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News & Information: COViD 19

Nonprofits and Funders: Coronavirus Requires Immediate State Advocacy

Wednesday, April 8, 2020   (0 Comments)
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Nonprofits and Funders: Coronavirus Requires Immediate State Advocacy

Article by Tim Delaney (View Original)

With cable news constantly pumping out supposedly “breaking news” coming from the White House and Capitol Hill, US media have focused squarely on federal policy, but the feds are not the only location of policymaking. In the last few weeks, governors have issued 758 executive orders in response to the coronavirus pandemic.

State legislatures too have been busy, passing coronavirus-related legislation, including appropriating additional funding or authorizing access to rainy-day funds. For nonprofits, a key question is: Do you trust your state policymakers to take into account the work of charitable nonprofits? Or, if you don’t, would you like to coach them with a little common sense and facts—otherwise known as advocacy?

People in local communities are depending on nonprofits today for far more than usual, as individuals seek help responding to and coping with the pandemic. And, with 10 million having lost their jobs already due to the pandemic, people will be relying on nonprofits even more in the weeks and months ahead seeking relief and recovery from the COVID-19 crisis. Given the increasing reliance on nonprofits, everyone has an interest in helping state policymakers make informed decisions that both support the sustainability of nonprofits and strengthen their ability to serve people.

Emerging Nonprofit State Policy Concerns

Even before a national emergency was declared, patterns began to emerge of potential threats to the effectiveness and survivability of nonprofits amidst the pandemic. All are familiar, each has new wrinkles, and each one requires policy actions.

What follows is a sampling of seven sector-wide policy issues that state associations of nonprofits have been working proactively. Instead of just providing a heading and brief description, each section shares two quotes from advocacy letters sent to state officials. The selected quotes provide context and granularity of detail so readers can see the practical importance of engaging in advocacy to help public officials make the best-informed decisions—and ensuring your interests are not ignored or unknown.

Nonprofit Seats at the Table

Frontline nonprofits are closest to the problems, giving them a clearer view of the solutions. State associations are making the case that state officials—governors, legislators, agency heads—need to create a nonprofit seat at the table so they have access to the informed perspectives of nonprofit leaders. The Speaker of the House in Hawaii recently modeled the way by appointing Lisa Maruyama, CEO of the Hawai‘i Alliance of Nonprofit Organizations, to the Select House Committee on COVID-19 Economic and Financial Preparedness.

Not waiting to be invited, other state association leaders have been stepping forward:

  • “Add a seat for nonprofits on the COVID-19 Economic Impact Task Force so that the perspective of nonprofit organizations can be included as solutions and responses are crafted by the task force.”—Washington Nonprofits
  • “We hope you will include nonprofit leaders as you seek frontline input and craft solutions. We will provide real-time information or insight to you and your staff in whatever ways are useful. You can count on the nonprofit community to be a partner in your work, and you can count on MNA to be a resource and communications conduit.”—Montana Nonprofit Association
Reminding Lawmakers that Nonprofits are Employers Too!

While 97 percent of nonprofits have budgets of $5 million or less and 92 percent under $1 million, collectively charitable nonprofits are the third-largest workforce in the nation—larger than construction, larger than finance, and even larger than manufacturing. Nationwide, we’re more than 10 percent of the workforce. And we’re greater than that in many states, such as 18 percent in Maine and Massachusetts, 13 percent in Minnesota, and 11 percent in Montana.

That’s why many across our network have been sending messages…

  • Urging state officials to “include nonprofits in any relief and recovery funding that is available in our state. To date, announcements at the state and local level have focused on small businesses and employees but have not mentioned support for nonprofits.”—Washington Nonprofits
  • Expressing concern that state officials should utilize nonprofit-focused tax relief: “Any direct assistance to employers through a corporate or income tax mechanism will likely leave out nonprofit employers. Any future employer tax benefit should be available to nonprofit employers, either by making the tax mechanism relate to taxes that nonprofits pay (such as payroll taxes), or by using a grant mechanism for nonprofits.”—Maryland Nonprofitset al.
Government Contracts

