If you read this policy update every week, you have probably read the words “proposed rule” and “public comments” quite a bit over the past month or so. To help you sort through all the recent federal regulatory proposals that could affect nonprofits, we begin today’s policy update with a summary of four recent proposed rules that could affect nonprofits’ tax-exemption, funding, and data. We provide more resources to help your nonprofit engage in nonpartisan voter education and voter registration activities in preparation for this fall’s election. And we provide details on a new state senate committee exploring property tax issues and a DHHS toolkit on upcoming Medicaid changes that nonprofits can share with their communities to help ensure that North Carolinians understand new requirements and don’t lose their health coverage.
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Several Proposed Federal Rules Could Affect Charitable Nonprofits
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Over the past month, several federal agencies have proposed changes to federal regulations that could have significant implications for nonprofits and the people and communities they serve. Four major proposed rules with implications for nonprofits are: |
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Loss of tax-exemption for nonprofit schools that use race as a factor in various policies. A proposed rule from the Internal Revenue Service would allow the IRS to revoke the 501(c)(3) status of any nonprofit private school that “discriminates on the basis of race, color, or national or ethnic origin in administration of its educational, admissions, scholarship, athletic, or other policies, based on the fundamental public policy of the United States against such practices.” The IRS explanation of the proposed rule specifies that it “would further define race-based action for the purpose of ameliorating societal discrimination as a form of discrimination” (translation of the phrase from legalese to English: nonprofit schools with diversity, equity, and inclusion (DEI) policies and practices would lose their 501(c)(3) status if the rule is finalized). While the proposed rule would only apply to nonprofit K-12 schools and nonprofit private colleges and universities, it could create a precedent that could lead to future challenges to the tax-exempt status of other 501(c)(3) nonprofits with race-based policies, programs, or services. For more, see the Center’s analysis of the proposed rule. The proposed rule is open for public comments through November 3. The IRS has scheduled a public hearing on the proposed rule on December 2 at 10 a.m.
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Major changes to the 2030 U.S. Census. A proposed rule from the U.S. Census Bureau would change the criteria for counting residents for the apportionment of congressional districts by excluding many non-citizens from the count. The proposed rule also would prohibit the decennial census from including questions about race, ethnicity, and sexual orientation. Every decennial census since 1790 has asked about race and ethnicity of U.S. residents. These changes to the census could jeopardize federal funding and congressional representation for North Carolina and could eliminate an important data source that nonprofits use in determining how and where to provide programs and services. For more, see the NC Counts Coalition summary of the proposed rule. The proposed rule is open for public comments through October 13.
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Changes to rules for bank investment in community-based nonprofits. A proposed rule from the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) would make changes to the rules implementing the Community Reinvestment Act (CRA) and could have significant implications for banks’ investment in the work of charitable nonprofits. Among other things, the rule could mean that fewer banks are required to make CRA investments, could prohibit banks from making general operating support grants to nonprofits as CRA investments, and could require larger banks to limit indirect cost rates on nonprofit grants to 15% or less. The proposed rule is open for public comments through October 13.
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New eligibility requirements for refundable tax credits. A proposed rule from the U.S. Treasury Department and the IRS would create new eligibility requirements for individuals and married couples claiming four refundable tax credits – the Earned Income Tax Credit, the child tax credit, the adoption tax credit, and the American Opportunity Tax Credit. Under the proposed rule, to be eligible for a tax refund for any of these four tax credits, individuals or married couples would need to be a U.S. citizen, U.S. national, or a lawful permanent resident, asylee, or refugee and declare on their tax return, under penalty of perjury, that the taxpayer is eligible to receive the refunded portion of the credit. It is possible that, if the rule is finalized, changes to individual income tax forms (specifically IRS Form 1040) could cause confusion for other individuals or couples claiming these credits. If the rule is ultimately finalized, it is quite possible that many nonprofits will need to help educate the people they serve about the new requirements so that they don’t lose out on these tax credits. The proposed rule is open for public comments through October 5.
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The Center encourages nonprofits that could be affected by any or all of these rules to consider submitting public comments (use the links above). |
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Watch a Free Nonprofit Public Policy Update Webinar |
Yesterday, the Center offered a free public policy update webinar in partnership with the Dan River Nonprofit Network, which serves nonprofits in Person County (as well as nonprofits in the Dan River region of Virginia). If you missed the webinar, you can still check out the recording and the webinar handout, which provides information about major federal and state policy issues affecting nonprofits right now (along with links where you can learn more about these issues).
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Join a Free Online Briefing on Proposed Changes to U.S. Census |
As noted in the first item in today’s policy update, the U.S. Census Bureau has proposed significant changes to how the 2030 Census could be conducted, and the public has until October 13, 2026 to weigh in. To help ensure that North Carolina nonprofits understand the proposed changes and have a chance to provide their input, the Center and the NC Counts Coalition are offering a free briefing, Protect Our Count: North Carolina’s Call to Action on Proposed Changes to the 2030 Census, on Monday, September 28 from 12:30-2:00 p.m.
