Alliance FOR Nonprofits Washington ACTION Blog

Sign the IS petition for responsible defecit reduction

Terry Fernsler — Wed, 25 Apr 2012 17:22:53 GMT

Independent Sector adopted Guiding Principles for Deficit Reduction and Tax Reform, a set of principles that reflects the organization’s views about the priorities that policymakers in Washington should consider as they move forward with deficit reduction and tax reform efforts.

Generally, these principles say to Congress and the President that as a matter of justice, fairness and effectiveness, steps taken to address the nation’s fiscal challenges should favor policies that will not exacerbate income inequality or increase poverty.

Independent Sector has launched an effort – through a Change.org petition – to demonstrate to policymakers that the nonprofit community across the country shares these values.

Sign the Change.org petition now; and share the link with your employees, volunteers, affiliates and other stakeholders, and encourage them to sign the petition, as well.

It is important that Congress and the President hear from the nonprofit sector that deficits must be reduced in a way that doesn’t further disadvantage those who are struggling the most.

The Problem with Special Sessions

Terry Fernsler — Fri, 06 Apr 2012 16:18:48 GMT

When the state legislature cannot finish its work on time in a regularly-scheduled session, a special session is called. We have had three consecutive years of special sessions in Washington now, ostensibly to finish budgeting or create a supplemental budget to adjust for revenue projection changes.

When a special session is called, however, any bill can be introduced or re-introduced. During the current special session, some bad bills for the nonprofit sector are re-emerging after failing to get traction in the regular session:

HB2762 and SB6635 would sunset all tax preferences (tax deductions and exemptions). While this is an attempt to increase revenue for the state, many tax preferences are enjoyed by nonprofit organizations. An unintended consequence of these bills is less revenue for nonprofits to conduct their programs (because the money would go to taxes instead). While it is important for all citizens, including corporate citizens, to pay a fair share of taxes, nonprofit corporations are exactly that--NONPROFIT. Financial gains inure not to individuals or other corporations, but to a public benefit--reduction of homelessness, environmental protection, education, and so on. Nonprofit revenues benefit the public, not private profit, and should be exempt from sales

HB2762, at least, has a proposed amendment to exempt nonprofit organizations from the sunsetting of tax preferences. Let's hope our legislators understand that the value of nonprofit corporations differs markedly from profit-making corporations, and allows us to continue to maximize our resources to achieve public benefits.

Sometimes attempts to consolidate have unintended consequences as well. HB2822 and SB 6633 would transfer sales tax collections from more than cities to the state's Department of Revenue (DOR). This could cost local governments, and total state and local collections. The loss is estimated to be between $23 million and $50 million across the state. Losses would come from the following parts of the proposal:

A 1% administrative fee charged by the DOR to the cities;
A loss of tax penalties and interest paid by tax cheats;
Elimination of a local tax on the square footage of businesses (the occupancy tax);
The inability of the State (due to lack of resources) to aggressively pursue local tax cheats as cities can;
A change in the way local tax dollars are apportioned.

It is vital to be aware that a loss in state or local budget revenues equates with cuts to social service, because a large portion of the budget of human service nonprofit organizations is dependent on State resources.

Unintended consequences of budget policy

Terry Fernsler — Tue, 03 Apr 2012 16:30:07 GMT

In an effort to streamline state sales tax collections, a bill that never got out of committee in the regular legislative session has been reintroduced in the special session. The proposal would have the Department of Revenue take over collection of sales tax from businesses in the 60 or so cities in which the cities now collect it. Five cities account for 80% of the tax collections, and they stand to lose millions of dollars (the City of Seattle estimates $24 million) if the state takes over the collection. The revenue loss will come primarily from a fee the state will charge the cities, and from the state's incapacity to strictly enforce collection.

This is an example of unintended consequences of policy. The state is proposing this change in order to streamline and consolidate tax collections, but is likely result in a loss of total government revenue. Any loss of revenue will hurt nonprofit organizations.

