MNN Testifies Before State Committee on the Impact of Tax Reform on Nonprofits

Today, MNN CEO Jim Klocke testified in front of the Joint Committee on Revenue at an invitation-only informational hearing on the recently passed federal tax reform law, the Tax Cuts and Jobs Act. In the testimony, Klocke discussed the pieces of the federal tax bill which will be harmful to the Massachusetts nonprofit sector, highlighting that the federal tax bill will make it harder for all nonprofits to operate – small, medium, and large alike.

“The federal tax bill will reduce charitable giving, impose new taxes on the sector, and will negatively impact the Commonwealth’s nonprofit community and the people and causes they serve,” said Klocke.

Klocke’s testimony also outlined the future opportunities for state government and the nonprofit sector to work together to mitigate the impact of the federal tax bill on “communities and the people that rely on the programs and services provided by our government and nonprofit sectors.”

Free Webinar: “Now What: How the New Federal Tax Law Impacts Charitable Nonprofits”

The federal Tax Cuts and Jobs Act, enacted just days before the New Year, will affect nonprofits across Massachusetts and the country. From compliance issues, to fundraising challenges, to the prospect of changes in state and local tax law, there is a lot for nonprofits to understand about the Act.

MNN is joining with its colleagues at the National Council of Nonprofits in promoting a free nationwide webinar, “Now What: How the New Federal Tax Law Impacts Charitable Nonprofits,” on Thursday, January 11, 2018 at 3:00 pm. All workers and supporters of the nonprofit sector are invited to learn about operational changes nonprofits may need to make right away, what they need to know about state and local policy changes, and other items that will affect nonprofits and the people nonprofits serve.

Click here to register for the webinar.

 

Employer Health Care Assessment Takes Effect

On January 1, 2018, the new temporary Employer Health Care Assessment (EMAC) took effect. Employer charges for the new assessment will be included in 2018 first quarter unemployment insurance bills. Details of the new health care assessment include:

  • A January 1, 2018 effective date with a sunset 2 years after implementation.
  • For employers with 6 or more employees, an increase in the existing employer medical assistance contribution (EMAC) of $26 per employee annually.
  • For employers with 6 or more employees who have employees on MassHealth or ConnectorCare, an additional charge for each employee receiving those benefits (5% of the first $15,000 of annual pay to a maximum of $750/year).
  • Two years of unemployment insurance relief, estimated to save employers a total of $344 million in 2018 and 2019.
  • Additional details and FAQs can be found here.

During the regulatory process, MNN worked to secure changes to the new charge for workers on MassHealth or Connector Care. In November, MNN testified at a hearing on draft regulations for the assessment and urged changes to them. In December, state officials released a final version of the temporary regulations (accessible here), which included two of the changes MNN recommended. The assessment will now only apply to workers on MassHealth or ConnectorCare for at least 8 continuous weeks in a quarter, rather than the two weeks originally proposed. It will also not be assessed on workers who earn less than $500 per quarter in a given job. These changes will provide relief to many nonprofits, including those with employees in short-term or low-hours roles.

Even though the assessment has taken effect, the regulations will still go through one more round of reviews in the first quarter. MNN will continue to advocate for nonprofits throughout the process and if you have questions or feedback, please let us know.

In End-of-Year Fundraising, Consider Tax Reform in Your Pitches

The end of the calendar year is typically a time of frenzied fundraising for many of our members. This year is no different- except that last week, the federal tax bill passed the House and Senate. It will take affect in 2018.

One of the bill’s effects is that millions of donors across the country will no longer itemize their deductions. Those donors will no longer utilize the charitable tax deduction, beginning with their 2018 contributions. In MNN’s Commonwealth Insights publication earlier this year, we estimated that change could reduce Massachusetts giving by up to $513 million.

As you prepare your end-of-year asks to donors and other supporters, we suggest that you notify them of this change and encourage those affected to take advantage of the charitable deduction while they still can by donating in 2017. If you have already sent out your direct mail campaign, consider making phone calls or starting an online campaign.

MNN remains committed to working with our members, and our colleagues across the country, to advocate for the interests of nonprofits.

