Southwest RPD September 2018 Renny Fagan

Transcription

1 Federal & State Policy Issues Impacting Colorado s Nonprofits: Advocacy in Action Southwest RPD September 2018 Renny Fagan rfagan@coloradononprofits.org

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3 ~Coffman, J. (2008). Foundations and Public Policy Grantmaking.

4 Manitou Incline View from bottom View from top

5 Mantiou Incline

6 Revenue Sources by Sector Sector Arts, culture, humanities Private Donations Private Payments Govt. Grants/pay ments Investment Income Other revenue < 1 6 Education Environment/ animals < 1 5 Health care < 1 2 Human Services Source: Evaluating the Charitable Deduction and Proposed Reforms, Urban Institute, June 2012

7 Coloradans Consider Tax Benefits 50% agreed that they consider tax benefits when they donate. Gen X and Baby Boomers Incomes over $100,000 (75.8%) Republicans more than Independent (27%/19% strongly agreed) Those who gave more ($1,000 to $10,000)

8 Federal Tax Law & Charitable Deduction Increased standard deduction for individuals ($12,000), joint ($24,000) and heads of household ($18,000). Raised limits on cash donations for itemizers to 60% AGI Failed to include universal deduction H.R. 3877/S.2123 would have allowed non-itemizers to deduct up to $4,000 individual/$8,000 joint

9 CO Charitable Deductions (2015 IRS Data) Income Percent of charitable deductions Average contribution Percent of all charitable gifts Average itemized all deductions Total Charitable Contributions $1K to $10K 1 $1,164 <1 $15,683 $9,781,000 $10K to $25K 4 $2,012 1 $15,718 $51,538,000 $25K to $50K 11 $2,291 5 $15,439 $179,107,000 $50K to $75K 15 $2,606 7 $17,002 $280,191,000 $75K to $100K 15 $3,087 8 $19,438 $329,551,000 $100K to $200K $200K to $500K 36 $4, $23,744 $985,948, $7, $37,872 $705,830,000 $500K to $1m 2 $18,006 7 $70,910 $266,485,000 $1m or more 1 $154, $317,945 $1,073,558,000 Totals 100 $5, $25,509 $3,881,989,000

10 Existing State Deduction for Non-itemizers Since 2005, Coloradans who do not itemize on their federal return may deduct charitable contributions that total more than $500 from their state taxable income. Form DR 0104AD (06/30/17) COLORADO DEPARTMENT OF REVENUE, Line 7 Value is 4.63 cents per dollar. In 2015, 155,704 Colorado taxpayers gave $234 million. Average deductible gift of $1,562. Tax savings of $72.32

11 IRS SALT Proposed Reg s New federal tax law limit of $10,000 for state and local tax deduction High tax states created ways for payments to government run nonprofits providing public services. Charitable contributions without limitation instead of taxes

12 IRS SALT Proposed Reg s Taxpayer gets a benefit when they receive a state income tax credit for charitable donations Treated like reduction in charitable contribution by the amount of fair value received, i.e. gala ticket Would impact Colorado s Child Care Contribution Credit and Enterprise Zone Credits

13 IRS SALT Proposed Reg s If rule becomes final, applies to donations after August 27, 2018 IRS Comment period: October 11 Sample comments:

14 New UBIT Rules Instead of aggregating all revenues and expenses from unrelated business income, nonprofits must separate for each trade or business No definition of trade or business Until final reg, IRS proposes using NAICS codes Nonprofits can combine the revenue and expenses from all advertising activities (e.g. online advertising and ads in a variety of print publications) into one category (NAICS code ), since these would all be within the same NAICS code. (National Council of Nonprofits)

15 More Resources

16 Nonprofit Partisanship Johnson Amendment prohibits nonprofits and churches from receiving tax-deductible donations if they endorse or oppose candidates for public office. Various Congressional proposals to weaken House bill funding the IRS basically prohibits IRS from enforcing against churches

17 What If? New State Law $1,051,186,788 1,892,688 households $559 average per household

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19 Potential Impact

20 What If.? Colorado Gives Day Checkoff Income Tax Refunds

21 SB Donate to a Colo Nonprofit Fund Adds option for taxpayer to designate any 501(c)(3) in good standing under Colo Charitable Solicitations Act (CCSA) and in existence for 5 years Retain existing checkoff funds and organizations Taxpayer must enter CCSA identifier Starts with 2019 tax year, filing year 2020 Cost of administration paid from donations, just like federated workplace giving campaigns Start up costs paid by gifts, grants, donations

