Southwest RPD
September 2018
Renny [email protected]
Federal & State Policy Issues
Impacting Colorado’s Nonprofits:
Advocacy in Action
~Coffman, J. (2008). Foundations and Public Policy
Grantmaking.
Manitou Incline
View from bottom View from top
Mantiou Incline
https://gardenofthegodscolorado.com/manitou-incline-
colorado-springs/
Revenue Sources by Sector
Sector Private
Donations
Private
Payments
Govt.
Grants/pay
ments
Investment
Income
Other
revenue
Arts, culture,
humanities
44 34 16 < 1 6
Education 20 65 15 3 2
Environment/
animals
51 28 15 < 1 5
Health care 4 59 35 < 1 2
Human
Services
17 28 51 1 3
Source: Evaluating the Charitable Deduction and Proposed Reforms, Urban
Institute, June 2012
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)
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
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
36 $4,000 25 $23,744 $985,948,000
$200K to
$500K
14 $7,120 18 $37,872 $705,830,000
$500K to $1m 2 $18,006 7 $70,910 $266,485,000
$1m or more 1 $154,468 28 $317,945 $1,073,558,000
Totals 100 $5,595 100 $25,509 $3,881,989,000
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
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
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
IRS SALT Proposed Reg’s
• If rule becomes final, applies to donations after August
27, 2018
• IRS Comment period: October 11
• Sample comments:
https://www.coloradononprofits.org/policy-updates/proposed-irs-
rules-state-giving-tax-credits/aug-29-2018
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 541800), since these would all be within
the same NAICS code. (National Council of Nonprofits)
More Resources
https://www.councilofnonprofits.org/how-tax-
cuts-jobs-act-impacts-nonprofits
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
• https://www.councilofnonprofits.org/take-action-
johnson-amendment
New State Law
• What If?
$1,051,186,788
1,892,688 households
$559 average per household
Potential Impact
What If….?
Income Tax Refunds
Colorado Gives Day Checkoff
SB18-141 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
HB18-1013 Nonprofit Sustainability Act
Donors save $1 on state
taxes (25% credit up to
$5k)
For every $4 they give
(max gift of $20k)
HB18-1013 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
HB18-1013 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
How do we become more
influential?
Become a trusted source
It’s all about Relationships
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
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
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
Importance of Relationships
Source: Pinterest
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
Becoming a Trusted SourceProvide 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
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
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
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
“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
501(h) electionBudget size Total annual expenditures that may be
spent on lobbying.
Up to $500,000 $100,000 (20%)
$500,000 to $1,000,000 $100,000 + 15% of expenditures over
$500,000.
$1,000,000 to $1,500,000 $175,000 + 10% of expenditures over
$1,000,000.
$1,500,000 to
$17,000,000
$225,000 + 5% of expenditures over
$1,500,000.
Over $17,000,000 $1,000,000
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
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).
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.
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
Lobbying Resources
• National Council of Nonprofitshttp://www.councilofnonprofits.org/nonprofit-
advocacy/power-information
• Alliance for JusticeBolderadvocacy.org
• Nonprofit Voter Engagement Network (www.nonprofitvote.org)
• Colorado Nonprofit Association– Speak for Yourself toolkit
Nonprofits of Influence
• Community-wide networks
• Silence is acquiescence
• Levers
• Relationships
• Our cause is just
Renny Fagan
Colorado Nonprofit Association
789 Sherman Street, Suite 240
Denver, CO 80203
www.coloradononprofits.org