Federal Tax Reform Invitation Draws Mixed Responses from Senators
The first deadline for influencing comprehensive tax reform is looming and Senators are reportedly mixed in their views of how to respond. On June 27, Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) sent a letter informing Senators that the Committee will start consideration of a tax reform package with a "blank slate," meaning that it contains no deductions or credits. As a result, Senators will have to fight to get their favored tax provisions re-inserted into the bill that is being drafted. The Committee leaders stressed that the legislation they are drafting on a bi-partisan basis will restore only those deductions, exclusions, credits, and other tax expenditures that (1) help grow the economy, (2) make tax laws fairer, and (3) effectively promote other policy objectives. Some Senators may be submitting a list of priority tax provisions; others have indicated they are likely to provide a set of guiding principles for the Committee to follow; and still others apparently are refusing to send in anything out of concern that their submission will be made public. Predictably, lobbyists and interest groups are submitting multipoint proposals to lawmakers seeking to make the case for their own special tax breaks. Unless nonprofits speak up, their concerns for those they serve will get ignored. Individual charitable nonprofits have the opportunity to weigh in as constituents to inform their Senators about their work and the importance of the charitable giving incentive to their ability to solve problems in their communities.
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Impact of Sequestration: Myth or Reality?
The answer to whether the severe negative consequences of the across-the-board budget cuts known as sequestration have been overblown or are real depends on who is answering. A recent Washington Post article suggested that the cuts have not been as dire as predicted, asserting that Congress and federal agencies have taken mitigating actions to prevent “widespread breakdowns in crucial government services.” The focus of that article and some federal policymakers, however, has been primarily on federal staffing and direct government services, and many have failed to recognize the severity of the arbitrary cuts on individuals and communities outside the Beltway. For instance, in the last week alone, Head Start program operators in Napa and Solano, California have begun partially or completely closingsix classrooms, the Northwest Arkansas Economic Development District acknowledged that it must cut 12,400 meals for homebound seniors, and TOUCH, a nonprofit in Congers, New York dedicated to helping people with chronic illnesses, is owed $120,000 from the federal government andmay have to begin cutting programs. Share stories of cuts to your nonprofit and the effects on people in your community andread others, from every state, at GiveVoice.org. These stories will help policymakers understand the costs of sequestration as major decisions approach about appropriations, the continuing resolution, and whether to continue these arbitrary cuts.
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States Consider Nonprofit Giving Incentives and Tax Exemptions as Sessions End
State treatment of the charitable giving incentive and tax exemptions are at the center of tax reform debates across the country as legislatures rush to complete action before the end of their legislative sessions. On July 2, Hawai’i Governor Abercrombie signed legislation that exempts the State’s charitable deduction from the overall cap on itemized deductions. North Carolina made similar progress in exempting the charitable deduction from changes when the Senate approved an amendedtax reform plan with several improvements for nonprofits. Although the plan retains provisions that cap sales tax refunds for some nonprofits, require nonprofit arts groups to charge sales tax on admission, and eliminate the non-itemizer credit for charitable contributions, the bill carves out the charitable giving incentive from a $15,000 cap on other itemized deductions. Prior to adjourning, the Oregon Senate failed to pass a budget and tax bill, an earlier version of which would have capped all itemized deductions except for charitable donations. Oregon’s Governor may call a special session of the Legislature in September to continue consideration of the budget and tax bill. Bucking the trend in support of the work of charitable nonprofits, Maine policymakers enacted a FY 2014-2015 biennial budget that, among other things, caps all itemized deductions, including the charitable giving incentive, at $27,500 retroactive to January 1, 2013.
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Rhode Island Legislature Mandates “Voluntary” Agreement, or Else!
Rhode Island Governor Chafee signed legislation that allows the City of Smithfield to charge Bryant University for public-safety service fees if the University fails to reach an agreement for expanded payments in lieu of taxes. Bryant is considering litigation to block the new law that only applies to the university, on the grounds that it is unconstitutional, unwarranted, and needlessly divisive. University officials said in a statement that it contributes more than $800,000 annually to the City in addition to already paying for fire, police, and rescue services through existing PILOT agreements. "This heavy-handed legislation comes after several months of good-faith discussions with the town of Smithfield and is not in the best interests of any of the parties involved," the University said.