Nonprofit Independence Upheld as Johnson Amendment Protected in Final Tax Bill

The independence of the nonprofit community was upheld last night as the language that would have severely impeded nonprofits’ ability to pursue their missions was stricken from the final version of the tax reform bill.

During deliberations in the Senate late Thursday, the chamber’s parliamentarian blocked language that would have repealed the Johnson Amendment, an important provision in the current tax code that prohibits charitable organizations from endorsing candidates for political office.

“While the final tax bill set to be revealed today will contain a litany of provisions harmful to our sector, nonprofits will be able to operate free from partisan politics, ‘dark money,’ and tax-deductible political contributions. This represents a significant win for the integrity of nonprofits across Massachusetts,” said Jim Klocke, CEO of the Massachusetts Nonprofit Network (MMN).

Over the past few weeks, MNN activated its members in an expansive email and phone call campaign directed towards federal representatives integral in tax reform deliberations, including Representative Richard Neal of the Massachusetts 1st Congressional District, the ranking Democrat on the House of Representatives Ways and Means Committee.

But the fight for the Johnson Amendment is far from over, Klocke noted, as Congressional leaders may try to repeal the Amendment in the near future.

“We look forward to continuing our work with our members and colleagues as we pursue our ultimate public policy goal: enacting policies that strengthen and unite, not divide, our communities.”

Local Nonprofit Leaders: US Tax Reform Will Hurt People in Need

United Way of Massachusetts Bay and Merrimack Valley, the Massachusetts Nonprofit Network, and Catholic Charities of Boston today issued the following joint statement outlining their concerns about the impact of increasing the federal standard deduction on charitable giving:

“The Tax Reform legislation passed by the United States Senate, and by the US House of Representatives, has the potential to significantly harm the ability of nonprofit organizations to help people in need, both in Massachusetts and across the country. On behalf of the children, families and communities we serve, today we are speaking out about the ramifications of the tax proposal on the nonprofit sector, specifically the elimination of the charitable deduction for 31 million middle- and upper-middle income taxpayers.

“Currently, the charitable tax deduction is available to taxpayers who itemize, about 30% of taxpayers, or about 45 million taxpayers. Of the 45 million taxpayers who itemize, 36 million claim the charitable deduction, which accounts for an estimated 82% of charitable giving. The proposal would decrease the incentive to itemize by increasing the standard deduction, and 31 million taxpayers will lose the ability to claim this deduction. Studies suggest that this will result in about a $13 billion reduction in gifts to the charitable sector. These donors often give to humanitarian, social service and disaster relief organizations.

“The direct impact on nonprofits in Massachusetts could be devastating.  In Massachusetts, roughly 1 million donors (nearly a third of all Massachusetts filers) claimed the charitable deduction, accounting for $5.5 billion dollars.  A 5% loss resulting from tax reform would mean $275 million fewer dollars to fund private food banks, homeless or domestic violence shelters, provide day care, or job training.

“A drop in giving of this magnitude would have disastrous consequences. It would mean large cuts to services that people depend upon. It would put hundreds if not thousands of small nonprofits across the state out of business. And it would jeopardize the financial health of medium- and large-sized nonprofits, threatening their ability to deliver services.

“In addition, 20% of donors who would be eligible for the higher standard deduction earn an income of $200,000 or more. A national study released in 2016 asked philanthropists, whose incomes were $200,000 or more, whether their giving habits would change if the charitable giving deduction were eliminated. Nearly half (49%) indicated that they would decrease their giving, and 20% indicated that their contributions would ‘dramatically decrease.’

“There is unanimous agreement among academics and economists that charitable tax incentives enable people to give more. While any individual person has a variety of motives for giving, the century-old policy of exempting charitable donations from taxes significantly increases charitable giving. Claims that the final tax reform legislation will increase charitable giving are unsupported by any fact-based analysis.

“We are not optimistic that the compromise bill will differ significantly from what has been passed, but we will continue to look for other avenues to enact a universal “above-the-line” charitable deduction. We are deeply concerned for the millions of people in need in our communities and across the country who rely on private funding for critical early education, out-of-school time programs and organizations that provide pathways out of poverty.”

