abomination – is giving hope to cash-starved municipalities that they can soon take nonprofit resources through new taxes, fees, or payments in lieu of taxes (PILOTs). In June, New Jersey tax court judge Bianco struck down the property tax exemption of the Morristown Hospital System, asserting that the charitable nature of 21st Century nonprofit hospitals is a legal fiction and recognized no distinction from taxable for-profit hospitals. The hospital system recently settled the city’s suit for back taxes for $5.5 million. The nonprofit also agreed to pay taxes of $1 million a year for the next ten years, based on 24 percent of the assessed value of the hospital’s main campus considered taxable as used for for-profit ventures such as private doctors’ offices, a restaurant, and parking garages. The state hospital association reportedly has set up a task force to make recommendations to the Legislature on changes to the property tax exemption that are “fair” both to nonprofit hospitals and their host communities. Unclear, so far, is whether this hospital task force will make recommendations addressing potential payments by hospitals, as occurred in Illinois in 2012, or whether it will throw other types of nonprofits under the bus, as happened in Boston in 2011 that led to the much-maligned Boston PILOT scheme. $15 Minimum Wage, Nonprofits, and Contracting: New York Perspective In September, New York Governor Andrew Cuomo proposed raising the state minimum wage over several years to $15 per hour, following up on a similar hike in New York City for fast-food workers. To develop data on the latest proposal, the New York Council of Nonprofits conducted a survey of nonprofits of all sizes and types and developed some startling findings. While nearly half of nonprofits responding to the survey (47%) expressed support for the proposed increase, 92 percent answered that “Our financial viability would be threatened.” The survey participants focused particular attention on organizations that provide services on behalf of governments. Four out of five nonprofits (80%) answered “The State should increase all contract amounts and reimbursable rates to fully offset for the additional costs incurred.” The comment of this human service provider is representative of the views of nonprofits in many other sub-sectors: “The state cannot expect nonprofits to bear the burden of increased labor costs to provide services, the State needs to reimburse for the true cost of services provided. This practice of under compensation is already taking a serious toll on many nonprofit organizations in the child care sector.” Pennsylvania Nonprofits Stand Up for their Fellow Citizens The news in Pennsylvania is not good. The Governor and Legislature have been at loggerheads over a budget, which is now five months overdue and many organizations that have been providing services on behalf of the Commonwealth have not be paid since mid-summer. The Governor agrees that the “nonsense” must end and legislators say they remain committed to completing a budget deal. But they still have failed to act, putting the public in jeopardy. So what are nonprofits that are dedicated to public service, community building, and problem solving to do? Take a stand for passage of a budget, of course. November 23 was “celebrated” as the Stand for Pennsylvanians Day. More than 100 organizations participated in the project organized by the Pennsylvania Association of Nonprofit Organizations, the United Way of Pennsylvania, the Adams County Community Foundation, the Pittsburgh Foundation, the PA State Alliance of YMCAs, and a coalition of nonprofits and schools districts.  The campaign goals were two-fold: To tell the collective story of Pennsylvania citizens directly impacted by the budget impasse, and To mobilize clients and members of local communities to support the bi-partisan efforts already underway to pass the budget. Participants accomplished their goals through a media campaign demonstrating the impact that nonprofits make on their local communities and the people they serve. Word was spread through Twitter (#StandForPA) and Facebook. Nonprofits from across the Commonwealth reached out to their legislators and the Governor expressing the simple message: pass the budget. Much media attention was devoted to a Statehouse rally conducted that day. Speakers laid bare the severe challenges the politicians are inflicting on Pennsylvanians. A director of a domestic violence and sexual assault shelter reported that the budget crisis has forced her to not pay bills, leading to its phone service being shut off and staff worried about getting paid, as it had to ask more than 180 people seeking refuge to go elsewhere for assistance. A representative from an organization providing employment for people with disabilities shared that the failure of the government to complete