The new tax law, the measure formerly known as the “Tax Cuts and Jobs Act,” represents the most comprehensive overhaul of the federal tax system in decades. Although the full impact of the law is still unfolding, most of the law’s provisions are effective as of January 1, 2018, so non-profits need to take steps now to understand and adapt to the changes. Following is a discussion of some of the key elements of the law affecting 501(c)(3) organizations, as well as some elements that did not make it into the final statute.
The Center for Non-Profits has been surveying the New Jersey non-profit community at least annually since 2001 to gauge the effects of the economy, funding and programmatic trends, and other issues in our field. This year’s report, New Jersey Non-Profits 2017: Trends and Outlook, based on the responses from 300 organizations, reveals familiar themes as well as some new concerns and opportunities.
On May 4, President Trump signed an Executive Order declaring the executive branch’s goal to “vigorously enforce Federal law’s robust protections for religious freedom.” Of particular interest to the broad-based charitable community is a provision that purports to make it easier for religious institutions to engage in partisan political speech and electioneering – activities that are prohibited for 501(c)(3) organizations under the “Johnson Amendment.” (Another provision concerns whether insurance companies must cover contraception for individuals if their employers opt out for religious reasons.)
The President’s Executive Order is likely to face legal challenges from a variety of organizations, some of which reportedly are already in the process of preparing their legal filings. But in the meantime, what does it actually say, and what does it mean for 501(c)(3) organizations? Arguably, it says and means both nothing and everything simultaneously.
Proposed “Johnson Amendment” repeal would harm 501(c)(3)s
by Linda M. Czipo
Since 1954, tax law has contained a provision prohibiting 501(c)(3) organizations from directly or indirectly attempting to influence the election or defeat of any candidate for public office. This ban, also known as the Johnson Amendment for its sponsor, then-Senator Lyndon B. Johnson, applies not only to churches, but to all 501(c)(3) organizations.
In the wake of last week’s 2016 presidential election, there is clearly a high degree of uncertainty, speculation and concern across the country. It would be foolish and presumptuous of me to pretend to have any great wisdom to offer as we embark on this new chapter. But like most everyone else, I’ve certainly given it a lot of deliberation. So I humbly offer a few thoughts, some professional and some personal, as we move forward – with advance apologies that this might be a little disjointed.
On the professional:
The work that non-profits do remains more important than ever.
Non-profits are often the backbone of communities, providing programs and services that make communities good places to visit, live and work; employing members of the community; and providing training and education that helps people find and keep jobs. Non-profits are also often the first, last or only source of help for people in distress.
We’ll know more in the coming weeks as appointments and proposed policies take shape, but one thing is certain: the people that rely on us need our voices, our advocacy, our programs and our protection. This was the case before November 8, and it’s just as true now.
It’s no secret that the slow economic recovery continues to take its toll on the ability of New Jersey’s non-profits to provide essential services for our communities in the face of a stagnant funding environment.
One important way to address the problem is to make it easier for people to give to charity by providing a state-level tax deduction for charitable donations. Several bills now pending in the New Jersey Legislature would allow taxpayers to deduct their charitable gifts from their state income taxes.
A New Jersey charitable deduction would be good for our state’s charities and everyone that relies on them. Here’s why:
The full report lays out in detail the ups and downs experienced by non-profits during the previous year, and their outlook for 2016. Here are the major highlights, based on the 311 New Jersey non-profit respondents from late January/early February 2016:
Nearly three-quarters of responding organizations reported that demand for services had increased during the past year.
Nearly four-fifths expected demand to continue rising in 2016.
Only two-fifths reported receiving more total funding in 2015 than in 2014, but nearly two-thirds reported that their expenses had increased during the same period.
Over one-third (35%) reported that expenses exceeded support and revenue during their most recently completed fiscal year; the proportion was even higher (44%) among larger organizations, those with annual budgets of $1.5 million or more.
Seventy percent expected their total expenses to increase in 2016, but fewer than half (47%) expected total 2016 funding to increase.
If you’ve seen our previous surveys or if you work regularly with non-profits, these findings may sound like variations of a familiar theme. You may even think that they’re better than during the worst of the recession – and that’s true. But if you care about the well-being of the non-profit community and non-profits’ ability to provide vital programs and services, these numbers should generate deep concern.
What do you get when you put four savvy grantmakers in front of a room of willing and passionate non-profits? No, not something resembling ABC’s reality TV show Shark Tank, but a friendly and supportive exchange of useful and honest insight.
Last month, staff and volunteers from New Jersey non-profits attended Grant Giving from the Grantor’s Perspective, a breakout session at the Princeton Community Works conference. The impressive panel was a balance of corporate and community foundation funders:
Did we see you there along with over 400 of your closest non-profit friends and family? If so, we hope we got a chance to tell you how much we appreciate all you do for New Jersey. But, often like being in the wedding party, we only had fragmented conversations, waves from afar and quick handshakes or hugs.
The conference, as we all know, isn’t a party (though there was plenty of good food and enjoyment to be had). It’s a chance to connect with allies old and new, foster a collective spirit, and gain valuable insight and tools for the good work you do every day.
The 2015 conference was also the start of some wonderful relationships and important dialogues — including these Top 5 Takeaways many of you shared with us:
Every day, our lives are touched in some way by the work of charitable organizations. Charities play an essential social and economic role in making our communities attractive places to live, work and grow.
While a slow economic recovery and rising demand for charitable services mean that charities need donor support more than ever, donors may become overwhelmed by the various requests for contributions. For donors trying to sort through these appeals, wise giving choices have never been more crucial.
You don’t need to have an elaborate plan to “do good,” but you can take steps that will help you to be confident in the decisions you make.