MARCH 27, 2026

With the weather fluctuating between hot and cold in much of North Carolina this week, today’s policy update begins with a different sort of forecast – the projections for state revenue. We share details of Governor Stein’s latest proposal for Hurricane Helene recovery and on new federal and state investigations into fraud. And we provide information on the Center’s upcoming Nonprofit Policy Conversations and Legal Compliance webinars.

On Tuesday, economists from the NC General Assembly’s Fiscal Research Division (FRD) and the NC Office of State Budget and Management (OSBM) released their consensus forecast for state revenue. The forecast suggests that state legislators will have a small revenue surplus for FY 2025-26 and FY 2026-27, but that state general fund revenues are likely to decline in the near future. Some highlights of the forecast include:

Yesterday, Governor Josh Stein sent legislative leaders his proposal for $790 million in additional funding to help communities in western North Carolina with the ongoing recovery from Hurricane Helene. Among other things, the proposal would:

State legislators will likely consider additional Hurricane Helene relief when they return to Raleigh for the 2026 short session on April 21. It is unclear whether the legislative disaster relief bill(s) will have the same priorities as Governor Stein’s proposal. Note that funding for Governor Stein’s Hurricane Helene recovery proposals would come from state reserve funds dedicated to disaster recovery, not from the state’s general fund, so it is not directly impacted by the revenue forecast mentioned in the first item in today’s policy update.

The Center is hosting a series of Nonprofit Policy Conversations this spring. Registration is open for the first three policy conversations:

At each policy conversation, the Center will provide a public policy briefing that includes the latest information about recent federal executive actions that could affect nonprofits and a preview of what nonprofits can expect during the 2026 short session of the NC General Assembly. We will also have a discussion for participants to share their insights about important state and federal policy issues for 2026. 

The Center is planning additional policy conversations for the Triad in collaboration with Guilford Nonprofit Consortium and HandsOn NWNC on Monday, June 15 (location TBD) and other regions of the state. Details and registration information will be available soon.

These weekly policy updates provide information on policy issues that could become laws in the future. Of course, nonprofit staff and board members need to be aware of a wide range of existing laws and regulations that affect their organizations’ operations. To help you better understand these laws, the Center is offering a two-part workshop series on legal compliance for nonprofits. The online workshops will be held on April 17 and April 24 from 10:00-11:30 a.m. The first part on April 17 will cover nonprofit corporate governance, charitable solicitation, fundraising laws, and employment laws. The second part on April 24 will cover federal and state tax compliance issues for 501(c)(3) nonprofits as well as laws and regulations related to federal and state grants and contracts. The Center plans to offer three hours of CLE credit for attorneys who attend the live online workshops (pending approval). Register today.

On January 28, the U.S. General Services Administration (GSA) posted a notice on the Federal Register indicating that it intends to amend the certification requirements in the System for Award Management (SAM) registration system for nonprofits with federal grants to “align with updated executive branch guidance” on discrimination. The posting specifically references the June 2025 U.S. Department of Justice (DOJ) memo with 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. Among other things, the memo asserts that diversity, equity, and inclusion (DEI) policies and practices are unlawful discrimination and asserts that “unlawful proxy discrimination” is unlawful discrimination. The memo gives several examples of “proxy discrimination” in hiring and promotion decisions and determinations about program recipients for nonprofits receiving federal funding. These examples include the use of criteria like “cultural competence,” “lived experience,” “overcoming obstacles” narratives, and targeting programs and services to specific geographic areas based on their racial or ethnic composition. The memo implies that federal agencies could freeze or discontinue grant funding for nonprofits that are engaged in practices or policies that DOJ deems discriminatory, either directly or through proxy criteria. 

GSA also has posted on the Federal Register a draft of its proposed certification requirement (click “Download File” on the link to access the draft certification). Because the proposed certification requirement is broad and vague, the Center and other nonprofits are concerned that many nonprofits with federal grants and contracts may not be comfortable signing the certification since it may not be clear whether their policies, procedures, and operations are consistent with the terms of the certification. This concern is heightened by DOJ’s recent increase in investigations and prosecutions of federal contractors for alleged violations of the False Claims Act. Nonprofits that are unwilling or unable to make required certifications on SAM.gov can lose their federal funding.  

GSA is accepting public comments on the proposal for the amended SAM certification requirements through next Monday, March 30. Nonprofits with concerns about the proposed certification requirements may want to consider submitting public comments. Nonprofits also can join on a national sign-on letter to GSA expressing concerns about the proposed certification requirements. 

