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What are nonprofit leaders lobbying for?

Are you surprised to learn that Minnesota’s nonprofit sector is extremely active in advocacy and public policy work? You shouldn’t be. From environmental concerns to workforce development to arts and cultural support, the state’s large and savvy nonprofit community gears up for each legislative session like runners training for a marathon. Here’s my take on the most significant concerns the sector is pursuing during the 2015 session.

Playing defense

Irregularities revealed in the financial operations of Community Action of Minneapolis prompted the organization to shut down last fall. A Department of Human Services’ audit found that Community Action spent more than $800,000 of taxpayer dollars on items such as travel to the Bahamas, spas, loans to executives and bonuses.

A key element in the Star Tribune’s exposé showed that the Community Action board of directors did not provide sufficient oversight to ensure the agency’s compliance with funding requirements. Prominent board members, including two public officials (state Sen. Jeff Hayden and U.S. Rep. Keith Ellison), resigned from the agency before it closed, though observers agree this in no way relieves them of responsibility for past mismanagement. Ethics hearings spurred by Community Action have already been held at the Capitol.

Susan Brown, public policy director of the Minnesota Council of Nonprofits (MCN), expects hearings on the matter, with the possibility of bills aimed at expanding regulation of the nonprofit sector. Proposals could include salary caps for executives, legislation regulating the composition of boards or even requirements for directors appointed by the State of Minnesota.

As the state’s largest association of nonprofit organizations, MCN says it will vigorously work to protect the decision-making autonomy and self-governance authority of nonprofits. MCN’s position is that Minnesota’s nonprofit sector is respected and, overall, well managed. “Outliers happen,” said Brown, “but let’s not legislate on the basis of an outlier that got a lot of attention.”

In what’s likely to be a lively and possibly contentious discussion, MCN also will tell legislators that Minnesota nonprofits have broad access to management resources and training. Workshops and courses on subjects such as salary benchmarking and good governance practices are widely available, and the region’s private sector funding community has high expectations for adherence to best practices. Further, requirements for public disclosure already provide transparency with nonprofit finances (every nonprofit’s IRS Form 990 is viewable on the Guidestar website, at guidestar.org).

To see MCN’s complete public policy agenda for the session, visit the council’s website at minnesotanonprofits.org and click on “At the Capitol.”

And on offense

The Minnesota Council on Foundations (MCF) is the professional association of grantmaking organizations in our state. Like its cousin MCN, MCF has an active public policy agenda that director of government relations and public policy Bob Tracy leads on behalf of the grantmaking field. As this column was going to press, the MCF agenda for 2015 had not been made public, but Tracy shared an advance copy with Twin Cities Business; check mcf.org for updates.

Two of MCF’s priorities seem most likely to spur discussion. The first is its support of a national effort to change federal regulation on private foundations options for lobbying. Today, most nonprofits may participate in advocacy, public policy and lobbying, though they are prohibited from participating in partisan political activities. However, private foundations may not do so. For example, private foundations may not express views on specific legislation or issue “calls to action” in communications about legislation with the general public.

In part these federal regulations are designed to preserve the perceived independence of the “independent sector.” Nonprofits, and in particular foundations, operate with significant tax privileges that are granted based on perceived social benefit. While some private foundations’ political leanings are all too evident from their grantmaking approach, allowing direct lobbying represents a real change in how they operate. Expect robust discussion, locally and nationally, about these proposals.

Another of MCF’s public policy priorities is an effort called Endow Minnesota. Based on comparable programs in other states, MCF members are proposing a tax credit for gifts to permanent endowment funds at community foundations in the state. MCF is in the midst of a multiyear campaign to advance Endow Minnesota, which right now calls for a maximum allocation of $2 million in state tax credits providing a 25 percent credit for gifts up to $100,000. Eligible recipients would only include community foundations across the state, with the proposal language emphasizing the benefits to rural Minnesota and smaller cities, where the community foundation often plays an important economic development role. The hope is that such a tax credit will result in more of baby boomers’ wealth staying in the state, in particular in local communities.

Endow Minnesota is controversial among some nonprofits since it advantages endowment gifts to community foundations over other kinds of gifts. In a similar program in Iowa, community foundations also are the sole beneficiaries. North Dakota’s program, however, has an incentive for endowment gifts to any nonprofit, including colleges, cultural institutions, human service agencies and community foundations.

Compared to many of the major bills that move through the Legislature, the nonprofit sector’s advocacy concerns may seem like small potatoes. But for those working in nonprofits, the legislative session is a major preoccupation. Actions taken there have long-lasting effects on funding and governance. Nonprofit sector leaders will be there, taking part in the debate.

Sarah Lutman is a St. Paul-based independent consultant and writer for clients in the cultural, media and philanthropic sectors.

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