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.”

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During deliberations in the Senate late Thursday, the chamber’s parliamentarian blocked language that would have repealed the Johnson Amendment, an important provision in the current tax code that prohibits charitable organizations from endorsing candidates for political office.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

New MNN Report Features Fundraising Advice “From the Experts” to Aid Nonprofits

Today the Massachusetts Nonprofit Network (MNN) released the latest edition of its Commonwealth Insights report series. The report, entitled “From the Experts: Advice to Inform Your Organization’s Fundraising,” features advice from interviews with four successful Massachusetts nonprofit fundraisers in an effort to inform and support year-end fundraising efforts of nonprofit organizations.

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Click on the image to read the full report.

In an early 2017 survey of its membership, nearly 60% of MNN member nonprofits cited fundraising as the largest challenge facing their organization. With many nonprofits currently accelerating their fundraising operations to coincide with the end of the calendar year, MNN believes this report will be useful to its over 700 nonprofit members representing every region of the state, as well as members of the state’s nonprofit sector at large.

“Fundraising is an ever-present challenge-and opportunity-for all types of nonprofits. This edition of Commonwealth Insights focuses on ideas that can help nonprofits take their fundraising to new heights.” said Jim Klocke, CEO of the Massachusetts Nonprofit Network.

The report is centered on general strategies for fundraisers to consider in their efforts and is supplemented with actionable advice. In a fast-paced and changing fundraising landscape, all four experts agreed that the need to consistently engage donors and provide them with new, creative ways to be involved with a nonprofit organization is critical to building and retaining support.

The report also touches upon a concern of those working in fundraising, particularly at smaller organizations, that current events and overwhelming needs from across the country and world could further heighten the competition for donors’ support. The interviewed experts agreed that while this concern is understandable, donors of all ages are looking for even more ways to support causes they care about.

“I think that many people are looking for more ways to make a difference, and I think that is what we need right now,” says Margaret Keller, Executive Director of Community Access to the Arts in Great Barrington, MA, one of the experts featured in the report. “Donors are more engaged and more committed than ever.”

This is the third edition of Commonwealth Insights MNN has published in 2017. Earlier editions focused on federal tax reform and the Earned Income Tax Credit. The Commonwealth Insights series is made possible by support from the Barr Foundation. Past editions of Commonwealth Insights can be found at www.massnonprofitnet.org/commonwealthinsights.

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.

How You Can Help Those Affected by Hurricane Harvey

Our hearts go out to the victims of Hurricane Harvey in Houston, Texas and all affected areas. Making landfall over the weekend, Harvey continues to wreak havoc on the lives of millions, and will likely do so for many years. We are also sending strength to all first responders currently helping with relief efforts, including volunteers and staff of nonprofit organizations.

If you’re interested in helping out, there are many ways you can, including donating resources, your time, needed goods such as nonperishable food, toiletries, etc. Visit the links below for more detailed information.

Center for Disaster Philanthropy –  Recording of webinar: “Hurricane Harvey Recovery: How Donors Can Help.”

Boston Magazine – “How to Help People Displaced by Hurricane Harvey”

NECN – “Help for Houston: Boston Helping Those Affected by Hurricane Harvey”

United Philanthropy Forum – “How to Respond to Hurricane Harvey”

Boston Business Journal – “Boston Area Businesses Reach Out to Respond to Hurricane Harvey”

As we would expect in the event of a disaster here in Massachusetts, local and national nonprofit organizations have stepped up with characteristic vigor and have on-the-ground teams responding to the immediate needs of victims. In addition to organizations like the American Red Cross, consider following the work of these and other nonprofits on the front lines:

Feel free to be in touch with any questions or additions to this list. Contact Communications Manager Fernando Martinez at fmartinez@massnonprofitnet.org.