Michael K. Durkin, President and CEO, United Way of Massachusetts Bay and Merrimack Valley
Jim Klocke, CEO, Massachusetts Nonprofit Network
Deborah Rambo, President and CEO, Catholic Charities of Boston

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MNN Urges Representative Neal to Protect Johnson Amendment in Tax Reform Debate

Yesterday, MNN sent a letter to Representative Richard Neal of Massachusetts, expressing their opposition to Section 5201 in the House of Representatives version of the federal tax reform bill, a provision that would radically change the longstanding protection known as the Johnson Amendment.

Section 5201 would significantly weaken the Johnson Amendment, a section in the U.S. Tax Code that prohibits nonprofits from endorsing or raising money for political candidates.

The letter urges Representative Neal, who was recently appointed to the conference committee tasked with reconciling the House and Senate versions of the tax bill, to work with fellow conferees to ensure that the provision is stricken from any final version of the bill.

“Section 5201 of the House-passed tax bill is harmful and will politicize and weaken the charitable sector in fundamental and irreparable ways. In a time of division, the nonprofit sector is one of the few places where people can work together on our country’s most important challenges,” said Jim Klocke, CEO of MNN.

The full text of the letter can be found here.

MNN Statement on Senate Tax Proposal

On Saturday, the U.S. Senate passed its tax legislation.  Despite containing several provisions harmful to the nonprofit sector, it did not weaken or repeal the Johnson Amendment, an important part of the current tax code that keeps nonprofits free from partisan politics and focused on their missions.

The conference committee is expected to take very swift action on reconciling the House and Senate versions of tax legislation.  The House version includes language significantly weakening the Johnson Amendment—language that must not be included in the final bill.

MNN will continue to work to protect nonprofit independence, working with its 800 members, the entire Massachusetts nonprofit community, the National Council of Nonprofits, Independent Sector, and the Council on Foundations.

MNN Urges Senate to Vote Against Tax Cuts and Jobs Act

Today, the Massachusetts Nonprofit Network (MNN) sent letters to Senator Edward J. Markey and Senator Elizabeth Warren of Massachusetts, thanking them for their ongoing support of the nonprofit sector and urging them to vote against the Tax Cuts and Jobs Act scheduled for a vote in the Senate today.

“The tax legislation to be considered by the Senate includes significant changes to long-standing tax policies that will have a drastic effect on the Commonwealth’s nonprofit sector. These effects include reducing charitable giving by billions and imposing new and unfair taxes on the nonprofit sector,” said Jim Klocke, CEO of MNN.

Although the Senate bill does not contain a repeal of the Johnson Amendment like the House bill included, Klocke noted concerns held by many in the nonprofit sector that a repeal could be offered as an amendment, or could survive should the House and Senate tax bills end up in conference.

In opposing the Tax Cuts and Jobs Act, MNN joins opposition from both their member nonprofit organizations across the Commonwealth and from national groups including the National Council of Nonprofits, Independent Sector, and the Council on Foundations.

The full text of the letter can be found here.

Free Webinar on Mon., 11/27: What Tax Reform Will Mean for Nonprofits

The House and Senate are racing to enact comprehensive tax reform in time to place a bill on the President’s desk by Christmas. The House passed its own bill on November 16 and the Senate plans to pass its version by December 1, giving them time to work out the many differences and enact the first comprehensive reform of the tax code since 1986. The Senate will likely start deliberations on this bill as early as the Monday after  Thanksgiving.

MNN is joining with its colleague organizations across the country, including the National Council of Nonprofits, in promoting a free national webinar on Monday, November 27, 2017, from 4:00 to 5:15pm.

On the webinar, participants will hear from nationally prominent speakers who are involved in the intricate details of the tax policy proposals, are directly engaged in the policy debates, and can speak to effective advocacy strategies. They will also hear from nonprofit leaders active in the states at the grassroots level who will provide real-world examples of the impact of the proposals. Most importantly, they will get their questions answered and learn what they can do to help improve the legislation on behalf of the people nonprofits serve.

Click here to register for the webinar.