The NC Senate returned to Raleigh this week, and today’s policy update highlights legislation the Senate passed that could affect the state budget, election laws, healthcare laws, and the legislative calendar for the remainder of the year. We also seek your feedback on the ways the proposed OMB rules for federal grants would affect your nonprofit and on the impact of Medicaid Expansion on your nonprofit and the people you serve. |
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| NC Senate Approves State Budget Adjustments |
This week, the NC Senate approved two bills (H.B. 268 and H.B. 562) making a variety of adjustments to the state budget for FY 2025-27 (S.257). Among other things, the budget adjustment bills make changes to several of the directed grants to nonprofits in the budget and provide full funding for the NC Secretary of State’s implementation of the new annual reporting requirement for nonprofit corporations in 2027. The NC House of Representatives is expected to vote on both bills next week. The Center will update its chart of nonprofit appropriations in the state budget once the budget adjustment legislation becomes law in the coming weeks.
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Let Us Know: How Would Proposed Changes to Federal Grant Rules Affect Your Nonprofit
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Two weeks ago, the Center submitted public comments on the U.S. Office of Management and Budget’s (OMB) proposed changes to the OMB Uniform Guidance, the rules that govern federal grants to nonprofits. The Center’s public comments were informed by the feedback we received from North Carolina nonprofits about the potential impacts of the proposed changes to the federal grant rules. Thank you if you shared your input!
Overall, OMB received 496,805 public comments from organizations and individuals on the proposed changes to the federal grant rules. OMB must now review those comments before publishing its final rule, which could incorporate some of the feedback from these public comments. OMB is expected to release a final rule later this summer or early this fall with an intent to have it take effect on October 1.
Among other things, the OMB proposal would modify federal grant rules to: |
- Establish a new pre-issuance review of grant applications by political appointees;
- Require federal grant programs and grant applicants to be aligned with the policies and priorities of the President;
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Create a preference for grant applicants with lower indirect cost rates;
- Significantly expand the ability of federal agencies to terminate and/or suspend federal grants, including those that are deemed contrary to “the national interest” without an opportunity for nonprofits to contest or appeal their grant terminations or suspensions;
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Eliminate fixed-amount grant awards, which could create more red tape and payment delays for nonprofits;
- Expand the current prohibition on the use of federal grant awards for lobbying activities to also prohibit federal grants from being used for voter registration, state regulatory advocacy, and public messaging activities; and
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Require nonprofits to receive prior approval from federal agencies to use grant funds to attend conferences and other training programs.
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This week, the U.S. Senate is reportedly negotiating a bipartisan continuing resolution that would require OMB not to implement some parts of the rule, including the enhanced use of political appointees in grant oversight and the expanded ability of federal agencies to terminate grants.
Because the final OMB rule is likely to be similar to the proposal (unless Congress prohibits OMB from including certain provisions in the final rule), the Center is still seeking feedback from nonprofits with federal grants about the ways that the proposal could impact their operations, programs, and services. If you haven’t already done so, let us know how the proposed new federal grant rules would affect your nonprofit.
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NC Senate Approves Election Law Changes |
On Tuesday, the NC Senate approved a bill (H.B. 958) that makes a variety of changes to state election laws. Notably, the Senate-approved bill would reduce the early voting period for primary elections and runoff elections from 17 days to 10 days but would maintain the 17-day early voting period for general elections. Many nonprofits encourage their staff, volunteers, and the people they serve to vote during the early voting period. The House approved a different version of the bill last month that did not include changes to the length of the early voting period for certain elections. The House is expected to vote on the Senate-passed version next week.
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Regulatory Reform Bill Includes Changes to Administrative and Healthcare Laws
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On Wednesday, the NC Senate unanimously approved the final version of this year’s regulatory reform bill (S.445), which makes 52 changes to a wide variety of state laws. Two provisions of the bill could have implications for nonprofits: |
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A provision that codifies the NC Supreme Court ‘s ruling in the 2025 Mitchell v. UNC Board of Governors decision, which gives state courts broad authority to implement their own judgment in interpreting state regulations rather than deferring to the expertise of state agencies. The Mitchell decision is essentially the state equivalent of the U.S. Supreme Court’s 2024 ruling in Loper Bright v. Raimondi, which significantly limited the rulemaking authority of federal agencies.
- A provision that enables employers, including nonprofits, to offer voluntary portable benefits plans for their independent contractors. Essentially, this would enable nonprofits and businesses to choose to voluntarily contribute funds into their independent contractors’ health, retirement, or life insurance benefits while ensuring that these contributions do not cause the contractors to be treated as employees for the purposes of a variety of labor laws.
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The House is expected to vote on the regulatory reform bill next week. |
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NC General Assembly Sets Calendar for Remainder of 2026 |
On Tuesday, the NC Senate passed an adjournment resolution (S.J.R. 1091) that would set the legislative schedule for the remainder of 2026. Under the adjournment resolution, the NC General Assembly would return to Raleigh for limited sessions on: |
- August 31-September 2
- September 28-30
- October 26-28
- November 16-19
- November 30-December 18
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It is possible that legislators will not actually hold voting sessions during some of these mini-sessions. The House will vote on the adjournment resolution next week. |
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Share Your Stories about How Medicaid Expansion Benefits Your Nonprofit |
Just a few years ago North Carolina expanded Medicaid, bringing healthcare coverage to more than 700,000 people at no cost to the state. Now, as Medicaid rules and funding are changing, nonprofits must demonstrate how Medicaid Expansion is helping working adults across our communities (people between the ages of 18-64 without significant health conditions).
The Center is proud to be part of the Keeping NC Medicaid Strong coalition, which recently launched a storytelling campaign highlighting the real-world impact of Medicaid Expansion, including beneficiaries, caregivers, employers, and community leaders across North Carolina. The Center encourages your nonprofit to complete this short storytelling form to highlight the difference Medicaid Expansion has made in your life, what it has meant to your organization and the people you serve. Thank you in advance for sharing your stories. Your input can help the coalition make the case for preserving Medicaid Expansion in North Carolina.
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Nonprofits Can Advocate For or Against Constitutional Amendments |
The NC General Assembly has placed three state constitutional amendments on the November 2026 ballot: |
- An amendment that would lower the constitutional cap on state income tax rates from 7% to 3.5%. The Center is opposed to this constitutional amendment because it would be harmful to nonprofits by limiting state revenue options.
- An amendment that would require the NC General Assembly to establish limits on how much counties and municipalities may increase property tax levies. If the constitutional amendment were to pass, legislators would then work on the details of these levy limits next year.
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An amendment that would require all voters to provide photo ID when voting. North Carolina currently has a voter ID statute, so the amendment would have little practical impact on elections.
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Each amendment would be added to the state constitution if a majority of voters approve it in this fall’s election.
As the Center has explained in a blog post, charitable nonprofits can take positions on state constitutional amendments and other ballot measures. Efforts by 501(c)(3) nonprofits to advocate for citizens to vote for or against constitutional amendments is treated as direct lobbying for federal tax purposes, which is a legal activity for charitable organizations. With at least three (and possibly more) constitutional amendments on the ballot this fall, nonprofits may want to consider whether it makes sense to take a position on these ballot measures.
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