Last updated January 3, 2023
State Policies Affecting Nonprofit Operations
Nonprofit Governance
- Support clarification and modernization of the state nonprofit corporation statute to ensure nonprofit organizations can operate efficiently, effectively, and in a manner consistent with best practices for the nonprofit sector.
- Support state laws and policies that allow public officials to serve on nonprofit boards and work and volunteer for nonprofits, while also ensuring transparency of – and, where necessary, recusal from – any situations that might create potential conflicts of interest between public officials’ government duties and their service to nonprofits.
Regulation of nonprofits
- Support clarification and modernization of the state charitable solicitation statute to ensure that licensing requirements are consistent with IRS filing requirements and nonprofit best practices.
- Support legislation or executive action to help minimize the compliance burden of review of nonprofit mergers, asset transfers, and other transactions – particularly those involving small and mid-sized organizations – by the NC Attorney General.
- Support legislation to create simple, no-fee annual reports for nonprofits.
- Support adequate funding for regulation of nonprofits by the NC Secretary of State.
- Support policies creating official or unofficial state agency liaisons with nonprofits.
- Oppose “mandatory volunteerism” requirements for recipients of government services, since these can create financial and administrative burdens for nonprofits.
Laws affecting nonprofits as employers
- Support policies to address the workforce shortages that are creating challenges for many nonprofits. Such policies include including increased funding to support jobs in the nonprofit sector and investment in accessible and affordable child care.
- Support policies that enable nonprofits to provide affordable and high quality benefits for their employees.
- Support policies that reduce unnecessary employment law red tape or expenses for nonprofits.
Nonprofit funding and fundraising
Nonprofit fundraising events: Lawmakers should ensure that any rule changes for nonprofit fundraising events, such as charitable gaming, are clear and consistent with best practices for nonprofits.
- Support legislation to expand opportunities for nonprofit fundraising events.
- Support legislation that promotes access to capital for nonprofits.
Donor privacy and donor secrecy
- Support policies that ensure that personal information about individual donors to 501(c)(3) nonprofits remains protected from public disclosure while also ensuring that state agencies that regulate 501(c)(3) nonprofits and other tax-exempt organizations have access to information they need to protect the public and the integrity of the nonprofit sector by providing oversight of nonprofits.
- Oppose policies that would limit the ability of state agencies to provide reasonable oversight of 501(c)(3) nonprofits or other tax-exempt organizations.
Nonprofit independence
- Oppose policies that limit nonprofits’ governance as independent, nongovernmental corporations with control over their own organizational policies and practices.
Efficiency ratios
- Oppose policies that would rate nonprofits or condition government treatment of nonprofits on “efficiency ratios” related to nonprofits’ administrative expenses, indirect costs, overhead, or fundraising expenses. The use of this type of “efficiency ratio”, while sometimes helpful in comparing the programs and services of similar nonprofits, can be misleading when comparing nonprofits that provide very different types of programs and services. Some types of nonprofits have inherently higher fundraising and administrative expenses than others.
Election laws
Because nonprofits serve many people who are less likely to turn out to vote – including people with disabilities, low-income citizens, and young people – it is important for nonprofits to share clear and accurate (and nonpartisan!) information about the state’s ever-changing electoral process. As demand for voting by mail has significantly increased this year due to the COVID-19 pandemic, it is important for North Carolinians to be able to vote safely and easily by mail.
- Oppose election law changes that make it more difficult for people to vote, since these changes ultimately diminish nonprofits’ policy influence by reducing the civic participation of people served by nonprofits, including low-income North Carolinians, seniors, and individuals with disabilities.
Benefit corporations
- Support policies that would formally recognize benefit corporations in North Carolina law and provide legal protections to benefit corporations and their board members. Benefit corporations have been important partners with nonprofits in North Carolina.
Response to natural disasters, public health crises, and economic challenges
- Support state and local grant programs and state tax credits that treat nonprofits equitably with for-profit businesses in providing economic relief to employers.
- Support policies that prioritize state support to nonprofits that are providing increased services during challenging times.
- Support policies that would help nonprofits hire employees to offset reductions in volunteers or workforce shortages.
Federal Policies Affecting Nonprofit Operations
Regulation of nonprofits
- Support adequate funding for the IRS to provide reasonable regulation and oversight of tax-exempt organizations.
- The Center's 2022 federal policy efforts included advocating for the Nonprofit Sector Strength and Partnership Act.
Laws affecting nonprofits as employers
- Support policies that enable nonprofits to provide affordable and quality benefits for their employees.
- Support labor laws and regulations that treat nonprofits similarly to for-profit businesses and that provide adequate protections for nonprofit employees and clients while not creating unreasonable unexpected new costs for nonprofits. In particular, it is essential that any significant changes to labor laws and regulations provide adequate transition periods for nonprofits to absorb increased costs due to fixed reimbursement rates under government grants and contracts or through limits imposed by private funders. It is also important for federal labor regulations to provide clear guidance on job functions that are unique to the nonprofit sector, such as fundraising, volunteer management, and certain types of program service providers.
- Oppose policies – such as elimination of student loan forgiveness programs – that would harm nonprofit employees.
- The Center's 2022 federal policy efforts included advocating for Reinstating the Employee Retention Tax Credit and The Volunteer Driver Tax Appreciation Act of 2022.
Nonprofit independence and advocacy
- Oppose new restrictions on nonprofit advocacy rights.
- Support policies that would limit the influence of political donors on policymaking. This would help level the playing field for advocacy by nonpartisan nonprofits.
Response to natural disasters, public health crises, and economic challenges
- Support federal grant programs and federal tax credits that treat nonprofits equitably with for-profit businesses in providing economic relief to employers.
- Support policies that prioritize federal support to nonprofits that are providing increased services during challenging times.
- Support policies that would help nonprofits hire employees to offset reductions in volunteers or workforce shortages.
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