In 2020, Expect Many Policy Actions That Affect Nonprofits and Foundations. Here’s What to Watch.

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Let’s play a game.

We start by drawing a large tic-tac-toe grid. Across the top, label the columns legislative, executive, judicial. Now label the rows as federal, state, local. That’s the basic game board for understanding and tracking public-policy proposals affecting nonprofits.

To illustrate how it works, last year nonprofits filled the federal row with successes when Congress repealed the tax on nonprofit transportation benefits (legislative), the Labor Department adopted overtime regulations that included nonprofit employees rather than treating them as second-rate by carving out exemptions (executive), and three district courts and the Supreme Court blocked a citizenship question from being added to the 2020 census that would have prevented a fair, accurate, and complete count and hurt nonprofits and those they serve (judicial).

Likewise, nonprofits filled the legislative column with the victory on transportation benefits (federal), successes in Arizona to secure a new universal charitable deduction and in Kentucky to restore nonprofit tax exemptions (state), and wins in multiple municipalities where nonprofits had resisted efforts by officials seeking to impose taxes on tax-exempt property (local).

But the tool is not a trophy board. Rather, we developed this metaphorical game board to help nonprofit leaders and grant makers keep track of the always present, yet ever-evolving, threats and opportunities in policy arenas that simply can’t be ignored.

For instance, not all was positive at the federal level last year. Congress did not add a universal deduction as an incentive for charitable giving. And there was slippage in the executive branch, with the White House issuing significant executive orders and federal agencies taking harmful actions, such as the Department of Health and Human Services seeking to require recipients of Medicaid to work and volunteer even though many are not able to do so, the Agriculture Department limiting the number of people who can receive food stamps, and the Education Department’s indifference (at best) to correcting dire problems in the Public Service Loan Forgiveness Program.

So, what does the game board show for nonprofit policy activities in 2020? Let’s take a look.

Federal Level

The 2020 census likely will be the most important policy matter of the year, given its influence over dollars, data, and democracy throughout the next decade. A person who isn’t counted still exists. But the federal dollars that communities should receive based on population-based funding formulas disappear, which means nonprofits, donors, and grant makers must fill the resulting gaps in meeting human needs. Incomplete counts also skew data that many nonprofits (and others) need to make informed planning decisions. And inaccurate counts lead to unfair distribution of political power since census results form the basis for divvying up representation among and within the states. Nonprofits across the country are taking action because of the risks that undercounts pose to the people and communities we all serve.

Few in Washington expect Congress to be productive this year — because it’s an election year and the House and Senate are under rival control. To feed their base voters, the Democratic House is likely to continue passing progressive bills and the Republican Senate will continue ignoring them while confirming more conservative judges. Plus, the impeachment trial in the Senate and continued investigations of the Trump administration in the House, regardless of outcomes, will cause even greater hostility, even if that’s not conceivable now.

With gridlock firmly blocking Hill action, nonprofits can still use this time to educate federal (and state) policy makers and candidates about the need for a universal charitable deduction that would enable all taxpayers, including those who take the standard deduction, to receive a tax benefit for contributing to charitable works in their communities.

An idea emerged in 2019 that could advance the cause for a universal charitable deduction for all taxpayers: offering temporary, targeted deductions to donors who support nonprofits in the aftermath of natural disasters. Charitable organizations are always on the frontlines of disaster relief and recovery work. They are also frequently victims of the same disasters they are trying to ameliorate. Think of a local food bank that’s under water from a flood or hurricane.

That’s why many nonprofits are urging Congress to encourage people to support relief and recovery by donating to charities in declared disaster areas. This could be achieved through a temporary deduction that could be taken by everyone. And it could be limited to donations that help local nonprofits in the thick of relief and recovery efforts. The approach would provide immediate support, plus serve as a pilot program to prove that a permanent universal charitable deduction would be sound policy.

Low congressional productivity does not mean policy changes coming out of Washington will be inconsequential. We expect a flurry of proposed rulemaking in the executive branch covering a wide range of issues, including many of interest to nonprofits working on issues such as education, the environment, human services, and more. Traditionally, the fourth year of an administration brings a concentrated push to get an agenda in place while it’s still possible. Nonprofits are advised to pay close attention to federal regulatory actions that could influence their missions for better or for worse.

State Level

Call them laboratories of democracy or petri dishes for testing policy ideas, the states are where nonprofit-friendly ideas can be incubated — and where past nonprofit gains can be ruined, often at frightening speed. The constant threat of losing those gains is why so much work on behalf of nonprofits must be defensive, not by choice but out of necessity, as ORS Impact documented in a recent research paper based on interviews with nonprofit advocates and grant makers.

The recent flood of state tax legislation will likely slow some. That’s good because every time lawmakers open up their state’s tax code, nonprofits can suffer setbacks. Still, more states are expected to consider provisions that help taxpayers support charitable works. Arizona’s new nonitemizer charitable deduction, allowing taxpayers taking the standard deduction to deduct a set percentage of their charitable donations, is a fresh model for shaping an incentive to fit within a state’s tax structure, adding to the successful variations in Colorado and Minnesota. A bill to create a charitable-giving incentive is pending in New Jersey.

Beyond tax policy, states appear to be throwing off any hesitation to impose their own employment standards and benefits requirements. More than half the states have set minimum-wage rates higher than the federal level. Several, including California, Colorado, Maine, New York, and Washington State, set higher standards requiring payment of overtime to more employees than federal rules require. These and the growth of paid-leave regimes — which apply equally to nonprofit and for-profit employers — could well be the biggest trend for 2020. It’s important to note that employment policies are not just a legislative issue; executive-branch agencies and even contracting offices can impose higher or different workplace rules than those set by the federal Labor Department.

There’s another timely issue vying for the title of biggest trend for 2020: efforts in state legislative, executive, and judicial spaces to undermine or expand voting rights for the 2020 elections. As the Chronicle has noted, these policy fights invariably come back to the intersection of political power and racial equity.

Local Level

Without fail, some local governments will attempt to divert money from nonprofit missions, whether framed as taxes, fees, or payments-in-lieu-of-taxes. Demands for forced “voluntary” payments are already underway in several Northeastern cities, with a few Southern communities taking notice.

And speaking of local focus, what better opportunity for explaining how government policies impact nonprofits than when politicians are spending time campaigning “back home”? The 2020 elections offer the chance for active nonprofit engagement in nonpartisan election-related activities like voter registration, candidate debates and townhall meetings, and get-out-the-vote efforts. Nonprofits must remain nonpartisan, but that doesn’t mean we have to be disengaged and on the sidelines.

Nonprofit advocacy is vital to advancing the mission of every organization, so it’s essential to spend time engaging on the issues that matter. It’s not just our constitutional right and civic duty but also our obligation to the missions and communities we hold so dear.

Tim Delaney is chief executive of the National Council of Nonprofits, where David L. Thompson is vice president of public policy.