New Jersey Non-Profits: Checking in and Looking Ahead to 2015 - - PowerPoint PPT Presentation

February 10, 2015

presented to the

New Jersey Non-Profits:

Checking in and Looking Ahead to 2015

Your presenter

Linda Czipo

Executive Director Center for Non-Profits

About the Center for Non-Profits

• Promoting New Jersey’s non-profit

community

• Public policy
• Research (non-profit statistics, trends)

Advocacy/Public Education

• Management/compliance assistance
• Workshops/seminars/Webinars
• Publications

Capacity Building

• E-newsletters, resource lists,

info/referral

• Cost saving benefits

Member Services

For 30+ years, the champion & first-stop resource for and about New Jersey’s non-profit community

What we’ll cover today:

NJ Non-Profit Overview National and New Jersey Policy Trends

Government/Non-Profit Contracting Looking Ahead: Initiatives and Issues

New Jersey Non-Profit Overview

 30,000 501(c)(3) orgs in NJ  314,000 employees

 9.8% of the state’s private work force  More than construction, transportation, public utilities, finance and insurance industries

 $37 billion in expenditures annually  1.5 million volunteers providing $4.6 billion in service

New Jersey’s Non-Profit Community

 # of NJ 501(c)(3)s grew by 64% from 1999-2009  Even after IRS auto-revocation, net increase of 30% in number of public charities from 2003-2013.

Non-Profit Sector Size/Scope

Government Media Public Funders/Donors

Heightened scrutiny

Compensation levels Admin expense ratios Evaluation/impact Accountability/transparency “Pay your fair share”

Heightened scrutiny

Capacity issues

National and NJ surveys:

2/3 to 3/4 of

survey respondents consistently report

rising demand

for services. This upward trend has been reported by non-profits for numerous consecutive years.

2014 NJ Non-Profit Survey:

more than 80%

• f NJ respondents

said demand had risen in 2013.

more than 80%

projected that demand would continue to rise in 2014. Sources: Nonprofit Finance Fund, State of the Sector surveys, 2013 and prior years; Center for Non-Profits, New Jersey Non-Profits: Trends and Outlook survey reports, multiple years

Capacity issues

Source: Nonprofit Finance Fund, State of the Sector survey, 2013

Over half

• f national survey

respondents said they

could not meet

the increased demand.

“Stealth shift”

Gradual transfer of burden of service delivery from government to non- profits

• Rising demand
• Budget cuts
• Efforts to curtail tax

exemptions, giving incentives

• Contracting system challenges

Government funding/regulation

• Budget crises/funding cuts
• Non-profits as a revenue

source

• Rationale for tax privileges
• Threats to autonomy,

advocacy rights

Other trends / issues

Squeezing non-profit resources

• Property Tax Challenges/PILOTs
• NJ Court Cases to Watch
• Princeton University
• Morristown Medical Center
• Cumbersome, restrictive, ineffective

government contracting structure

• Efforts to limit charitable giving

incentives

Other trends / issues

Policy Updates

Budget in the new Congress

What to watch for

Gridlock or Cooperation?

• Federal Fiscal Year runs 10/1 through

9/30

• FY 2015 budget (10/1/14 - 9/30/15)

enacted December 2014

• IRS budget cut
• Funding for various non-profit

programs

• Affordable care act

Giving Incentives and Tax Reforms

Tax Reform in the new Congress?

Provisions to look for:

• AGI Floor or cap on deductibility
• Annual giving limits
• Donation deadline of 4/15
• Estate tax
• UBIT Changes
• DAF payout requirement
• Foundation excise tax reform?