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Other Taxes, Fees, PILOTs Stories
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Government-Nonprofit Contracting News
New York’s Executive Order 38 Survives First Challenge
New York Governor Cuomo and the State Department of Health were within their authority to establish caps on executive compensation and limit the amount of administrative costs that can be paid using government funds, a court recently ruled. Concerned Home Care Providers, Inc. sought a preliminary injunction to prevent Executive Order 38 from taking effect on July 1, 2013. Regulations implementing the Executive Order, which applies to all state agencies making authorized payments to service providers, limits total compensation to executives of covered nonprofit and for-profit organizations to no more than $199,000 per year, among other criteria. The regulations limit not only how much can be paid for executive compensation using government funds, but all funds. Administrative costs are also capped for contractors at a declining rate until April 1, 2015, at which point they must not exceed 15 percent.
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Government Innovation: Collaboration with Nonprofits
Denver’s Office of Strategic Partnerships (DOSP) is the subject of praise in a recent article about creating a culture of innovation in government. The Office has been building collaborative efforts between government and nonprofits in the city, including a recent overhaul of the current contracting system to alleviate cumbersome, confusing, and inconsistent contracting practices to create streamlined, consistent practices across City departments with a focus on outcomes. DOSP is headed by Dace West, a member of the new National Government-Nonprofit Contracting Reform Task Force that the National Council of Nonprofits established to bring together national experts to identify and promote proven solutions across the United States that streamline contracting policies, improve outcomes, and save taxpayers money, all while maintaining or even increasing accountability.
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Additional State and Local Stories
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Demonstrating Nonprofit Social and Economic Impact
The YMCA of Greater New York knows how important it is to measure its impact for funders and the public; it has moved beyond simply assessing the effectiveness of its programs to also calculating its economic impact on Greater New York.
Among the findings made in a new study, the YMCA announced that it employs the full-time equivalent of 3,240 New Yorkers, pays more than $113 million annually in wages, and contributes more than $191 million annually to the city's economy. The study also found that the Y supported the business community, because 1,800 parents in need of childcare were able to go to work because of the YMCA's after-school program.
The YMCA reports that its decision to measure the organization’s economic impact on its surrounding community is intended to augment its other program-based metrics, such as the measure of students’ math and reading improvements after they participate in YMCA classes. “Our ultimate goal is to improve people's quality of life," Jack Lund, Greater New York City CEO, said. "And with this study we are showing that we are."
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- Tax Reform
- Sequestration Spotlight
- Federal Workforce Giving
- Charitable Giving Incentives: HI, ME, NC, OR
- Taxes, Fees, PILOTs: NJ, RI, TX
- Government-Nonprofit Contracting: CO, NY
- Parks Funding: NY
- Music Funding: NY
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Nonprofit VOTE Webinar
Laws on the Ballot: Ballot Measure Advocacy for Nonprofits
July 25 at 2:00 pm Eastern
Learn about the important lawful roles that nonprofits can play in ballot measure elections.Register now.
Free Webinar
Health Insurance under the Affordable Care Act
Does your nonprofit have the information it needs to make decisions about providing health insurance for your employees under the new Affordable Care Act? Can your nonprofit answer your employees' questions about health insurance? Join the webinar What Small Nonprofits Need to Know about Health Insurance under the Affordable Care Act on July 30 at 3:30 p.m. Guest speakers from the federal government will explain how implementation of health care reform will impact small nonprofits. Register now. This webinar is available free to all nonprofits thanks to the generous support of ReadyTalk.
Affordable Care Act Resources
The National Council of Nonprofits has updated our website resources:
Worth Reading
“Cities and Symphonies: Will the Music Stop?,” Tod Newcombe,Governing, July 5, 2013, reporting on how the financial struggles of orchestras, large and small, are bad for cities, and providing keen insights into the positive impact of the arts on local economies and well-being.
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