MNN Urges House Members to Vote Against Tax Cuts and Jobs Act

Today, MNN sent letters to the entire Massachusetts congressional delegation urging them to vote against the Tax Cuts and Jobs Act (H.R. 1).

“As drafted, this bill will reduce charitable giving, eliminate a long-standing law prohibiting charities from engaging in partisan politics, and will impose new taxes on the sector,” said Jim Klocke, CEO of MNN. “This bill will have a devastating impact on the Commonwealth’s nonprofit community and the people and causes they serve.”

In calling for the Massachusetts congressional delegation to oppose H.R. 1, MNN joins a growing chorus of opposition to the House bill, including the National Council of Nonprofits, Independent Sector, and the Council on Foundations.

The full text of the letter can be found here.

Update on Federal Tax Reform – November 14, 2017

On November 9th, the House tax bill was approved on a party-line basis by the Ways and Means Committee. On the last day of the House Ways and Means Committee markup,  Chairman Brady offered a “manager’s amendment” that dramatically expanded the anti-Johnson Amendment provision. As amended, the new harmful Johnson Amendment language, Section 5201, will politicize the 501(c)(3) community by allowing charitable nonprofits, houses of worship, and foundations to engage in partisan electioneering for or against candidates, as long as doing so occurs “in the ordinary course of the organization’s regular and customary activities in carrying out its exempt purpose,” and the organization incurs no more than “de minimis” incremental expenses. The provision would be effective from 2019 through 2023, and is estimated to cost. In addition, the nonpartisan Joint Committee on Taxation (JCT) estimates that the provision would cost the federal government $2.1 billion over just six years because donors would divert their currently nondeductible political campaign donations to political churches and charitable nonprofits in order to claim charitable tax deductions. This legislation is expected to come to the House floor by Thursday with a “closed rule,” meaning that no amendments will be allowed and Representatives will only be able to vote for or against the Committee version of the bill. 

Also on November 9th, the Senate released its tax bill with the Finance Committee’s deliberation set to begin today. Similar to the House Ways and Means bill, significant changes to the bill in the Finance Committee are not likely. Committee members were informed late last week that amendments would be rejected unless they were cost neutral or contained offsetting revenue raisers, and were accompanied by a cost estimate from the Joint Committee on Taxation. Those restrictions have no dissuaded Senators from drafting more than 300 amendments. Senator Stabenow (D-MI) and Ranking Member Wyden (D-OR) have prepared an amendment for Committee consideration that would create a universal deduction that would allow all Americans who take the standard deduction to also claim a deduction of up to 60 percent of their adjusted gross income (AGI).

Other filed amendments to the Senate tax bill include one to incorporate the CHARITY Act, several to make the work and economic development tax credits permanent, and a proposal to permit charitable deductions from estates for donations to non-charitable nonprofits, including 501(c)(4) social welfare organizations, (c)(5) labor unions, and (c)(6) trade associations. Once the Committee completes its work this week, the Senate version will go to the Senate floor under an expedited procedure known as “reconciliation”. This will limit debate and permit passage by a simple majority rather than the usual 60 votes needed to overcome a filibuster. It is expected that the full Senate will vote on the bill after the Thanksgiving holiday.

With a few notable exceptions, both the House and Senate tax bills are closely aligned to the Tax Reform Framework negotiated by Republican congressional leaders and White House officials. Each bill adds to the federal deficit by $1.5 trillion over 10 years by lowering individual and corporate tax rates, and nearly doubling the standard deduction while repealing most deductions and exemptions. Neither bill includes a universal deduction. Both bills would immediately double the exemptions under the estate tax to exclude estates valued at less than $11 million for an individual and $22 million for couples; the House bill goes farther and repeals the estate tax after 2024. The drafts in the House and Senate both turn to the nonprofit community for new revenue, proposing to impose excise taxes on some nonprofit college and university endowments as well as on salaries of higher-paid employees of nonprofits.

Unlike the House version, the Senate bill does not currently include language weakening the Johnson Amendment, streamlining the private foundation excise tax, nor a provision eliminating private activity bonds upon which many nonprofits rely for capital financing. The Senate bill does include several new provisions that could be problematic for charitable nonprofits, including new unrelated business income taxes (UBIT) and rules on intermediate sanctions. Thanks to the diligent work of our colleagues at the National Council of Nonprofits, click here for a detailed and helpful comparison of the House and Senate tax bills.