URGENT! CONTACT THE GOVERNOR TODAY

Terry Fernsler — Thu, 29 Mar 2012 18:16:15 GMT

Although the state legislature passed an extension of the document recording fee (HB 2048), which funds homeless programs, Governor Gregoire has yet to sign it, and some County Auditors are asking her to veto it.

At least 71,000 people in Washington will either be saved from falling into homelessness or will be lifted out of it with this bill . Tremendous efforts were taken to address and appease the concerns of those opposing the legislation, including language added to the bill to ensure that the fees only apply to real estate-related documents and another amendment that was added to make it clear which documents the fees apply to. This bill is too important to the many in Washington struggling in homelessness or struggling to keep a roof over their heads.

Contact the Governor today online, via fax (360-753-4110), or by phone (360-902-4111) and urge her to sign the bill IN FULL (meaning, no line-item vetoes). The bill is too important to veto.

Thank you!

Recap of legislative session

Terry Fernsler — Fri, 09 Mar 2012 21:48:38 GMT

While we take a breather between the regular legislative session and the special session (which will begin Monday), let's review how the nonprofit sector fared.

HB2762, to sunset all tax preferences, did not move out of the Rules Committee in the House, because there were numerous amendments to exempt nonprofit organizations from the sunsets. Alliance FOR Nonprofits Washington volunteers lobbied heavily on Washington Nonprofit Day In Olympia to make legislators aware of unintended consequences of sweeping legislation like this.

HB2048, re-instating document recording fees to help pay for the costs of homelessness issues, passed both houses and was sent to the Governor. Alliance FOR Nonprofits Washington volunteers, along with many other nonprofit organizations and coalitions, pushed hard for this legislation during Washington Nonprofit Day In Olympia as well.

Other bills of note to the nonprofit sector:

SB6600, providing for property tax exemption on property owned by a nonprofit if the property is used for exempt purposes by another nonprofit, passed the legislature and was sent to the Governor.

HB2239, creating a social purpose category of corporation, passed the legislature and was sent to the Governor. There is mixed feelings about this legislation within the nonprofit sector.

We were surprised that neither SB6598, granting broader tax exemptions to fair associations, nor SB6216, limiting liability to nonprofits providing second-hand reading glasses to low-income clients, passed both houses of the legislature.

Democratic process snubbed in State Senate Staurday morning

Terry Fernsler — Mon, 05 Mar 2012 18:09:42 GMT

Senate Republicans, with the aid of three Democrats, forced a bill that had no public hearings through the Senate in a late Friday night session. While the Democrat’s proposal made no cuts to education or higher education, the Republican plan makes a total of $74 million in cuts to those areas. It also makes deeper cuts to health and human services programs, including reducing the amount of money in monthly grants that are given to people through the Temporary Assistance for Needy Families Program. The Republican plan also focused on several reform bills that they sponsored, but did not get traction, including a pension reform bill. The summary released by Senate Republicans shows that their budget plan would reduce the amount of state funding to state employee health benefits and bonuses for teachers and would eliminate a program known as Disability Lifeline, a health care program for unemployable adults who are not covered by the federal Social Security benefits.

Furthermore, a bill making changes to the state retirement plans was passed early Saturday morning. Under the bill, the state would not pay into the state retirement plans next year, but would resume contributions in 2014. (A budget-balancing gimmick no better than the Democrat proposal to delay payments to schools.) The Republican plan would move all new state employees into a hybrid plan that splits the pension benefits between a portion based on employer contributions and another defined by the employee's own contributions.

These two bills were brought up on a procedure allowing bills that have received no hearing to be brought to the Senate floor. They were debated without the benefit of hearing from the public impacts of the bills. Additionally, the Democrats had not even seen the proposals and had to use a delaying procedure in order to offer up proposed amendments.

Public processes are established for a reason. Experts from the public, such as those in many nonprofit organizations, can shed light on unintended consequences of proposed legislation. Introducing proposals without public input is an insult to the public, perspectives of those with knowledge about the issues, and the democratic process.

House and Senate Democrats must try to come to an agreement on the budget before the 60-day legislative session ends March 8, or else face going into overtime with a special legislative session.