Giving Incentives and Tax Reforms

December 2014 A Fleeting Restoration

Expired Incentives:

• IRA Charitable Rollover
• Food Inventories
• Land Conservation

___________

• Signed into law 12/19/2014
• Expired 12/31/14

Giving Incentives and Tax Reforms

America Gives More Act

H.R. 644 - House to Vote 2/12/15 Restore and Make Permanent:

• IRA Charitable Rollover
• Food Inventories
• Land Conservation
• Simplify Foundation Excise Tax

___________

• Mobilizing support

Per Council on Foundations, private foundations may contact members of Congress to support this (“self-defense” issue)

2013 Proposed Regulations

• 501(c)(4) Social Welfare Nonprofits only
• Attempted to define “campaign-related

political activities” that would not count as a social welfare purpose

Concerns of 501(c)(3) organizations

• Nonpartisan election-related activities
• Black-out periods

Status

• Over 140,000 comments received, mostly

in opposition

• Timeline for rewrite uncertain

Campaign- Related Political Activity Treasury/IRS Proposed Regulations

• Released July 2014
• IRS’ response to backlog of applications

at IRS and targeting controversy

• Available to many groups with less than

$50,000 gross receipts / $250,000 assets

Concerns

• 3-page checklist
• No IRS agent review
• Gateway to unsuitable approvals?
• Funder backlash?

Form 1023 EZ

A (too?) streamlined path to Tax Exemption

Contracts & Grants

Persistent problems:

• Contracts that don’t cover the

cost of services

• Complex and time consuming

application/ reporting requirements

• Changes to contracts mid-stream

(54%)

• Late payments
• Non-profits owed $200,000+ on

average by state governments

Government-Nonprofit Contracting Reform

Contracts & Grants

New Jersey

• Contracts that don’t cover the cost
• f services (76%) Nation’s Worst
• Complex and time consuming

application processes (81%) 5th Worst

• Late payments (53%) 9th Worst
• Complex and time consuming

reporting requirements (75%) 12th Worst

Government-Nonprofit Contracting Reform

Common Contracting Problems and Changes in New Jersey Non-Profits' Experiences since 1/1/13 compared with 2012

Be Better Ab About the sa same me Worse rse N/A

State dollars not covering full cost to provide services under contract 2% 38% 53% 7% Timely contract processing or renewal 5% 49% 42% 4% Late payments 6% 55% 27% 12% Changes made by state contract terms after execution 3% 41% 36% 20% Complexity and time required for preparing contract applications 5% 37% 54% 4% Complexity and time required for contract reporting 2% 47% 47% 3% Duplication/overlap of monitoring or reporting requirements (for organizations with multiple state contracts) 2% 38% 47% 3%

N = 135

Source: Rapid Response Survey conducted June 2014 (currently unpublished)

Why does this matter?

• Rising demand for services
• Unmet community needs
• Gap between contract funds

and actual cost

• Government funding cuts

Why does this matter?

Public charities nationally reported over $1.59 trillion in total revenues in 2011.

Contributions, gifts, government grants, 22% Other 6%

Program revenue, including government contracts

72%

Source: Urban Institute, NCCS Core Files, circa 2011

Why does this matter?

Public charities in NEW JERSEY reported over $40 billion in total revenues in 2011.

Source: Urban Institute, NCCS Core Files, circa 2011

Contributions, gifts, government grants 17% Other 6%

Program revenue, including government contracts

77%

Why does this matter?

Some are forced to cut programs or staff. Many seek funds from other sources, e.g., donors, grantmakers

• driving up competition for finite

pools of funds

• increasing the pressure on

grantmakers to “keep essential

• rganizations whole”

Governments are also turning to private philanthropy.

How do non-profits try to fill the gaps?

Why does this matter?

Private philanthropy CAN’T make up the difference.

Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

• NEW OMB final guidelines governing

federal grants/contracts, including state/local pass-throughs

• Major overhaul of federal award

procedures

• Final guidance took effect

12/26/2014

BIG WIN!

Some highlights:

• State & local governments using federal

funds will be required to reimburse nonprofit contractors and grantees for reasonable indirect costs.

