Early voting began throughout North Carolina yesterday, and today’s policy update reminds nonprofits to encourage their staff, volunteers, and the people they serve to make a plan to vote early. We share information about a new proposed rule that could increase health care costs for some nonprofit employees and clients, a new lawsuit challenging the legislators’ decision to defund NC IOLTA grantees (and potentially helping protect the free speech of many other nonprofits), and a letter that went out to about 1,400 North Carolinians who appeared on a federal database of possible non-citizens. And we include reminders about submitting public comments on the proposed Census changes and the importance of advocating on the three state constitutional amendments on the ballot.
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Election Tip of the Week: |
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: Yesterday was the first day of early voting for this fall’s election in North Carolina. The early voting period continues through Saturday, October 31. Now is a great time for nonprofits to encourage their staff, volunteers, and the people they serve to make a plan to vote early. Early voting is a great option for many North Carolinians for several reasons:
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- During early voting, you can register to vote if you are a new voter or update your voter registration if you have changed addresses within your county. You can’t register or update your registration on Election Day.
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You have more options for dates and locations (any early voting site in your county) to vote during early voting. On Election Day, you can only vote at your designated polling place. Even (and maybe especially) for voters who use early voting in most elections, it is important to check the hours and locations of early voting, since these have changed in many counties this year.
- If something comes up and you are unable to vote when you originally plan, there are always other times you can still cast your ballot (either on another day of early voting or on Election Day). If you get sick or a conflict arises on Election Day, you won’t have other opportunities to vote in the election.
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NC State Board of Elections Sends Letters to Voters Who Might Not (or Might) Be U.S. Citizens
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This week, the NC State Board of Elections began sending letters to nearly 1,400 registered voters in North Carolina who appeared on a federal database of potential non-citizens. It is quite likely that many people receiving these letters are actually U.S. citizens who are eligible to vote. You Can Vote has three important tips for nonprofits whose staff, volunteers, or clients may receive one of these letters:
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- Voters may get this letter even if they are a citizen eligible to vote.
- Eligible citizens can vote without responding to the letter. Citizens do not need to provide documentary proof of citizenship to vote.
- Non-citizens who receive the letter should not vote.
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Three Legal Services Nonprofits File Lawsuit Challenging Defunding of NC IOLTA Grants
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A provision in this year’s state budget removed a major source of funding for legal services nonprofits by making fundamental (and problematic) changes to the Interest on Lawyers’ Trust Accounts (IOLTA) program. As established by the NC Supreme Court, the NC IOLTA grant program has traditionally provided grant funding to a variety of legal services programs. The budget redirected much of the NC IOLTA funding to the Commission in Indigent Defense Services (a program that provides support for public defenders to provide criminal defense services to low-income North Carolinians) instead of to nonprofit legal services organizations. It also created onerous new eligibility requirements for the NC IOLTA funds that would still technically be available for legal services nonprofits, including prohibitions on awarding grants to nonprofits that provide immigration services, engage in representation related to gender transition, or engage in a wide range of lobbying and advocacy activities. These restrictions render all legal services nonprofits ineligible for NC IOLTA grants, even though NC IOLTA funds do not come from state revenue sources. The onerous programmatic and advocacy restrictions for prospective future NC IOLTA grantees sets a dangerous precedent of enabling lawmakers to prevent nonprofits from otherwise legal programs, services, and advocacy activities simply because they receive public funding.
Last week, three legal services nonprofits – Pisgah Legal Services, Legal Aid of North Carolina, and the Charlotte Center for Legal Advocacy – filed a lawsuit in state court challenging both the defunding of legal services nonprofits from NC IOLTA and the onerous speech limitations that the budget imposed on prospective future NC IOLTA grantees. The lawsuit alleges that:
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- The decision to defund civil legal services nonprofits violates the state constitution’s separation of powers provision since the N.C. Supreme Court unanimously established the NC IOLTA grant program to provide funding for civil legal services nonprofits through a 2007 court order.
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The onerous restrictions on advocacy and other activities of future NC IOLTA grantees – which would apply to the entirety of these organizations’ activities, not merely their use of NC IOLTA funds – violates the First Amendment freedom of speech. In their court filing, the plaintiffs noted that they legally engage in lobbying and public advocacy activities and represent immigrant and transgender clients, using non-IOLTA funds to support these activities.