Bills benefitting a few nonprofits move through Legislature

Terry Fernsler — Mon, 05 Mar 2012 17:57:01 GMT

SSB 6216 would limit the liability of nonprofit organizations that provide used eyeglasses to low-income people. This bill will benefit to keep insurance costs down for organizations, such as the Lions Club and Union Gospel Mission for providing a specific charitable purpose, allowing them to have more funds available for programs. This bill passed the Senate and the House Committee on the Judiciary and has been referred to the House Rules Committee.

SSB 6598 extends the property tax exemption of nonprofit fair association that sponsors or conducts a county fair to include uses by for-profit organizations, provided the use is for less than 50 days. This exemption extension allows fair associations to retain revenue for program. This bill passed the Senate and is now in the House Ways and Means Committee.

SB 6600 allows a property tax exemption for property owned by a nonprofit charitable corporation and ultimately leased to another nonprofit charitable corporation, even when a for-profit corporation serves as an intermediary. This bill helps nonprofit property owners retain revenue for program purposes. The bill passed the Senate and is now in the House Ways and Means Committee.

New business model in Washington

Terry Fernsler — Mon, 05 Mar 2012 17:20:25 GMT

Under HB 2239, which passed through the state legislature on March 2nd, a new type of corporate business model is established, the “social purpose corporation.”

A social purpose corporation, while subject to all provisions applicable to other for-profit corporations, must be organized to promote a general social purpose, meaning it must be organized in a manner intended to affect positively certain constituencies. These constituencies must include one or more of: (1) the corporation’s employees, suppliers, or customers; (2) the local, state, national, or world community; or (3) the environment.

While some people feel social purpose corporations compete with or replace nonprofit corporations, they are different in that they may distribute profits to shareholders. While the shareholders of social purpose corporations generally do not expect as high a return rate on their investments as they would receive from standard (C or S) corporations, they do expect some return and therefore are a different type of investor than those to nonprofit corporations. Nonprofit corporate investors--donors--do not expect a direct return.

In fact, social purpose corporations may make it more appealing for donors to invest in nonprofit organizations. If social improvement becomes a more legitimate business purpose, more people may become interested in supporting the social benefit work of nonprofits.

Other people feel that the blurring of purpose between nonprofit and for-profit associated with social purpose organizations may eventually erode tax and fee exemptions enjoyed now by nonprofit corporations. While this may bear watching in a future better economy, the IRS has yet to make any rulings that would provide tax exemptions to social purpose corporations, and the bills introduced in the State Legislature do not provide any tax preferences to them; the bills provide only limited liability.

Let us know what you think.

Capital gains tax proposal gets hearing

Terry Fernsler — Mon, 05 Mar 2012 17:04:13 GMT

A bill to create a state capital gains tax had a hearing in the State House Committee on Ways and Means on February 29th. It was scheduled for the committee's executive session the following day, but no action was taken on the bill.

The Capital Reform (HB 2563) proposal is a reasonable approach for Washington State. It would create a new, long-term stream of resources needed to help put Washingtonians back to work, build first-rate health and education systems, and maintain safe and vibrant communities in our state. Enacting this small tax on capital gains would:

Generate up to $1 billion a year in new resources for job creation.
Benefit all, though few would pay: Setting a reasonable exemption – up to $10,000 for married couples – on capital gains subject to taxes ensures that 97% of Washingtonians will not pay any capital gains tax.
Establish a sustainable, long-term stream of resources for economic growth, which the current revenue structure cannot do.

Create an opportunity to lower taxes for the vast majority of Washingtonians: Some revenue from a capital gains tax could be used to lower the state sales tax rate or finance a rebate for working families with children. Doing so would result in a net tax cut for the vast majority of Washingtonians while leaving significant additional resources to help rebuild our state economy.

The vast majority of capital gains accrue to a small number of very wealthy households -- and their share has been growing over the past several decades. The modest capital gains tax proposed utilizes a highly concentrated resource to spur broadly shared job creation and economic prosperity.

