A $50 million NPO bill will be presented to Congress
A bill is expected to be introduced in Congress today that, if passed by both houses and signed by the President, could alter the relationship between the nonprofit sector and the federal government.
A bill obtained by The Nonprofit Timesentitled The Nonprofit Sector Strength and Partnership Act of 2022, claims four objectives:
- Improve the capacity of the nonprofit sector to address public challenges and maximize opportunities to improve the quality of life in the communities where nonprofit organizations work;
- Strengthen communities across the United States by making the federal government a more productive partner with nonprofits through the establishment of better federal coordination with respect to increased transparency and greater support for the work of non-profit organizations;
- Collect, collate, and make available federal data and research on the nonprofit sector and generate new data and research as needed to support effective federal policy development; and,
- To educate the nonprofit sector and the vital civic, social, and economic contributions that nonprofit organizations make to the United States.
To achieve these goals, the bill provides for new coordinating offices within the federal government, changes to Form 1023-EZ, and a revamp of the federal grant application system.
The project cites statistics regarding the sector and its economic impact on the US economy and workforce. Citations include 1.8 million organizations in 2020; that nonprofits contributed $1.2 trillion to the economy in 2020 and accounted for 5.9% of gross domestic product (GDP); the sector has 12 million workers, 20 million board members, 63 million volunteers and 170 million donors. In 2017, nonprofits in the United States employed 12.5 million workers and paid more than $670 billion in salaries.
An entity known as the Interagency Council on Partnership with the Nonprofit Sector would be created. It would be composed of the head of each cabinet agency or their delegate. There would be a “nonprofit adviser” and a commission on federal grant reform that would release a report within 18 months of its establishment and meet again within five years to consider the reorganization. There would also be a Nonprofit Sector Advisory Council made up of a diverse mix of nonprofit leaders.
The legislation is co-sponsored on a bipartisan basis by two longtime members of the Midwest House of Representatives, Rep. Betty McCollum (D-Minn. 4and) and Rep. Fred Upton (R-Mich. 4and). McCollum is running for re-election in the district that includes Saint Paul, Minnesota, and was first elected to Congress in 2000. Upton recently announced he would retire from Congress at the end of that term in January 2023 after 36 years of service.
Independent Sector is the organization pushing for the bill which was first introduced a dozen years ago but has seen no action since. Independent Sector refused to provide anyone to speak on the bill until an embargo was lifted when the bill was tabled. The warning was added after The Nonprofit Times had made multiple requests for spokespersons and an appointment had been set.
A spokesperson for McCollum’s office acknowledged that the bill would be introduced today, but declined to comment further before the introduction.
The independent sector has a list of about 500 nonprofit organizations professing support for the legislation. But nearly every executive contacted for comment on the bill, good or bad, declined to do so. Representatives of a dozen national organizations contacted by The Nonprofit Times spoke on substance but not for attribution. No one expects the legislation to be enacted this year.
Two of the leaders who spoke formally agreed that moving the legislation forward would be difficult given the pressing needs of the wider economy and its timing.
Anthony J. Granado, vice president of government relations at Catholic Charities USA, said his organization does not support the legislation. “We were brought into the bill quite late. Other members of Independent Sector had been working on this for some time. Last month we became more aware of that,” he said.
“We have not endorsed it and take no official position on the bill,” Granado said. He called it “well-meaning,” but said CCUSA’s legislative priorities are expanding the charitable tax deduction and an employee retention tax credit for nonprofits. lucrative. “We focus more on practical concerns,” he said.
“This bill is very ambitious. I think it will be difficult,” he said. Congress has other priorities, such as military spending to prop up Ukraine and restock the US arsenal, according to Granado. Those looking for non-defense discretionary spending will be fighting for every penny, he said.
The project shows an expected appropriation of $50 million. He called the timing “curious,” given that Congress goes into recess every August, then the midterm elections rush over the timing and likelihood that any spending will be through continuing resolutions, and not by a full federal budget.
Tim Delaney, president and CEO of the National Council of Nonprofit Organizations, said his organization “endorsed the bill because we are supporting various parties needed to address the many challenges the sector has faced. He gave two examples.
First, “nonprofit charities rely on the public trust. Without it, we will lose donations, volunteers and staff. Yet in 2014, the IRS, to save money and catch up, effectively stopped screening applications for tax-exempt charitable status to ensure organizations are legally eligible. He did this using a simplified form, Form 1023-EZ, which makes it too easy for the IRS to approve applications and grant nonprofit status to bad actors,” said Delaney.
IRS Taxpayer Advocate conducted audits and documented that nearly a third of approved applicants were ineligible, according to Delaney, and state attorneys general also objected to the use of Form 1023 -EZ. Section 9 of the bill directs the Secretary of the US Department of the Treasury to revoke the problematic form and start over with input from nonprofits.
Delaney also said that “few people realize that charitable nonprofits collectively earn a third of all industry revenue when governments hire nonprofits to deliver essential services to the public on behalf of communities. governments. But nonprofits suffer when governments refuse to pay the full cost of services, pay very late, and provide haphazard advice and lax enforcement of government grantmaking protections. The legislation requires a review of federal government grantmaking practices followed by recommendations to Congress and the Office of Management and Budget.
Delaney said that ultimately the NCN decided “to approve the legislation because it seeks to promote a stronger partnership between charitable, nonprofit organizations and the federal government to advance the public good.”
When asked if the bill would pass by the end of the year when Congress adjourned, he laughed and said, “Hope is eternal. He admitted, however, that “Congress will most likely turn its attention to the massive issues facing it,” such as the budget, the separate fiscal reconciliation bill to try to push through parts of the environmental agenda. President Joseph Biden’s Social and Social Hearings during the Jan. 6 insurrection, Senate Democrats lobbied for confirmation of as many judges and executive branch officials while they still have 51 votes, and tackle inflation, immigration, war in Europe, and many other social and economic issues.
Many leaders contacted by The Nonprofit Times said they supported the initiative but were not going to devote a lot of resources to support it. For example, Leadership 18 member the American Red Cross did not sign, citing neutrality.
A Red Cross spokesperson said they were “pleased to see Congress focused on the continued good work of nonprofits across the country, especially as we emerge from the pandemic. Giving nonprofits a place at the table ensures their ability to address the most pressing challenges facing all Americans, while maximizing opportunities to improve the quality of life in the communities we serve. However, “No, as a neutral organization, we did not sign this bill.”
Leadership 18 has grown to include 22 of the largest national social service agencies.
A senior executive from another Leadership 18 organization who hasn’t signed and spoken in the background is more interested in supporting a Legacy IRA bill that would give donors more options to give through Section 401 plans (k).
This McCollum/Upton legislation may sound familiar to those who have been in the industry for more than a decade. America Forward, the American Association of Museums, ARNOVA (Association for Research on Nonprofit Organizations and Voluntary Action), Independent Sector, Minnesota Council of Nonprofits (Rep. McCollum), and National Council of Nonprofits called for similar legislation 12 years ago , then known as the Nonprofit Sector and Community Solutions Act (HR 5533), also introduced by McCollum.
The redesign of it began about 18 months ago, sources said. The non-profit times. It was presented to Leadership 18 members a few months ago and was criticized and suggestions were made, but many did not provide pledges of support.