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The Center strongly supports this litigation, and we are appreciative of the three legal services nonprofits that filed the lawsuit. In particular, we believe that the First Amendment claim in the lawsuit could set an important precedent that could help protect the free speech rights of other nonprofits that receive public funds. |
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Proposed IRS Rule Would Change Eligibility Standards for ACA Premium Tax Credits
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Many North Carolinians – including employees of many nonprofits that do not offer group health insurance – receive health care premium tax credits to help subsidize a portion of their families’ health insurance costs. These premium tax credits are an important component of the Affordable Care Act (ACA). This morning, the Internal Revenue Service published a proposed rule on the Federal Register that would make changes to eligibility standards for people receiving these credits. Notably, the proposed rule would:
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Prohibit many legal U.S. residents who are not citizens from accessing premium tax credits. This portion of the proposed rule would parallel recent changes to Medicaid eligibility for non-citizens that was part of the One Big Beautiful Bill Act that was signed into law last year. This change could significantly increase health care costs for many North Carolinians, including some nonprofit employees, volunteers, and clients.
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Enable people to access ACA premium tax credits if they are denied Medicaid coverage solely because they do not meet the new community engagement requirements, which take effect in January 2027. Under the community engagement requirements, most Medicaid beneficiaries are required to work, volunteer, or go to school for at least 80 hours per month or earn at least $580 per month in wages, with only very limited exceptions for people who are medically frail. It is likely that many North Carolinians will lose their Medicaid coverage next year because they fail to meet or document their work, school, or volunteer hours. The proposed rule could provide some (but not full) financial relief if they have to purchase health insurance.
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The proposed rule is open for public comments through November 30. |
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Reminder: Submit Public Comments on Proposed U.S. Census Changes by November 2 |
Last month, the U.S. Census Bureau published a proposed rule on the Federal Register that would make three fundamental changes to the 2030 U.S. Census and future decennial censuses: |
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It would change the way “usual residence” is determined from where people are living on April 1 to the place where “they have lawfully spent the greatest number of days” between January 3 and April 1, as evidenced by their tax records. This could create challenges and mistakes for many people who receive services from nonprofits, including people experiencing homelessness, people who do not file taxes, and college students.
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It would change the criteria that are used for counting residents of states for the purpose of the apportionment of U.S. House of Representatives districts among states. Specifically, the proposed rule would exclude many non-citizens from the count in this apportionment, despite language in the U.S. Constitution that provides that the decennial census is an enumeration of “persons” living in each state rather than U.S. citizens living in each state. The Census Bureau’s explanation of the proposed rule strongly hints that the change in residence criteria would require the 2030 U.S. Census to include a question about the citizenship status of U.S. residents.
- It 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, but the decennial census has never sought information about sexual orientation.
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The proposed changes to the Census could have significant impacts for North Carolina nonprofits. Among other things, these changes could: |
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Create significant challenges in getting a complete and accurate count of communities with significant immigrant populations;
- Reduce North Carolina’s representation in Congress;
- Jeopardize significant federal funding for North Carolina by reducing the number of people counted; and
- Eliminate important demographic data that many nonprofits use in assessing how and where to provide services.
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The proposed rule is open for public comments through November 2. The Center encourages all nonprofits to submit public comments explaining the potential impact of the proposal on their nonprofits and their communities. Two resources that can help nonprofits prepare public comments are: |
- The NC Counts toolkit on the proposed Census rule, including more details about the proposal and its impact on North Carolina and tips on submitting public comments; and
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The National Council of Nonprofits public comments guide.
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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: |
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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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The Center encourages nonprofits to understand these amendments and to communicate to their staff, volunteers, and communities about their potential impacts. Two Center partners have great information and resources on the amendments: |
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You Can Vote has a 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 North Carolinians (and for the nonprofits that serve them).
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The NC Budget & Tax Center has several excellent resources explaining the potential (negative) impacts that the tax amendments could have on North Carolina communities.
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Third Quarter Lobbying Reports are Due by October 21
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