Document recording fees move through legislature

Terry Fernsler — Sat, 03 Mar 2012 01:01:33 GMT

The Document Recording Fee Bill (HB 2048) will reaffirm the state's commitment to ending homelessness by extending the sunset of a $20 document recording fee currently set to expire in 2013. The bill also adds a new $10 fee to help make up for lost revenue to state and county homeless programs. The new fee is intended to help increase cooperation between state & local government, service providers and private landlords. The bill was approved by the House and the Senate, and was sent to the Governor. Alliance FOR Nonprofits Washington supports this bill.

IRS announces Form 990 filing deadline delay for January, Febuary filers

Melany Brown — Tue, 20 Dec 2011 16:35:04 GMT

The Internal Revenue Service (IRS) announced on December 16 that the filing date for tax-exempt organizations with annual returns due in January and February will be pushed back to March 30, 2012. This extension applies to organizations that electronically file Forms 990, 990-EZ, 990-PF, or 1120-POL. No form needs to be filed to get the March 30 extension--it is automatic. The IRS said it moved the filing deadline because the part of the service's modernized e-file system will be offline during the first two months of 2012. Source: BNA Daily Tax Report

Bill proposed to return estate tax levels to 2001 rate

(Past member) — Fri, 18 Nov 2011 17:38:21 GMT

Rep. Jim McDermott (D-WA), a senior Democratic member of the House Ways and Means Committee, introduced legislation recently to return the estate tax to 2001 levels. The Sensible Estate Tax Act of 2011, which calls for a 55 percent marginal rate on estates above a $1 million exemption for individuals and a $2 million exemption for married couples, which would be indexed for inflation. The current estate tax, with a $5 million exemption and a maximum rate of 35 percent, is set to expire at the end of 2012. Republicans have previously supported the current estate tax regime and opposed attempts to lower the exemption and raise the tax rate.

The Sensible Estate Tax Act of 2011 would encourage more giving to charitable organizations, in order to reduce tax payments, and is likely to increase government revenue to help offset the deficit. Encourage your Congressperson to co-sponsor this important legislation.

Nonprofit postal rate increase delayed!

(Past member) — Sat, 12 Nov 2011 00:21:24 GMT

During a House Oversight and Government Reform Committee mark up of postal reform legislation recently, the committee adopted an amendment offered by Rep. Danny Davis (D-IL) to delay by three years the implementation of a proposed reduction in the discount postage rate available to nonprofit organizations. The legislation now awaits action by the full House of Representatives. Bipartisan postal reform legislation (S. 1789) recently introduced in the Senate does not include a reduction of the nonprofit postage discount rate and has earned the praise of both lawmakers and outside stakeholders.

Proposal to Increase Nonprofit Postal Rates

(Past member) — Fri, 14 Oct 2011 20:17:51 GMT

The House Oversight and Government Reform Committee has marked up H.R. 2309, the Postal Reform Act of 2011, which would reform the United States Postal Service in the wake of an expected $8 billion in losses in FY 2011. Among other things, section 403 of the legislation would reduce the current discount rate for nonprofit postage by 5 percent each year for 6 years, changing the discount rate from 40% to 10% by 2018. On September 21, an amendment to fully repeal section 403 was offered by Rep. Danny Davis (D-IL) during subcommittee markup, and failed by a vote of 8-4.

How much, if at all, will the reduction in the discount rate impact your organization? Those who use bulk mail will especially feel the impact. Tell us your story here.