MNN Testifies on Employer Health Care Assistance Contributions

On November 13, 2017, MNN’s CEO Jim Klocke testified to the Division of Unemployment Assistance (DUA) on the Employer Medical Assistance Contribution supplement (EMAC supplement) draft regulations. The testimony raised our key concerns and included three recommendations:

  • The EMAC supplement draft regulations should only apply to employees who have been employed with an employer for at least two quarters.  In essence, this would create a waiting period before the assessment is applied, recognizing that many employers have high turnover rates. It would also keep the EMAC supplement from being overly complicated to administer.
  • The employer liability for the EMAC supplement draft regulations, which is currently set at 14 days, should be extended to 8 weeks. By only applying the assessment to employees who are on MassHealth or ConnectorCare for at least 8 weeks, this will avoid employers being unfairly assessed for very short-term stays on those programs
  • Third, many employers in the nonprofit sector employ very part-time employees to run various programs, assist elderly clients, and work as non-medical home health care aids, just to name a few. Many times these employees have multiple employers and their typical weekly hours per employer can be as low as 2 to 4 hours per week. Employer liability for the EMAC supplement for these particular employment situations should be given special consideration

Click here to view the testimony and here for additional information about this new employer assessment.

At the time of this writing, DUA has scheduled four additional listening sessions in Springfield, Worcester, Lawrence, and West Barnstable. In addition, DUA will be collecting comments electronically at EMACSupplement@massmail.state.ma.us. We encourage all nonprofits who will be impacted by the new EMAC supplement to submit comments to DUA or attend one of the listening sessions. If you have questions, contact Director of Government Affairs Tonja Mettlach anytime.

MNN Statement on the House Tax Reform Bill

The following is a statement from Jim Klocke, CEO of the Massachusetts Nonprofit Network:

“The Tax Cuts and Jobs Act released yesterday by the US House of Representatives Ways and Means Committee is a step backwards in many important ways. It will harm the Commonwealth’s nonprofits and the people they serve.

Federal tax policy should continue to support the work of the nonprofit sector—and it should encourage all Americans, regardless of income, to give back to their communities.

This bill does neither. It reduces charitable giving incentives in ways that will have a severely negative effect. It introduces partisan politics into the nonprofit sector in new and dangerous ways, jeopardizing the sector’s integrity. It imposes new and unfair taxes on the nonprofit sector, undercutting its tax exempt status. And it does not include any provisions to make giving easier for the 70% today, and 95% of Americans tomorrow, who do not itemize their federal tax deductions.

For these reasons, the Massachusetts Nonprofit Network is strongly opposed to the bill in its current form. We will continue to work with our nonprofit members and organizational allies to push for solutions that enhance giving, benefit Massachusetts families, and allow nonprofits to continue to serve our communities.”

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About the Massachusetts Nonprofit Network

MNN is the only statewide organization in the Commonwealth dedicated to uniting and strengthening the entire nonprofit sector through advocacy, public awareness, and capacity-building. MNN brings together nonprofits, funders, business leaders, and elected officials to strengthen nonprofits and raise the sector’s voice on critical issues. The network has more than 700 nonprofit member organizations and more than 100 for-profit affiliate partners. To learn more visit www.massnonprofitnet.org.

MNN Commits to Eliminate Gender Wage Gap by Signing 100% Talent Compact

FOR IMMEDIATE RELEASE

 

The Massachusetts Nonprofit Network (MNN) has recently signed on to The Boston 100% Talent Compact, a first-in-the-nation, business community-driven effort to level the playing field for working women. By signing the 100% Talent Compact, we have joined forces with the Boston Women’s Workforce Council, a public-private partnership between the City of Boston and Boston University, and more than 215 other Boston-area employers to close the gender wage gap.

According to the Boston Women’s Workforce Council’s 2016 report, women who work in Greater Boston earn significantly less than their male colleagues, while women are the majority of both Boston’s residents and workforce. We recognize that this pay discrepancy poses consequences on the company’s talent pool and that women are one of Boston’s assets: when women thrive, companies and communities thrive.

