Thanks to the collective voice of MNA’s 630 charitable nonprofit members – MNA has recently seen firsthand what
it means to have a seat at the policy table at both the state and national levels.
In Montana: Just before the bell rang to close out the
2013 legislative session, MNA learned of a decision made not by legislators,
but by a district court, that - as it stood - would weaken the integrity of
the nonprofit corporate structure and the concept of donor intent in Montana.
After scrutinizing the details of the case, and in
consultation with an attorney, the MNA Board voted for the first time ever to
engage in advocacy at the court level. We, along with Montana Community
Foundation, joined with the Attorney General’s office in filing a “friend of
the court” brief that detailed our concerns with the court decision in a
complex case involving the split of a church, and the disposition of assets
held by a Foundation associated with the church.
Here is a summary provided by Larry Johnson, counsel for MNA on the case. The details aren't necessarily recreational reading, but it's worth spending a few minutes on a case that put Montana's nonprofit sector at risk:
Hope Lutheran Ministry v. Faith Lutheran Church of Great Falls, 2014 MT
69 (March 12, 2014). The case arose out of a split in a Church over
theological issues with an ensuing dispute over which Church group owned
the church property. As part of the case, the Trial Court awarded
property held by the Church Foundation to one of the Church groups even
though the group had not proved any established legal theory for doing
so. . . Based on language in the Foundation's Articles of Incorporation, the Trial Court held there was some heretofore unidentified type
of fiduciary duty/trust obligation, and ordered the assets in the
Foundation be transferred to one of the Church groups. Both groups
appealed to the Montana Supreme Court.
appeal caught the attention of Kurt Alme, President and General Counsel
of Yellowstone Boys and Girls Ranch Foundation who brought it to the
attention of MNA and MCF. Kurt and Liz Moore then met with the
Attorney General’s Office. They expressed their concern that
contributors to certain charities and community foundation funds would
be reluctant to contribute unless the Courts would treat independent
charitable organizations as independent, protected by the statutes under
which they were organized. They also expressed their concern that if
the Court affirmed the Trial Court decision without understanding the
significance of this new unidentified legal theory, that theory may be
able to be used in a lawsuit against a nonprofit (or even a for profit
corporations or other entity) reaching any parent, subsidiary or other
related entity. Assistant Attorney General Jon Bennion filed an Amicus
Brief, in which MNA and MCF joined.
Supreme Court agreed with the Attorney General and reversed the Trial
Court on the Foundation issue, noting among other issues: “As amicus
Attorney General argues, to permit the particularly stated charitable
purposes of a nonprofit corporation to be malleably converted into an
express trust for unnamed beneficiaries, and then its property
transferred outright to those beneficiaries could negate much of the
substance of the Nonprofit Corporation Act.” The Court decided that the
language in the Articles of Incorporation, and the fact the Church
donated money to the Foundation, were not enough to justify the Trial
Court’s decision. The Supreme Court’s decision is lengthy and covers
many issues that were beyond those of concern to the Attorney General,
MNA, and MCF, but even the limited issues of concern to us were
discussed at some length by the Court. Those of us who are involved in
the Nonprofit sector, who rely on the independent existence of nonprofit
organizations to carry out their missions and the intentions of those
who financially support the organizations, will be referring to this
case for guidance for many years.
. . .The Attorney General was most helpful in helping secure a decision that
follows well established law that protects nonprofit organizations,
and preserves the intent of donors that contribute to those charities.
To all MNA members, when we met with the Attorney General’s office
to discuss this case, we said, “This
will harm the sector.” Due in large part to MNA's almost 650 members, our statement generated attention and action. Through
your membership in MNA, you had a seat at the table and it made a difference. Thank
you and well done.
In Washington DC: For the past several
years – including 2012 and 2013 – many of you responded to various requests for
information related to nonprofit/government contracts. Your efforts are paying
off. Armed with information provided by you and your colleagues across the
nation, the National Council of Nonprofits has been working closely with the
Office of Management and Budget (OMB) in Washington DC. As a direct result of our collective efforts, in December, 2013 the
federal government announced new guidelines that significantly overhaul the way
government works with nonprofits in the grantmaking and contracting process.
Here are the key points of the new
guidance as summarized by the National Council of Nonprofits:
Indirect Costs: The OMB Guidance
explicitly requires pass-through entities (typically states and local
governments receiving federal funding) to either honor a nonprofit’s
negotiated indirect cost rate if one already exists or negotiate a rate in
accordance with federal guidelines. Nonprofits will be empowered to elect
an automatic indirect cost rate of 10 percent of modified total direct
costs (MTDC), which can be used indefinitely if they so choose, or
negotiate a higher rate.
Direct Costs: The guidance makes clear that, in certain
circumstances, program administration (e.g., secretarial staff dedicated to a
specific program) can be reported as direct, rather than as indirect,
Audit Rules: The new guidance also raises the threshold
for a single audit (A-133) requirement from $500,000 to $750,000, thus
reducing costs for smaller contracts and grants.
Streamlining Federal Guidance: The new guidance
consolidates and streamlines eight OMB circulars, including OMB Circulars
110 and 122 that relate to charitable nonprofits. As a result,
applications and reporting will be standardized and streamlined to provide
more consistency across various federal agencies.
Rick Cohen of the Nonprofit Quarterly said, “The new OMB guidelines reflect the
continuing pressure that nonprofit advocacy organizations, in this case
epitomized by the National Council of Nonprofits, have put on the federal
government to remove impediments that make life difficult for nonprofit
grantees and contractors.”
Thank you MNA members. Via your membership in MNA you are affiliate members of the National Council of Nonprofits; through
them you have been at the table with OMB as these changes have taken shape. Not
only have you offered your stories and perspectives through surveys and e-mails,
but you have joined your collective voice with members of the larger nonprofit
community. Congratulations on the results!