Last Thursday, President Trump published to the Federal Register an Executive Order (EO 14395) establishing a new federal task force aimed at combatting fraud in federal benefits programs, including Medicaid, the Supplemental Nutrition Assistance Program (SNAP), and public housing benefits. The Executive Order alleges widespread fraud and abuse by individuals, nonprofits, federal agencies, and state and local governments that access a wide variety of federal benefits. The Executive Order directs the federal agencies that are part of the task force (which includes most federal agencies that provide grants to nonprofits) to identify fraud-vulnerable transactions within 30 days, propose corrective measures within 60 days, and submit full implementation plans within 90 days. It is unclear at this time what the task force’s recommendations could mean for nonprofits with federal grants and contracts.

Perhaps taking a cue from President Trump’s Executive Order last week (see the previous item for more details), the NC House Oversight and Reform Committee is scheduled to meet next month to investigate Medicaid fraud in North Carolina. This week, the committee sent letters to the NC Department of Health and Human Services (DHHS) Secretary and to the NC Attorney General seeking a wide variety of information about Medicaid fraud, waste, and abuse in North Carolina and systems that DHHS and the Department of Justice have in place to prevent, detect, and prosecute this alleged fraud, waste, and abuse of Medicaid funds. The committee has also directed the DHHS Secretary and the Attorney General to testify on these issues at the committee’s April 16 meeting.

Last fall, the U.S. Department of Education published a final rule that excludes employers – potentially including some 501(c)(3) nonprofits – from being eligible employers for the Public Service Loan Forgiveness (PSLF) program if they are engaged in “substantial illegal purposes.” The final regulation defines “substantial illegal purposes” to include:

The final rule takes effect on July 1, 2026 and only applies to “illegal” activities of nonprofits taking place on or after that date. Under the final rule, nonprofits must certify in their application to be a PSLF-eligible employer that they do not participate in activities that have a substantial illegal purpose, which may be difficult and unclear for staff to determine if the organization provides services in certain mission areas or to particular populations.

Two lawsuits challenging the final rule – one filed by a group of nonprofits and local governments and one filed by several states – are pending in federal court in Massachusetts. The lawsuits allege the Department of Education violated the Administrative Procedures Act and that its final rule was unconstitutional. The lawsuits ask the court to issue an injunction preventing the Department from implementing or enforcing the rule. Following the U.S. Supreme Court’s ruling from last year in Trump v. CASA, the court likely only has authority to issue an injunction stopping the Department from implementing or enforcing the rule against the plaintiffs to the lawsuit rather than issuing a universal or nationwide injunction.

Last week, the Department of Education filed a motion to dismiss the lawsuits. The Department alleges that the plaintiffs do not have legal standing to bring the lawsuits, that it is likely to prevail on the Administrative Procedures Act claims, and that the plaintiffs erred in seeking a universal injunction in light of the Supreme Court’s ruling in Trump v. CASA. It is unclear how quickly the court will rule on the Department’s motion to dismiss the case. 

This week, the U.S. Senate continued its debate on the Safeguard American Voter Eligibility Act or SAVE America Act (S.1383), which would amend federal election laws to require in-person, documentary proof of U.S. citizenship for voter registration for federal elections. The SAVE America Act also would make voting by mail more difficult by requiring most voters to provide their photo ID in person before voting by mail and would require photo ID for voting throughout the country (note that voter ID is already required in North Carolina). Nonprofit VOTE and other advocates have expressed concerns that the documentary proof of citizenship requirement in the SAVE America Act would effectively end nonpartisan, nonprofit voter registration drives. 

The U.S. House of Representatives passed the SAVE America Act last month. The Senate is scheduled for a two-week recess beginning next Monday, and it is unclear whether the Senate will pause the debate during that recess. Ultimately, the bill is unlikely to pass the Senate, since Senate rules require 60 votes for most legislation to pass. President Trump has said that he will not sign any other bills passed by Congress until (or unless) the Senate passes the SAVE America Act. He also has hinted that he could try to issue an Executive Order to implement some or all parts of the SAVE Act without congressional approval.

As a reader of these weekly policy updates, you are probably aware that the Center takes positions on – and lobbies on – state and federal public policy issues that affect most or all 501(c)(3) nonprofits in North Carolina. The Center’s Board of Directors recently approved the 2026 Public Policy Agenda for North Carolina’s Nonprofit Sector, which describes the Center’s current positions on state and federal public policy issues affecting nonprofits. Many of the public policy solutions and challenges identified on the Center’s 2026 public policy agenda are included because of your input and the input of other nonprofits. For readers who don’t have the time to read through eight pages of policy positions, we have included a “cheat sheet” at the beginning of the document, highlighting the Center’s top five state and federal policy priorities for the year.

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.