The Council’s mission is to work with the businesses in the Greater Boston area in a private-public endeavor to eliminate the gender wage gap, remove the visible and invisible barriers to women’s advancement, and ensure that 100% of the talent pool is used to make Boston the best area in the country for working women. As a signer of the 100% Talent, MNN will work with the Council to take concrete, measurable steps to eliminate the wage gap within their own company and to report their progress anonymously every two years.

For more information or to join the 100% Talent Compact, check out: www.bostonwomensworkforcecouncil.com.

Senate Proposed Employer Assessment, A Step Forward

Yesterday, the Senate Ways & Means Committee released its FY18 budget proposal. Included in this proposal was authorization for the administration to pursue either the employer health care assessment or an increase in the existing employer medical assistance contribution (EMAC), a fund to subsidize health care to low-income residents of the Commonwealth.

The proposal put forward by the Senate Ways & Means Committee is a positive step forward and will allow continued opportunities for dialogue on this important issue. MNN has been meeting with leaders in the administration and legislature on this complicated issue and will continue to remain engaged as conversations around these two proposals go forward.

As for the two options included in the Senate Ways & Means budget, the administration would have until August 1st to choose between the employer assessment or an increase to EMAC. If the administration went with the employer assessment, it would apply to employers with 25 or more employees that don’t offer adequate health plans and the administration would have the option to exclude certain classes of employers including nonprofits. The administration would need to consider many factors before setting the amount of the assessment including: (1) the number of employees; (2) whether employees are part-time or full-time; (3) whether employees have access to health insurance through a parent, spouse, veteran’s or Medicare; and (4) how much the employer contributes towards the employer-sponsored health care plan. If the administration instead went with the EMAC proposal, it could raise the current $51 per employee EMAC, an existing assessment that applies to employers with six or more employees.

Similar to the final House budget, the Senate proposal lowered the revenue target of the assessment ($180 million as opposed to the $300 million proposed by the administration). The Senate proposal also delays implementation to January 2018 and includes language sunsetting either proposal two years after the effective date.

How does the State Income Tax Affect Nonprofits?

In 2008, several conservative taxpayers associations advocated for a repeal of Massachusett’s 5.3% income tax. This repeal would have cost the state $11 billion in tax revenue.

While it would have had a very negative impact on nonprofits, many of which heavily rely on state funds, it would have had a more dramatic impact on education, infrastructure, social services, and all other publicly-funded sectors of the economy, and likely would have led to an increase in property and sales taxes.

With the lobbying efforts of the MNN and our drive to communicate the importance of public funds to the general public, over two million Massachusetts citizens turned out to vote against the repeal, defeating the motion in a landslide victory. Despite the warnings of the repeal’s advocates, the income tax level has remained steady, and the public sector and social service industries remain very important parts of the state’s economy. The nonprofit sector alone employs 14.6% of Massachusetts workers, more than the entire public sector, and total employment in the health and education services make up nearly a quarter of the entire workforce.

How does the lobbying law apply to nonprofit communications?

  • Question: I am employed by a non-profit organization to work as an advocate for developmentally disabled persons. I work directly with my clients helping them, among other things, to get housing and medical treatment, and helping them with daily life activities. My organization also encourages our clients to talk with legislators about their challenges or to advocate for more treatment resources. In some cases, I may accompany my clients to meetings and help them prepare what to say. Sometimes I may also say a few words but only to help my clients express their views when they unable to speak at the meeting or are having a difficult time expressing their views. The preparation for these meetings takes more than 25 hours in any six-month period. Do I have to register?
    • Answer: Yes, unless your communications are limited solely to helping your client express his or her views, in effect, like a translator or interpreter. If you were also to advocate on behalf of mentally ill persons generally or your organization you would have to register as a lobbyist, again assuming your advocacy and any related strategizing is more than “incidental”.
  • Question: I work for an advocacy group for the mentally ill. An employee in the Department of Mental Health (DMH) telephones and asks how one of the providers under contract to DMH is doing. The purpose of the call is to help DMH determine whether to renew that provider’s contract. Do I need to count that time as “lobbying” to determine whether I exceed the 25 hour trigger?
    • Answer: Yes, unless the DMH employee’s request and your response is in writing. By definition, executive lobbying includes “any act to communicate directly with a covered executive official to influence a decision concerning policy or procurement.” If the purpose of the call were to help determine whether to continue a specific procurement contract the time spent would have to be counted toward the 25 hour trigger. The law, however, provides for a specific exception if the information is provided “in writing in response to a written request for specific information by an officer or employee of the executive branch.” If you do not wish this time to count toward the 25-hour threshold, you should ask that the officer or employee submit a written request to you for this information and to reply in writing.