Governments routinely hire nonprofits to deliver a wide variety of public services. Indeed, charitable nonprofits collectively earn almost a third of the sector’s total revenue by performing government contracts or grants. But significant problems occur when governments don’t have sufficient tax revenues to reimburse nonprofits for the contracted services already provided, as a recent NPQ article detailed. Too many nonprofits suffered in this way during the Great Recession when tax revenues for state and local governments fell sharply. And it’s all about to happen again—only worse, as the “plunge in economic activity from the coronavirus crisis will soon bring about a free fall in state and local government revenues,” inflicting harm to “local and regional economies…far deeper and…much longer than many acknowledge.”

Nonprofits learned many painful lessons in the Great Recession. Most governments slashed funding across the board, including for human services. But cutting budgets didn’t cut human needs, so nonprofits faced soaring demands for help with fewer resources to meet those needs.

Here’s another painful lesson: many state and local governments substantially slowed their payments to reimburse nonprofits for the work they had already performed under government agreements. Nonprofits were essentially forced to subsidize governments interest-free for six to 18 months. That’s why state associations of nonprofits have been moving aggressively on this front right now:

  • Pay current invoices quickly. Pay current invoices from nonprofits (and businesses) on an expedited basis. State agencies often hold valid invoices for weeks or months prior to payment. An executive order requiring immediate and expedited payment of all current invoices will have an immediate positive impact on nonprofit agencies’ ability to make payroll, fulfill obligations, and stay in business.”—Pennsylvania Association of Nonprofit Organizationset al.
  • “State agencies should be allowed to temporarily loosen grant and contract reporting, application, and renewal requirements, following the lead of the federal Office of Management and Budget…for both federally and state funded agreements.” ~ Maryland Nonprofitset al.
  • “An expedited or automatic approval process for budget modifications that do not increase the contract total should be instituted to allow nonprofits to move budget-line items associated with existing contracts to new COVID-19 related priorities such as the cost of disinfecting facilities.”—CalNonprofits
  • FINANCIAL STRESS COULD CLOSE COMMUNITY BASED PROGRAMS—PERMANENTLY. If programs must close for weeks at a time, [nonprofit] providers of children’s services, adult behavioral health, and those who support people with intellectual/developmental disabilities will not financially survive. Without support from the State, this could severely damage the state’s networks of care and leave thousands of people without services for the foreseeable future. Providers will need emergency funding to keep afloat. Fee-for-service providers get paid for the clients they see. If they don’t see people, they don’t get paid. DDS providers with day programs get paid based on those in attendance. Recommendation: The State should continue to pay providers for attendance and treatment, consistent with normal levels and pay for overtime to cover shifts of any staff who miss work due to the virus.”—CT Community Nonprofit Alliance
Charitable Giving Incentives

In the current struggle against the deadly coronavirus disease, states can boost the widespread desire of everyone to join in solidarity and lend a hand by encouraging residents to donate to nonprofits helping people in their local community. Now is the time to expand existing charitable giving incentives and create new ones, as state associations of nonprofits have been advocating:

  • “Many nonprofits are on the front lines—providing medical care, food, shelter, and services in this increased time of need. Years of continuous, chronic under-funding of nonprofits makes the job even harder when need is even greater. (This is why we have been urging lawmakers in Trenton and Washington to enact legislation to create or expand tax incentives for charitable giving.)”—Center for Non-Profits (New Jersey)
  • “Nonprofits have seen a decline in private giving the past two years…. Policy solution: As the General Assembly considers temporary tax law changes to respond to the pandemic, it would be extremely helpful to add a targeted, temporary giving incentive (whether a credit or a deduction) to encourage North Carolinians to support the work of charitable organizations in their community that are responding to, or suffering from, the COVID-19 pandemic.”—North Carolina Center for Nonprofits
Unemployment Insurance

When Congress passes a law, no one waves a magic wand making everything line up. In many cases, states must adjust their laws to accommodate federal requirements. That’s the situation now with the unemployment insurance provisions in the new federal CARES Act, which took a step in the correct direction, but more is needed. Some relief for nonprofits could come at the state level to “ensure nonprofit employees are eligible for Unemployment Insurance (UI) changes due to the pandemic response.”