22 HB Nonprofit Sustainability Act Donors save $1 on state taxes (25% credit up to $5k) For every $4 they give (max gift of $20k)

23 HB Nonprofit Sustainability Act Funds are invested in endowment that grows over time Boards must manage the funds per donor intent and UPMIFA Nonprofits have funds for innovations, rainy days or to add to annual revenues

24 HB Nonprofit Sustainability Act 12 million impact on state s general fund, but $48 million in giving to nonprofit funds Passed House Finance but killed in House Appropriations Path forward for this legislation is difficult Reduction of state revenues (mis)perception of endowments Lack of appreciation for nonprofit operating environment

25 How do we become more influential? Become a trusted source It s all about Relationships

26 Why Relationships are Important You will become a trusted resource You want them to call you, not just call you back You will build trust and credibility Don t ask a stranger for a favor They will both listen and hear what you say Silence is acquiescence You can work together to solve problems

27 How Elected Officials Decide Life experience World view Personal knowledge of the issue Information from a trusted source Community opinion leaders Views of their constituents Gut feeling of what s right

28 Learn About Your Elected Officials District number/areas represented Political party and values Professional background Personal interests and family Where they give or volunteer And the Cycles of Their Process Procedure for a bill to become a law Budget timeline and input process Opportunities for public comment at meetings

29 Importance of Relationships Source: Pinterest

30 Becoming a Trusted Source Educate elected officials about what you do Invite them to visit your nonprofit Meet them where they are Individual appointments Public comment times at meetings Invite them to your special events Send them your newsletter

31 Becoming a Trusted Source Provide opportunities for Elected Officials to expand their own networks and talk about their priorities Meeting your board, volunteers, donors, constituents Meet and greet with your network Forum on your issues

32 Using Relationships to Communicate Strategically select a spokesperson Make your ask direct and succinct Activate network connections Content is more important that volume Show breadth and depth of your supporters, genuinely and respectfully

33 Messaging tips Give local facts District, city, neighborhood Share personal stories Bring a client or person impacted Anecdotes, quotes, testimony, etc. Quantify impact Give scope and significance to the issue Who is for or against this policy and why

34 501(c)(3)- Lobbying & Political Rules Nonprofits can t support or oppose candidates for elected public office Nonprofits can lobby but limited to either: o an insubstantial part of activities; or o a set percentage of expenditures based on budget size - 501(h) election

35 Insubstantial Part vs. Expenditure 501(h) Insubstantial Part Limit Activity-based Time + expenditures Lobbying must be insubstantial, which is not defined Depends on 990-reported facts and circumstances Expenditure Limit Expenditure-based Paid time + expenditures Lobbying must be less than set % of total expenditures Depends on 990-reported budget size

36 501(h) election Budget size Total annual expenditures that may be spent on lobbying. Up to $500,000 $100,000 (20%) $500,000 to $1,000,000 $100, % of expenditures over $500,000. $1,000,000 to $1,500,000 $175, % of expenditures over $1,000,000. $1,500,000 to $17,000,000 $225, % of expenditures over $1,500,000. Over $17,000,000 $1,000,000

37 Direct Lobbying Communication to a legislator, staffer, or govt. employee to influence legislation Refers to specific legislation (bill, ballot measure) Reflects a view on legislation Grassroots Lobbying Communication encouraging public to contact and influence legislators Refers to specific legislation Reflects a view on legislation Call to action Must not exceed 25% of total

38 What is NOT Lobbying? Discussion of broad social issues without reference to specific legislation Results of analysis or research on a legislative issue with facts presented fully and fairly. Responding to written requests from a legislative body (not an individual legislator).

39 What is NOT Lobbying? Distributing materials to your members discussing legislation with no call to action. Self defense Actions responding to legislation threatening the existence or livelihood of an organization Testifying at the request of a legislative body.

40 Political Activity Rules Cannot participate in any political campaign of behalf of or in opposition to any candidate for public office 501c(3) prohibited activities: Public communications for or against candidates Making campaign contributions or paying expenses of political organizations Conducting voter engagement activities based on party affiliation of voters Communications comparing the organization s positions on key issues with those of candidates Connecting criticism of a public official to voting in an election

41 Lobbying Resources National Council of Nonprofits Alliance for Justice Bolderadvocacy.org Nonprofit Voter Engagement Network ( Colorado Nonprofit Association Speak for Yourself toolkit

42 Nonprofits of Influence Community-wide networks Silence is acquiescence Levers Relationships Our cause is just

43 Renny Fagan Colorado Nonprofit Association 789 Sherman Street, Suite 240 Denver, CO