JANUARY 9, 2026

As we start the new year, this week’s policy update begins with two short surveys to give you an opportunity to shape the Center’s policy priorities and advocacy/policy programming in 2026. We include the latest on congressional health care legislation and on U.S. Department of Justice and state legislative investigations into DEI practices. We provide information on two free webinars to help your nonprofit get ready for nonpartisan voter registration and voter education work this year. And we (re)share the Center’s recap of the many policy developments affecting nonprofits in 2025 and our preview of what to expect this year.

As a reader of these weekly policy updates, you are probably aware that the Center advocates on state and federal public policy issues that affect most or all 501(c)(3) nonprofits in North Carolina, and that we also provide information and training to nonprofits on public policy issues and effective advocacy. As the Center plans for our 2026 public policy and advocacy work, we are seeking your input on both of these components. Please take a few minutes to complete two quick surveys to provide:

Thank you if you have already completed one or both of these short surveys!

In many ways, 2025 was an unprecedented year for public policy developments affecting nonprofits, with many new challenges (and a few good changes) coming from all three branches of the federal and state government nearly every week. As a result, these Nonprofit Policy Update emails have often been lengthy, so we know many readers haven’t been able to read them in their entirety. Make sure you didn’t miss any policy developments that might be important for your nonprofit by spending a few minutes reading the Center’s 2025 Nonprofit Policy Year in Review blog post to learn more about the (many) policy trends in the nonprofit sector last year and what to expect in 2026. 

Yesterday, the U.S. House of Representatives passed a bill (H.R. 1834) that would extend the enhanced premium tax credits on Affordable Care Act (ACA) Marketplace health plans for three years. The ACA premium tax credits expired at the end of 2025, meaning that the cost of ACA Marketplace health coverage is increasing significantly for many North Carolinians this month, including for many people who are clients of nonprofits and employees of nonprofits that do not offer employer-provided health coverage. Although the bill passed the House with bipartisan support in a 230-196 vote, it is unlikely to get the 60 votes needed to pass the Senate, at least in its current form.

The 2026 election in North Carolina officially begins next Monday, when county boards of elections will start sending out absentee ballots to eligible voters who have requested them. In-person voting for the 2026 election begins in less than a month, with early voting for the primary election opening on Thursday, February 12.  

While 501(c)(3) nonprofits cannot support or oppose candidates for office or make campaign contributions, your nonprofit can (and should) engage in nonpartisan voter registration and voter education work. To help your nonprofit do this, the Center is offering two free webinars next month:

Last month, the U.S. Department of Justice (DOJ) reportedly began investigating the diversity, equity, and inclusion (DEI) practices of businesses and organizations that receive federal grants and contracts. In May 2025, DOJ issued a memorandum asserting that federal grantees and contractors are in violation of the False Claims Act (FCA) if they “certify compliance with civil rights laws while knowingly engaging in racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion (DEI) programs that assign benefits or burdens on race, ethnicity, or national origin.” DOJ’s recent investigations into federal grantees’ and contractors’ DEI practices appears to be a follow-up action to last spring’s memorandum. DOJ has also “strongly encouraged” private lawsuits challenging DEI practices of federal grantees and contractors. FCA violations can lead to significant financial penalties for organizations and criminal liability for individual staff or board members who knowingly violate the statute.

To reduce the risk of FCA violations, nonprofits with federal grants or contracts may want to review their employment practices and policies and their programs and services before certifying compliance with federal antidiscrimination laws. In particular, nonprofits may want to review the July 2025 DOJ memorandum that provides guidance on the types of policies and practices that are deemed “unlawful discrimination” for recipients of federal funds, including nonprofits with federal grants or contracts. The memorandum asserts that “unlawful proxy discrimination” is unlawful discrimination, explaining that “facially neutral criteria . . . that function as proxies for protected characteristics violate federal law if designed or applied with the intention of advantaging or disadvantaging individuals based on protected characteristics.” 

On Wednesday, the NC House Select Committee on Government Efficiency held a hearing to investigate state and local government diversity, equity, and inclusion (DEI) practices in light of recent federal policy developments related to DEI, including: 

The committee heard from the UNC system about its recent efforts to replace its DEI policies and practices with an equality policy and heard from the City of Raleigh about the steps it has taken to comply with President Trump’s anti-DEI Executive Orders. An Asheville attorney made a presentation to the committee asserting that the City of Asheville and Buncombe County are engaged in a variety of DEI practices that violate federal laws. Among other things, the attorney asserted that city and county grants to 501(c)(3) nonprofits that provide services based on racial factors are “discrimination by proxy.”

Committee chairs indicated that they may recommend legislation based on the information presented at the hearing. Last year, the original version of the House bill (H.B. 171) to eliminate DEI in state and local government in North Carolina would have significantly limited DEI initiatives and programs in nonprofits with state and local funding. Thanks to advocacy from the Center and others, the House removed the nonprofit provision from the final version of the bill. That bill was vetoed by Governor Josh Stein, and his veto has not been overriden. However, it remains possible that legislators could again explore the possibility of limiting or prohibiting DEI practices or policies of nonprofits with state or local government funding this year. 

Last week, the Internal Revenue Service issued a notice raising the standard business mileage rate to 72.5 cents per mile for 2026 (up from 70 cents per mile for 2025). Many nonprofits use this rate when reimbursing their employees for work-related driving. The volunteer mileage rate – the amount that is tax-deductible when your nonprofit's volunteers drive on behalf of your organization – remains at 14 cents per mile and can only be changed by Congress. The Center continues to advocate for Congress to increase the volunteer mileage rate, and we are appreciative of Senator Ted Budd (R-NC), who joined with Senator Amy Klobuchar (D-MN) as a sponsor of U.S. Senate legislation (S.3020) to raise the volunteer mileage, and of Representative Addison McDowell (R-NC), who is a cosponsor of an identical bill (H.R. 1582) in the U.S. House of Representatives. 

Nonprofits that were registered as lobbyist principals in 2025 (and their staff or contractors who were registered as lobbyists) must file their final quarterly reports with the Secretary of State Lobbying Compliance Division by Friday, January 23. Lobbyist principals need to use the special fourth quarter expense reports (available online) that include the cumulative total payments to lobbyists for the year. To help you understand the basics of state lobbying laws affecting nonprofits, check out the Center's summary of NC lobbying laws for nonprofits.

Also, the NC Secretary of State has opened lobbying registration for 2026. Lobbyist principals (i.e. nonprofits that lobby) and lobbyists (i.e. nonprofit employees and contractors who lobby on behalf of nonprofits) must register annually with the Secretary of State. Lobbyists and lobbyist principals must register within a day after they begin lobbying.

Nonprofit Policy Update is the weekly newsletter on state and federal policy issues affecting 501(c)(3) nonprofits. Learn more about the Center's public policy agenda.
©2026 North Carolina Center for Nonprofits

Not a subscriber? Sign up for Center emails.
Current Center Member? Access your benefits or create your account.
Not a Center Member? Join now.
Not a nonprofit? Support or affiliate with the Center.