Limiting charitable deductions could cost nonprofits at least $2.9 billion

(Past member) — Mon, 10 Oct 2011 14:59:47 GMT

President Obama’s proposal to limit the value of charitable deductions for wealthy individuals would cost nonprofits at least $2.9 billion and perhaps as much as $5.6 billion, according to a study unveiled on Friday. The new research was presented at a conference by the Urban Institute’s Center on Nonprofits and Philanthropy and was paid for by a $1 million research grant from the Bill & Melinda Gates Foundation. Economists examined how people would be affected by Mr. Obama’s plan to limit to 28 percent the amount affluent people could write off in all itemized deductions. The wide range in the estimate is a sign of disagreements among economists about the exact impact of tax changes on giving. Source: The Chronicle of Philanthropy

The President's plan to reduce the value of itemized deductions for individuals earning more than $200,000 and married couples earning more than $250,000 has been replaced by a Senate Democratic plan to impose a 5.6 percent surtax on millionaires. The new plan would raise $453 billion over 10 years and would more than offset the cost of a modified version of President Obama’s jobs bill (S 1660), which consists of $447 billion in tax cuts and new spending programs. According to a score released by the Congressional Budget Office and the Joint Committee on Taxation on Friday, the surtax would raise $3 billion more than the package of revenue raisers originally offered by the White House.

S 1660 will be taken up this week in the Senate. Urge Senators Patty Murray and Maria Cantwell to support the replacement surtax on millionaires and to defeat any amendments that would reinstate a limit on itemized deductions.

New rule to limit lobbying would exempt nonprofits

(Past member) — Fri, 16 Sep 2011 18:59:23 GMT

A new regulation proposed this week by the Office of Government Ethics (OGE) would make the prohibition on federal government employees from accepting any gifts from lobbyists permanent. The rule was implemented by President Obama’s executive order in 2009, but the OGE proposal would modify the 2009 rule.

The new regulation would eliminate certain exceptions to the gift ban, including prohibiting federal employees from attending functions sponsored by lobbying groups that are considered “widely attended events” and accepting social invitations. It will, however, keep exceptions for birthday gifts from a lobbyist's spouse and for attending training courses provided by a lobbying organization that gives a discount to federal workers.

The good news for nonprofits is that the regulation would also exclude four different groups from its definition of a lobbying organization:

501(c)(3) nonprofit organizations
media companies acting in their news-making capacity
institutions of higher learning
professional associations that help with professional development.

OGE is accepting written comments on the proposed rule until November 14 by any of the following methods:

• E–Mail: usoge@oge.gov. Include the reference ‘‘Proposed Amendments to Part 2635’’ in the subject line of the message.
• Fax: (202) 482–9237.
• Mail/Hand Delivery/Courier: Office of Government Ethics, Suite 500, 1201 New York Avenue, NW., Washington, DC 20005–3917, Attention: Richard M. Thomas, Associate General Counsel.

All submissions must include OGE’s agency name and the Regulation Identifier Number (RIN ), 3209–AA04, for this proposed rulemaking.

"Experts" recommend eliminating the charitale deduction

(Past member) — Thu, 15 Sep 2011 14:13:33 GMT

Independent Sector reports that some "experts," including Alan Greenspan, whose policies brought us the 1991 recession and dot.com recession of 2000, recommend elimination of all tax expenditures, a "throwing the baby out with the bath water" approach to cutting the federal deficit.

A panel of experts, including former Federal Reserve Chairman Alan Greenspan, strongly recommended either elimination or significant reform of tax expenditures in testimony during a Senate Finance Subcommittee hearing yesterday. Greenspan endorsed one of the tax reform approaches of the president’s deficit commission, under which all tax expenditures would be eliminated, with Congress subsequently deciding which expenditures to add back to the code. Edward Kleinbard, former Joint Committee on Taxation chief of staff, recommended phasing out personal itemized deductions, including the home mortgage interest deduction and the charitable contribution deduction.

Such statements are why we in the nonprofit sector must urge the Joint Committee established by the Deficit Reduction Act of 2011 to take a reasoned approach to the charitable deduction, one that does not cut off the communities we serve and increases revenue for the government.

Former Reagan adviser Martin Feldstein suggested eliminating many tax expenditures, but disagreed with Kleinbard on the charitable deduction, arguing that every additional dollar the government collects under that change would come directly out of the pockets of charities.

Let Sen. Patty Murray, co-chair of the Committee, know that we should increase the incentive to contribute to nonprofit organizations, not eliminate it, and increase government revenue. Send you comments to http://murray.senate.gov/public/index.cfm?p=ContactMe.