• In some cases, administrative expenses

associated with a particular project (e.g., secretarial support) can be reported as direct, rather than indirect, costs.

• Raises the Single Audit threshold from

$500,000 to $750,000, eliminating duplicative and unnecessary audit criteria, and clarifying cost allocation rules.

Game Changing

Contracts & Grants

What now?

• Ensure that states/local

governments that pass through federal awards implement the new guidelines

• Ensure that non-profits understand

and exercise their rights under the new guidelines

• Encourage state/local

governments to emulate similar policies for their own (non-federal) awards

Contracts & Grants

Government-Nonprofit Contract Reform (Ongoing)

Looking Ahead: Initiatives and Issues

Promising initiatives

Center Advocacy Priorities Improve Understanding About Non-Profits

Center Advocacy Priorities

• Improve understanding

about non-profits

• Red Tape
• Contract Reform
• E-procurement
• Fortify ties with legislators

and regulators

Strengthen Government/ Non-Profit Partnerships

Center Advocacy Priorities NEW LEGAL WORKING GROUP

• Reform/modernize raffle

laws/games of chance

• Update the NJ Nonprofit

Corporation Act

Improve the Fundraising / Operating Climate for Non-Profits

Center Advocacy Priorities

Longer term: state level tax incentive for charitable giving

Improve the Fundraising / Operating Climate for Non-Profits

Center Advocacy Priorities

• Advocacy rights
• Accountability
• Ensuring fair fundraising

laws and regulations

• Taxation
• Giving incentives
• ? ? ? ?

Serve as a Watchdog on Key Non-Profit Issues

Seeking new/alternative funding sources Increased advocacy for field/constituencies New partnerships/collaborations Program adjustments Increased volunteer recruitment Increased collaboration Shared services Mergers - discussions and completions continue to grow

Actions Non- Profits are Taking

Top 5 issues affecting individual organization viability (aside from funding):

• Financial uncertainty (55%)
• Need for better

branding/communications (50%)

• Need for stronger board of trustees

(49%)

• Cannot afford enough good staff

(36%)

• Increased benefits/insurance costs

(31%)

NJ Non- Profits’ Top Issues (2014)

Top 5 issues affecting non- profit sector viability in the coming decade

• Attracting/retaining capable,

committed board members (57%)

• Non-profit infrastructure/capacity

building (54%)

• Foundation/corporate funding (47%)
• Attracting/retaining qualified workers

(39%)

• Giving/volunteering incentives (33%)
• Improving public understanding

about non-profits (33%)

NJ Non- Profits’ Top Issues (2014)

What will 2015 show?

• 2015 NJ non-profit survey

data analysis underway

• Report to be issued end of

February/early March

• Join our email list or check for

announcements at www.njnonprofits.org

NJ Non- Profits’ Top Issues

Nonprofit infrastructure investment Support full funding for full costs Strengthening governing boards Facilitate provision of expertise Support non-profit public policy work Encourage communication/dialogue Evaluation WHAT ELSE?

Implications for Funders

The Center’s Strategic Priorities

Champion and protect the non-profit

community as an indispensable part of the social and economic well-being of New Jersey and its residents.

Advance knowledge and promote best practices to foster effective, ethical

• rganizations in furtherance of the public

good.

Convene and foster connections

between and among non-profits and their allies, as well as partners in government and for-profit business, in order to enhance collective strength.

Questions/ Feedback?

Stay in touch!

Join our E-MAIL LIST! www.facebook.com/njnonprofits www.twitter.com/NJ_Nonprofits www.linkedin.com/company/center-for- nonprofits

Linda M. Czipo Executive Director Center for Non-Profits

3575 Quakerbridge Road, Suite 102 Mercerville, NJ 08619 Ph: 732/227-0800 Fax: 732/227-0087 Web: www.njnonprofits.org center@njnonprofits.org (general) lczipo@njnonprofits.org (direct)

THANK YOU!