How does the New Lobbying Legislation Apply to Research, Writing & Strategizing

  • Question: I work for an environmental non-profit organization as a researcher. I review and analyze data and write reports for the organization for many different purposes. Sometimes, my organization uses my research or reports as the basis for drafting legislation or environmental regulations. I also occasionally write op-eds about my research and give briefings to the general public. I do not write to or talk with legislators or regulators about my research and reports or otherwise engage in lobbying for my organization. The organization has a registered lobbyist who does that work. Do I have to register as a lobbyist?
    • Answer: No. Regardless of how much time you spend preparing, or how much you are paid for, your research or reports that are used by others in connection with legislation or you are not considered a lobbyist and, therefore, do not have to register. Why? Because you have not had “at least 1 lobbying communication with a government employee.’ If you never have a lobbying communication with a government employee about the research or other issues for your employer, you will not have to register as a lobbyist.If you did have a lobbying communication with a legislator or other government employee about legislation drafted by the organization, you would have to register as a lobbyist unless, during a six-month reporting period, your lobbying activities are “incidental,” i.e. you engage in them for less than 25 hours and are paid less than $2,500 for the hours you work on lobbying. Your research and report writing, as well as any strategizing, would be considered as lobbying activities if they were “performed in connection with or for use in an actual communication with a government employee.”

How does the new lobbying law pertain to Board Members?

  • Question: I am a member of the board of directors of a non-profit organization that advocates for civil rights and equity issues. Board members are unpaid and volunteer their time. Many of the board members write, meet or call legislators and engage in other legislative lobbying to promote the organization’s agenda. Do the board members who contact legislators or engage in legislative lobbying have to register as a legislative agent or lobbyist?
    • Answer: No. Volunteer board members of a non-profit organization do not have to register as a lobbyist. The lobbying law does not consider someone to be a legislative agent or lobbyist unless the person is “compensated or rewarded” for engaging in lobbying activities. It does not matter, therefore, how many hours unpaid volunteer board members lobby for their non-profit organization. If they are not paid to lobby, they are not legislative agents and they do not have to register.
  • Question: I serve on an unpaid, volunteer board of a non-profit organization. Sometimes we hold board meetings during the workday. Board members, who are employed, attend on their lunch hours or use personal time from their employers to attend board meetings. For example, I am a legal secretary and another member is a banker. My employer has a written policy while the banker’s employer has a customary practice that allows employees to participate in community service during the day. Does merely attending board meeting during the day mean we are paid by our employer to attend board meetings and therefore have to register?
    • Answer: No. Although some or all of the board members of a non-profit organization may be employed by other organizations or businesses, such employment does not make them lobbyists. This is because they are not being paid, or as the statute says “compensated or rewarded” for their service on the non-profit organization. Moreover, such employment does not make them a lobbyist even if the organization and its lobbying activities are of concern to their employer’s business unless there are other factors involved.
  • Question: I am a member of the board of directors of a non-profit organization that advocates for civil rights and equity issues. Board members are unpaid and volunteer their time. Many of the board members write, meet or call legislators and engage in other legislative lobbying to promote the organization’s agenda. Do the board members who contact legislators or engage in legislative lobbying have to register as a legislative agent or lobbyist?
    • Answer: Yes, you are compensated for purposes of the lobbying law. Although you are not compensated by the non-profit for your service as a board member or its lobbying activities, your service on the board and your lobbying are part of your usual professional responsibilities. You will, therefore, have to register as a legislative agent unless your lobbying activity is “incidental” for purposes of the lobbying law. Lobbying activities are presumed to be incidental if, during a six-month reporting period, you
      • (a) engage in lobbying for no more than 25 hours and
      • (b) are paid no more than $2,500 for such lobbying.