We are quickly approaching one of the spookiest times of the year – the deadline for submitting public comments on two major proposed federal rules with significant negative implications for nonprofits (and also Halloween!). Today’s policy update shares information about the public comments that the Center submitted this morning on the IRS proposed rule on nondiscrimination in private schools and the Census Bureau’s proposed rule to make major changes to the 2030 Census. We encourage your nonprofit to submit public comments on the proposed Census rule. Today’s update also provides a preview of the upcoming post-election sessions of the NC General Assembly. And we include last-minute tips on election engagement, the importance of advocating on the three state constitutional amendments on the ballot, and the need for nonprofits to share information with their clients about recent and upcoming changes to Medicaid eligibility requirements.
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Center Submits Public Comments on IRS Proposed Rule on Nondiscrimination in Private Schools
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This morning, the Center submitted public comments on a proposed rule from the Internal Revenue Service that 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 directly apply to nonprofit K-12 schools and nonprofit private colleges and universities, it could affect other nonprofits that support, or collaborate with, private schools. It also 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.
The Center’s comments address several legal and practical problems with the proposed rule and note that many nonprofits other than private schools would be impacted by the proposal. The Center’s comments recommend that the IRS withdraw the rule and, alternatively, provide a recommendation for (significantly) revised language if the IRS does move forward with a final rule. The Center is greatly appreciative of Josh Starin, an attorney with Schell Bray, for his work in helping the Center develop our public comments.
For more, see the Center’s analysis of the proposed rule. The proposed rule is open for public comments through Tuesday, November 3. The Center encourages nonprofits to consider submitting comments (although they don’t need to be as long or detailed as the Center’s comments).
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Reminder: Submit Public Comments on Proposed U.S. Census Changes by November 2 |
This morning, the Center submitted public comments on the U.S. Census Bureau proposed rule that would make three fundamental changes to the 2030 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 Center’s public comments emphasize that the proposed rule would harm North Carolina nonprofits in several ways, including: |
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Creating significant challenges in getting a complete and accurate count of communities served by nonprofits, including those with significant immigrant populations;
- Reducing North Carolina’s representation in Congress;
- Jeopardizing significant federal funding for North Carolina by reducing the number of people counted; and
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Eliminating 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. Your public comments can be as simple as a few sentences explaining the ways that the proposed changes to the Census would affect your community and the people your nonprofit serves. While you can format your comments as a formal letter to the Census Bureau (as the Center’s public comments do), you also can simply type the text of your comments into the public comment portal for the proposed rule. It is better to spend 5-10 minutes to write a short comment than for your nonprofit’s voice to be silent on this important issue!
The Center encourages nonprofits to check out the NC Counts toolkit on the proposed Census rule, which includes more details about the proposal and its impact on North Carolina, along with tips on submitting public comments. |
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Election Tip of the Week: Make Plans to Vote Today, Tomorrow or Next Tuesday! |
During the 2026 election season, the Center has been 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.
Today’s tip: Make a plan to vote in person today, tomorrow, or next Tuesday. Early voting for the 2026 general election ends tomorrow at 3 p.m. Here are four last-minute tips on voting: |
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If you need to register to vote or update your address within the same county, your only chance to vote is during the early voting period today or tomorrow. You can vote at any early voting location in your county, but it is important to check the hours and locations of early voting since these have changed in many counties this year. It is possible that lines could be long during the final two days of early voting.
- If you are voting on Election Day (next Tuesday, November 3), you must vote at your designated precinct. You can find your Election Day polling place, check out your sample ballot, and confirm that you are registered to vote at your current address on the NC State Board of Election’s voter search page.
- Make sure to bring a photo ID with you when you vote!
- Nonprofits may want to consider giving their staff paid time off to vote on Election Day.
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Reminder: Learn About Impact of Three Constitutional Amendments on 2026 Ballot in North Carolina |
While 501(c)(3) nonprofits are not permitted to engage in partisan political activities such as endorsing or opposing candidates for office, they can take public positions on ballot measures where voters make decisions about things like county or municipal bonds or state constitutional amendments. Ballot measure advocacy is direct lobbying, which is legal for 501(c)(3) nonprofits, as opposed to impermissible partisan political intervention. For every North Carolinian, this fall’s ballot includes 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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NC General Assembly Set to Return to Raleigh after Election
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The NC General Assembly is scheduled to return to Raleigh on November 16-19 and then again from November 30 through December 18 for the final votes of the 2025-26 legislative session. During the post-election legislative session, lawmakers could vote on any of the 14 bills currently in House-Senate conference committees, although some of those bills could be transformed into legislation that is unrelated to the subject matter of the original bills. Legislators also could vote to override Governor Stein’s vetoes of two bills with implications for nonprofits:
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A bill (H.B. 171) seeking to eliminate diversity, equity, and inclusion (DEI) initiatives in state and local government in North Carolina. The bill would prohibit state agencies, local governments, and public schools from promoting, supporting, funding, implementing, or maintaining DEI programs, policies, or initiatives and from applying for, accepting, or using federal funds, grants, or financial assistance that require compliance with DEI policies, initiatives, or mandates. If the bill becomes law, the biggest practical impact for nonprofits will likely be that local governments will no longer be permitted to provide DEI-related grants to nonprofits. Under the bill, state agencies and local governments also would be prohibited from federal grants that support DEI initiatives, but federal agencies are not currently funding DEI because of Trump Administration policies. However, by establishing a state law that prohibits state agencies and local governments from receiving federal grants related to DEI, the bill would continue to prevent state agencies and local governments in North Carolina from receiving federal grants supporting DEI initiatives - including pass-through grants that might have gone to nonprofits – even if a future administration were to revoke President Trump’s anti-DEI Executive Orders and related federal executive actions.
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A bill (H.B. 437) that would establish a drug-free zone within 100 feet of any facility (including a nonprofit) that receives government funding to provide housing or temporary shelter for people experiencing homelessness. The bill would create a criminal penalty for nonprofits that operate facilities to provide housing or temporary shelter for people who are experiencing homelessness if they intentionally allow the manufacture, sale, or distribution of illegal drugs at their facilities (with a limited exception for small quantities of marijuana). The bill would only apply to nonprofits that provide housing or temporary shelter for people experiencing homelessness and not to organizations that primarily provide other types of services to people experiencing homelessness. If the bill becomes law, affected nonprofits providing housing or temporary shelter for people experiencing homelessness also would be required to post at least one permanent sign at their facilities identifying them as drug-free zones.
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DHHS Provides Toolkit on Upcoming Medicaid Changes
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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 lost Medicaid coverage 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) has created a toolkit with print, video, and social media materials in both English and Spanish to explain these changes. The Center encourages nonprofits to share these materials with their communities and the people they serve to help prevent North Carolinians from losing Medicaid coverage because of non-compliance with these tricky new requirements.
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