Jonanthan Cartu Says: Election 2020: Tax, Census, & Mission are Primary Issues Fa... - Jonathan Cartu CPA Accounting Firm - Tax Accountants
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Jonanthan Cartu Says: Election 2020: Tax, Census, & Mission are Primary Issues Fa…

Election 2020: Tax, Census, & Mission are Primary Issues Fa...

Jonanthan Cartu Says: Election 2020: Tax, Census, & Mission are Primary Issues Fa…


The venomous political environment of 2020 is a minefield for nonpartisan nonprofit organizations. But tax policy, funding, and census-related issues are neither Democratic nor Republican. They are matters of survival.

This year’s top political concern is modifying the 2017 Tax Cuts and Job Act, which dealt nonprofits a major blow by increasing the standard, non-itemized charitable deduction and doubling the estate tax exemption.

“These changes went into effect January 1, 2018,” said Steve Taylor, senior vice president and counsel for public policy at United Way Worldwide in Washington, D.C. “They hit us some in 2018, and they are hitting us harder in 2019.”

Whatever can be done with tax policy “to incentivize more charitable giving… has to be in the top three [concerns] of every charity,” said Neal Denton, senior vice president and chief government affairs officer for YMCA of the USA.

Three bills in the U.S. House of Representatives – H.R. 651, H.R. 1260, and H.R. 5293 – call for the change. The bills have a mixed slate of backers – one primarily Democratic, one Republican, and one bipartisan.

“We think the three of them are generally getting to the same thing, to the creation of the universal charitable deduction,” said Denton, adding that the priority is getting representatives to sign on with at least one of them.

Other Tax Concerns

The nonprofit community scored a victory in late December 2019, when a tax code provision requiring nonprofits to pay tax on transportation employee benefits was repealed. But the sector is still fighting the Unrelated Business Income Tax (UBIT) expansion, which requires nonprofits to pay taxes on income generated from ventures unrelated to their core missions.

“[The UBIT adds] administrative costs and accounting costs. It is changing how we look at business development – unfairly, because it is only targeting the nonprofits,” said David L. Thompson, vice president of public policy at the National Council of Nonprofits.

Beyond Taxes

Nonprofit leaders remain wary about state and federal legislation that would set them apart from businesses. For instance, while there is some dissent about whether legislated employee benefits should apply to nonprofits, Thompson holds that exempting nonprofits is a mistake.

“We compete for employees,” said Thompson. “We don’t want to treat them as second-class citizens, and we don’t want to be the employer of last resort.”

At least when laws and regulations are created federally, nonprofits only have to comply with a single standard. Nonprofits have for years been struggling with a patchwork of state-by-state registration requirements regarding accepting contributions online. While a cottage industry in consulting has emerged, nonprofits would prefer a uniform law, according to Thompson.

The National Council of Nonprofits is pushing for a revamped disaster relief financial assistance package which would include loosening donation regulations and offering greater support for disaster-impacted nonprofits within the affected area.

Don’t set expectations too high, though. “Because 2020 is a presidential election year, and it’s going to be one of the most contentious presidential elections we have seen, that will largely grind lots of policymaking to a halt,” Taylor said. “Every now and then a member of Congress moves something through quickly and whatever [legislation] is moving becomes a vehicle for [add-ons of unrelated] issues.”

Neal Denton

To incentivize more charitable giving … has to be in the top three [concerns] of every charity. – Neal Denton

Leaders at United Way Worldwide would like to see the eligibility age for claiming the Earned Income Tax Credit lowered. As 380 United Way outlets offer tax preparation services for low-income people, such a change would benefit people in the organization’s footprint.

“But mostly what we are doing in 2020 is laying the groundwork for 2021,” Taylor said. “Historically, the first year after a presidential election is when most of the big things happen.”

It Gets Personal

Sometimes legislation or executive action so directly impacts an organization’s core mission that opposing it becomes a top priority. For Kate Leone, chief government relations officer at Chicago-based Feeding America, that action was the Trump administration’s rule tightening eligibility requirements for the Supplemental Nutrition Assistance Program (SNAP), which would result in nearly 700,000 recipients losing benefits. The rule is set to take effect April 1.Steve Taylor

“Historically, the first year after a presidential election is when most of the big things happen.” – Steve Taylor

Some states are moving to mitigate the damage by petitioning for allowances in higher-unemployment areas, including work training as work, and broadening exemptions for caregivers, those undergoing rehab programs, or volunteering.

For Feeding America, the challenge will be demonstrating SNAP’s impact beyond the individuals whose benefits will be cut. In rural areas, the loss of SNAP-based purchases will have a significant impact on retailers and grocers.

Vote and Be Counted

While the decennial census is nonpartisan, it is a huge issue for nonprofits. Census data can be the difference between a hospital adding a geriatric or a pediatric ward, according to Thompson.

“Our network has been extremely engaged in working to generate state and local government money for census outreach work,” Thompson said. “Through July, [it will be] a huge engagement for nonprofits.”

The National Council of Nonprofits is far from alone. “YMCAs around the country are working in a nonpartisan, apolitical way to ensure the most accurate count around Census 2020, and to provide as many opportunities for members of our community to register to vote and participate in the political process,” said Denton.

“That kind of civic engagement work must be a priority for the entire nonprofit sector in 2020,” Denton added.

Feeding America joined with voter participation organization Nonprofit Vote of Cambridge, Mass., during 2019 to test whether food banks were effective locations for encouraging voting. “Research has told us that direct service organizations where there is a level of trust are very effective places to engage people who are not registered, or who are unlikely to vote,” Leone said.

Feeding America relies on Nonprofit Vote to determine where voter registration efforts would do the most good. Its pilot took place in Asheville and Winston-Salem, cities in North Carolina home to different constituencies. Feeding America is considering expanding its pilot program to five or six more states during 2020.

David L. Thompson

“Our network has been extremely engaged in working to generate state and local government money for census outreach work.” – David L. Thompson

Feeding America is coordinating similar…

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