Deficit Committee to meet Sept. 8, hearing scheduled for Sept. 13

(Past member) — Tue, 06 Sep 2011 16:29:08 GMT

The 12-member bipartisan congressional committee charged with finding ways to cut $1.5 trillion from the budget deficit will hold its first meeting Thursday, Sept. 8. Co-chairs Sen. Patty Murray (D-WA) and Rep. Jeb Hensarling (R-TX) said the committee's operating rules would be adopted in the upcoming meeting. The co-chairs also announced that the panel’s first public hearing is scheduled for Tuesday, Sept. 13 and is titled, “The History and Drivers of Our Nation's Debt and Its Threats.” Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, will be a witness.

If you have suggestions for reducing the deficit, Sen. Murray's office is taking input via letters. Alliance of Nonprofits would also like to hear your suggestions here, to help us represent Washington state's nonprofit sector better.

Tell the President to Include Nonprofits in Jobs Bill

(Past member) — Thu, 01 Sep 2011 21:25:59 GMT

Action alert from Independent Sector:

President Barack Obama will address a joint session of Congress on Thursday, September 8 to unveil his proposal to spur job creation. Let’s make sure that nonprofits are not overlooked.

More than ever, families, communities and governments are turning to nonprofits for help. Hiring incentives for nonprofits will benefit American communities and the economy, allowing nonprofits to employ more people and provide more services to our communities.

The Nonprofit Sector Is a Major Employer

America’s nonprofits employ more than13 million people -- one of every 10 American workers. We collectively pay nearly $670 billion in wages and benefits in the U.S., and employ more people than the finance, insurance and real estate sectors combined. Each year, nonprofits spend $1.3 trillion, contributing to the economy and making important investments in communities across the country. Click here for more resources.

Take Action

Please join us in urging the President to include nonprofits in his jobs proposal. You can do this by directly reaching out to the White House at the contact info provided below, and also by joining our social media campaign.

Our message to the President is that any provisions intended to encourage job creation by for-profit companies should be made available to nonprofit employers -- including new hire tax credits, tax credits for hiring veterans, government-backed loans, subsidies for particular investments, or other opportunities.

Please contact the White House directly here or call 202-456-1111 – even better, call any contacts you may have in the administration. You can also sign this Twitter petition and tell President Obama to include nonprofits in the jobs bill. Encourage your networks to re-tweet and sign on.

The National Council of Nonprofits provides a good, brief analysis of the Debt Deal.

Melany Brown — Mon, 08 Aug 2011 21:31:46 GMT

We like what NCN says about the deficit reduction deal, and quote them here. This is your opportunity to let us know how you think it will affect your organization.

What It Means to Nonprofits
No one can predict with any certainty how the forces unleashed by the deficit reduction deal will impact nonprofits and the people they serve, nor, for that matter, how the deal will impact businesses or state and local governments. Here are a few observations to provide some perspective to the coming debates:

Spending cuts: As the New York Times, Washington Post, and the Christian Science Monitor report, governments at the state and local levels already are bracing for significantly reduced funding, which, in turn, limits their ability to work with nonprofits to provide services on behalf of governments in communities throughout the country.
Entitlement Reforms: Since policymakers generally assume nonprofits will fill in the gaps the policymakers create, many of the reforms to Medicaid, Medicare, and Social Security are likely to increase demand for services and reduce funding. Proposals on the table range from reducing eligibility and reimbursement rates, to delaying and taxing benefits.
Tax Reforms: There is broad agreement that the tax code is too complicated and unfair, but no consensus exists on whether reforms should be designed primarily to simplify the law and reduce tax rates, or to generate increased revenues to reduce the deficit. Lowering the individual tax rates from the current top rate of 36 percent to 25 percent, as discussed in the House, is expected also to lower the incentive for giving, as is the President’s proposal to limit the value of charitable and other itemized deductions.

Tell us what you think: How will the budget deal affect your ability to accomplish the mission of your nonprofit? How will it affect the people you serve?