During this briefing, we’ll unpack the U.S. Census Bureau’s proposed rule changes and potential implications for North Carolina. We’ll explore how these changes could influence federal funding for local services, political representation, and the overall accuracy of our community data. We’ll hear from experts and community leaders who will help us understand both the proposals themselves and their potential implications for communities across North Carolina. Most importantly, we’ll talk about what we can do while the public comment period is still open.
The first hour will include a formal briefing and community perspectives immediately followed by a 30-minute action session for anyone who wants to ask questions, get help preparing a public comment, or learn how to use available resources to engage their organization, community, or network.
Get informed. Take action. Make your voice COUNT. Register today. |
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NC Senate Forms Property Tax Reform Committee |
The NC Senate announced this week that it has created a new Select Committee on Property Tax Reform. The press release announcing the new committee explains that the committee’s goal is to “evaluate proposals to address growing concerns about skyrocketing property tax bills and opaque decision-making by local elected officials.”
Last year, the NC House of Representatives established a similar property tax study committee. Many of that committee’s recommendations would have had significant implications for nonprofits, including proposals to reform the law providing for property tax exemption for affordable housing nonprofits and limiting property tax exemption for nonprofit hospitals. Other property tax law changes could reduce local government revenue (which could lead to a variety of funding cuts) and could potentially limit future rent increases for nonprofits that lease their property. It is likely that the Senate property tax committee will also come up with recommendations with implications for many charitable nonprofits.
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Nonprofits Can (and Should) Promote Voter Registration This Month
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With the 2026 election coming up soon, the Center will be offering some concrete (and simple) ways that your nonprofit can provide clear and accurate (and, of course, nonpartisan) information about the election to your staff, volunteers, and community in the coming weeks.
Today’s tip: There is still time to register to vote. Nonprofits can promote voter registration by encouraging their staff, volunteers, and people in their communities to check their voter registration on the NC State Board of Elections (NCSBE) Voter Search tool to confirm that they are registered at their current address. Any eligible citizen who is not registered at their current address still has time to register to vote or update their registration through the voter registration deadline of Friday, October 9 or during the early voting period (October 15-31).
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Learn About Impact of Three Constitutional Amendments on 2026 Ballot in North Carolina |
This fall’s ballot will include three state constitutional amendments with implications for nonprofits and the people they serve. The three amendments would: |
- Require all voters to provide photo ID when voting;
- Cap the state income tax rate at 3.5%; and
- Limit the ability of local governments to set property tax rates in the future.
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You Can Vote has published a great one-page educational fact sheet about the three amendments that translates the ballot language into plain English, clearly explaining what the amendments would mean for various different types of North Carolinians (and for the nonprofits that serve them). We definitely recommend taking a couple of minutes to read this educational fact sheet and to share it with your staff, volunteers, and communities.
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DHHS Provides Toolkit on Upcoming Medicaid Changes |
Many nonprofits provide services to people who receive their healthcare through Medicaid. The One Big Beautiful Bill Act that Congress passed last year made several significant changes to Medicaid that create additional compliance burdens for Medicaid recipients and that limit Medicaid eligibility. The NC General Assembly passed legislation earlier this year to conform with these new federal requirements and to add additional compliance requirements for Medicaid recipients. Among other things, these new federal and state rules will mean that:
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- Many non-citizens will lose Medicaid coverage beginning on October 1;
- Most Medicaid recipients will need to meet new work or community engagement requirements starting on January 1, 2027; and
- Starting in 2027, most Medicaid recipients will need to renew their eligibility every six months instead of once a year.
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The NC Department of Health and Human Services (DHHS) created a toolkit with print, video, and social media materials in English and Spanish to explain these changes. The Center encourages nonprofits to share these materials with your communities and the people you serve to help prevent North Carolinians from losing Medicaid coverage because of non-compliance with these tricky new requirements.
As Governor Josh Stein said in a press release earlier this month: “Medicaid expansion provides lifesaving coverage for approximately 740,000 of our neighbors in North Carolina. These cruel federal cuts to health care will harm our people, rural hospitals, and the entire health care system. Knowledge is power so I appreciate our partners helping us spread the word so that eligible North Carolinians know what’s next and what steps to take to protect their health care.”
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Get Free Resources on Nonpartisan Voter Engagement for Nonprofits |
With mail-in absentee voting for this fall’s election starting this month, now is a great time for your nonprofit to plan for nonpartisan voter engagement. To help with your planning, the Center encourages nonprofits to check out You Can Vote’s extremely helpful free resources on voting and elections (available in both English and Spanish). The You Can Vote resources include a succinct voter guide card, fact sheets with information about offices on the ballot, why these elected officials matter on issues of importance to nonprofits, and voting rights for various populations served by nonprofits. It is absolutely worth 15 minutes of your time to peruse these great resources and share the ones that are most relevant for your nonprofit’s work and mission.
To learn more about nonpartisan voter engagement in this fall’s election, check out the recordings of two recent webinars from the Center: |
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