contracts – a result of government agencies not knowing how much they can spend – has forced his nonprofit to lay off several of the employees that the state contracts are designed to help. Anne Gingerich, Executive Director of the Pennsylvania Association of Nonprofit Organizations, brought home the demands of the nonprofit community and all Pennsylvanians adversely affected by the budget impasse: “We need to get a budget passed and we need to start looking at next year's budget frankly and how to build a system so that we do not go through this again.” Federal Issues Charitable Giving Incentives Car Donation Deduction State and Local Issues State Interference in Nonprofit Contracts: IN, NJ, TX, US Spending Caps: CT, MT Property Tax Exemption: IL, MA, NJ Minimum Wage: NY Advocacy in Action ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦  Nonprofit VOTE Webinar Engaging New Voters in 2016 Thursday, December 10th, 2:00 pm Eastern Join this presentation to learn how nonprofit service providers and community-based organizations have improved voter turnout among traditionally low-voting communities by helping their clients/consumers to register to vote or encouraging them to sign a pledge to vote. Find out how you can apply the lessons learned from these activities to your work in 2016. Register now! Worth Quoting “This is a huge issue for nonprofits -- and the American public.” — Tim Delaney, President & CEO, National Council of Nonprofits, quoted in Charities Chafe at IRS Proposal to Collect Donors' Social Security Numbers, Fox News, November 22, 2015, explaining several serious problems with the proposed IRS rule that could have charitable nonprofits – and ultimately scam artists posing as nonprofits – asking donors for their Social Security numbers. “While everyone wants to see program purpose dollars maximized, bear in mind that administrative and fundraising expenses are an indispensable part of running an organization. They help to ensure efficiency, accountability and compliance with the law; can help an organization by increasing awareness of and support for its activities; and can lead to stronger operations and sustainability through the building of a more stable, diversified funding base.” - Linda Czipo, Executive Director, Center for Non-Profits in New Jersey, providing Tips for Making Informed Giving Decisions that apply equally to government grantmaking, published in the Front and Center blog, November 24, 2015. Worth Reading Success Metrics Questioned in School Program Funded by Goldman, Nathaniel Popper, New York Times, November 3, 2015, reporting on irregularities in how success was measured in the Salt Lake City, Utah social impact bond program, potentially leading promoter Goldman Sachs and the state to significantly overstate the effect that the investment had achieved in helping young children avoid special education. Inside Track: Caldwell makes transition from photography to philanthropy, Pat Evans, Grand Rapids (MI) Business Journal, November 20, 2015, relating the career trajectory and lessons learned of Kyle Caldwell, former Executive Director of the Michigan Nonprofit Association, current Board Chair of the National Council of Nonprofits, and newly appointed Executive Director of Grand Valley State University’s Dorothy A. Johnson Center for Philanthropy. Worth Studying The Nonprofit Sector in Brief 2015: Public Charities, Giving, and Volunteering, Brice McKeever, Urban Institute, October 29, 2015, the annual update of key nonprofit data. How State Economies Are Performing, Mike Maciag, Governing, November 20, 2015, providing state-by-state employment data from 1998 to present. Numbers in the News 47 Number of states with grades of D or F in ethics and transparency, according to a joint analysis from the Center for Public Integrity and Global Integrity. Alaska scored the highest (C), and Michigan the lowest (F), in the survey that asked local journalists to respond to 245 questions. According to the report authors, “state governments are plagued by conflicts of interests and cozy relationships between lawmakers and lobbyists, while open-records and ethics laws are often toothless and laced with exemptions." Source: State Integrity 2015, November 9, 2015; see also, In State Rankings on Ethics and Transparency, Alaska Wins and Michigan Loses, Travis Fain, Governing, November 9, 2015. Nonprofit Events December 2, New Jersey Non-Profit Conference, Center for Non-Profits (New Jersey) January 14, Nonprofit Day at the State House, Maine Association of Nonprofits  Share this newsletter with your staff, board, and nonprofit colleagues Did you receive this email from a friend? Sign up now to receive this free e-newsletter every other Monday. © Copyright 2015 National Council of Nonprofits. All rights reserved  1001 G Street NW | Suite 700E | Washington, DC 20001 | www.councilofnonprofits.org