  • “We support efforts to ensure that that those COVID-related UI claims are not charged to the employer’s experience rating. We understand that DEED is working on this provision for UI; since nonprofits have the ability to self-insure, it may need to be spelled out in legislation that reimbursing employers are to be treated similarly as those that use the state UI system.”—Minnesota Council of Nonprofits
  • “The…state needs to take two additional steps…: 1. Ensure that…the General Statutes allow the state of North Carolina to receive the federal funds to cover half of the costs of COVID-19 related UI claims for self-insured nonprofits and to apply these funds toward the reimbursements that these nonprofits would ordinarily owe for these claims; and 2. Provide forgiveness from North Carolina’s UI Trust Fund for the other half of the amounts that these self-insured nonprofits would typically need to reimburse the state for COVID-19 related UI claims.…To the extent that the General Assembly makes temporary changes to unemployment insurance (UI) benefits, it is important to fully hold harmless nonprofits have the option of self-insuring and reimbursing the state for UI claims…rather than paying SUTA based on experience rating.—North Carolina Center for Nonprofits
Government Filings and Deadlines

Seemingly simple things like meeting filing deadlines can be problematic when auditors aren’t making site visits and people working remotely don’t have access to paperwork in their offices. That’s why state associations of nonprofits are seeking systemic extensions for nonprofits to make various filings.

  • “[I]t would be helpful to establish automatic 3- or 6-month extensions in filing deadlines for corporate annual reports with the Department of Treasury, Division of Revenue and Enterprise Services, and annual charities registration renewals with the New Jersey Division of Consumer Affairs without requiring advance payment of filing fees. Since charities are likely to be in dire financial straits for a prolonged period, it would also help to raise the mandatory charities registration audit threshold from the current $500,000 (unchanged since 2011) to $750,000 or $1 million.”—Center for Non-Profits (New Jersey)
  • “Most charitable nonprofits are required by state law to have charitable solicitation licenses, which are issued annually by the NC Secretary of State. Many of these nonprofits will need to file for renewal of their licenses on May 15 and will need an extension due to workplace disruptions stemming from COVID-19 and social distancing practices.”—North Carolina Center for Nonprofits
Staying Connected to the Frontlines

State associations of nonprofits have been calling on government officials asking for and offering improved communications:

  • “Talk with us. We urge you to consult with nonprofit leaders statewide as the state of Washington continues to proactively respond to this crisis. Invite nonprofit representatives to sit at key decision-making and advisory tables. Nonprofit leaders…have great insights from their work on the frontlines.”—Washington Nonprofits
  • “Nonprofits are a trusted presence and communications pipeline for many of their constituencies year-round; this is a resource that can be drawn on during crisis. Montana Nonprofit Association will use our communications systems and listservs to deploy information rapidly; we will be a resource to your office in whatever ways might be helpful.” ~ Montana Nonprofit Association

What YOU Can Do to Protect Your Nonprofit and Your Community

Things are moving fast. The CARES Act, despite involving a record-popping $2.1 trillion in appropriations, zipped quickly through Congress without a hearing or public comment. The same is happening at the state level. We all can’t be everywhere all the time, but we need to work together—and now—to be heard.

Nonprofits, if you’ve not yet joined the state association of nonprofits in your state, do so. We—the collective nonprofit community and the people we all serve—need every voice ready to engage state, local, and federal officials so nonprofits are included as part of the solutions and not left out of policies. Funders, if you’ve not yet invested in the state association of nonprofits in your state, do so. The state associations of nonprofits are serving not only as needed advocates, but also as communications pipelines, funneling information needed by nonprofits across your state, exchanging information with their colleagues across state lines, and gathering information from the field and channeling it to us and others so we can track trends and amplify voices of everyone.

None of us can do it alone. But together, we can accomplish so much good.



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