Nonprofits safe this year, but what about next year?


This article was written by Valerie Acres and originally appeared in the Greater Manchester Chamber of Commerce's Capitol Insight newsletter, which is sponsored by Sheehan Phinney Bass + Green and the Sheehan Phinney Capitol Group.


At the end of January and in mid-February, we reported on HB 1509, a bill that would extend the Business Enterprise Tax to non-profits and reduce the rate of the tax for BET taxpayers.

This bill was universally opposed by the nonprofit sector and even by organizations representing the for-profit sector which pays the BET and would benefit from the lower rate. Indeed, the only support for the bill at the public hearing came from its prime sponsor, Rep. David Hess (R-Hooksett). 

What we haven't reported on is the final result, which is a good news-bad news kind of thing. The good news: The bill was killed on the House floor and is unlikely to return this session. The bad news: The bill was killed by only ten votes in a body comprised of 336 members that day. Yikes! Even though there will be an election between now and the 2015 legislative session, a vote this close means the issue will be back. 

Opponents of HB 1509 will need to work hard during the summer and fall to reinforce with current legislators and new candidates the value nonprofits bring to New Hampshire communities, the taxes already paid by many nonprofit organizations, the level at which many nonprofits subsidize government obligations by accepting reimbursement rates that are less than costs, and the real-life damage that imposition of the BET on these organizations will cause in an already stressful economic environment.

Again this week, the nonprofit sector escaped unscathed - but barely! SB 186, a bill that would require specific training for non-profit board chairs or designees and give broad authority to the Office of Charitable Trusts to impose penalties for non-compliance, will go to the House floor as part of the consent calendar with a 15 -2 committee recommendation that it be referred for interim study. 

If the bill remains on the consent calendar, there will be no floor debate on the matter. However, discussion at the committee level was lively and, like HB 1509, despite universal opposition from the nonprofit sector the group appeared nearly evenly split on the issue. Opponents of SB 186 tried to build a case that, with the exception of one or two so-called "bad apples," New Hampshire's nonprofit boards are comprised of ethical and knowledgeable people from diverse backgrounds who are already provided with training from internal and external sources that is superior to that required in the bill. 

Opponents cited other mechanisms to ensure appropriate oversight by boards than the cursory training envisioned in SB 186. And they raised a large number of policy and logistic questions that remain unanswered in the bill. The nonprofit sector also emphasized the bill's unfair characterization of its members and their boards as less professional, intelligent or trustworthy than for-profit counterparts, perhaps the most disturbing aspect of SB 186.

Since the bill is on the consent calendar, it is likely to be referred for interim study by the full House. Non-profits will need to work hard during the summer and fall on this issue as well, to educate current legislators and candidates regarding the quality of their board composition and financial oversight, the training they provide, and the mechanisms they use to combat potential complacency over time. Additionally, they will need to identify alternative, narrower mechanisms to help the state identify and assist troubled organizations before financial difficulties impact their ability to fulfill missions.

Post date: April 22, 2014
Topics: NH Legislative Updates

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