It’s hard to believe we are more than a month out from the 2023 Legislative Session and significant bills – such as HB 2, the budget bill – are still unresolved. But the dust has settled on most issues – and below you will find a recap of how the session played out relative to MNA’s policy agenda.
TLDR; Many anti-nonprofit proposals this session stemmed from negative perceptions of nonprofits. We worked hard to push back on these, and together with our partners we were largely successful in our efforts. We are also celebrating the expansion of the now permanent charitable endowment tax credit. Finally, we are still awaiting the governor’s signature on issues critical to the nonprofit workforce: the Best Beginnings scholarship program and closing the Medicaid Provider Rate gap.
Read along for the full details.
Negative Perceptions of Nonprofits
Let’s begin with the emerging negative perceptions of nonprofits. It’s hard to pin down the cause of these perceptions, but as a group they threaten the health of our sector and the operability of your missions. We spent a lot of time pushing back on these misconceptions this session, and will continue to do so in the future.
Perception 1: “The tax-exempt status of nonprofits is unfair.”
Often, it’s a specialty issue that triggers the challenge: hospitals not paying property taxes yet having such a large real estate footprint, or nonprofits owning agricultural land and getting a “discounted” ag rate on their taxes yet not being ag producers. MNA fights to protect tax exemption, and rightfully so. We also recognize there are pain points on the other side that we need to understand and – where possible – share in developing solutions. It’s so important to have relationships with legislators so that we can have honest, clear discussions on these issues. We may not agree, but mutual respect goes along way when the next vote to tax nonprofits comes up.
Perception 2: “Nonprofits are suspect…sometimes”
There is a shadow on nonprofits that shows up in language like “These nonprofits don’t pay taxes.” Or “These nonprofits get money from who-knows-where.” “These nonprofits” is a phrase that creates invisibility by painting every nonprofit with a brush of one perspective. And yet, it was the same legislative leaders who labeled “these nonprofits” that also carried and led on meaningful legislation benefiting the sector. I ask that we work consistently and with intention to communicate our message during the interim. “These nonprofits” are the very organizations government and communities count on for quality of life: kid’s summer food programs, houses of worship, 4-H, shelters and sanctuary, and more.
Perception 3: “Nonprofits can’t or shouldn’t lobby or litigate”
Litigation and lobbying by nonprofits came under fire this session more than I can ever remember. There were remarkable and numerous attempts to make litigation a non-charitable activity which would then be taxed. This will come up again. To penalize nonprofits for carrying out their mission in a courtroom or a legislative hearing represents a misunderstanding of the nonprofit’s right and responsibility to associate, to petition government and to speak. It’s part of why we exist.
These are big themes, and we know they are not top of mind for many of our members – but unchecked they would undermine the bedrock of our sector. Tax exemption, trustworthiness and advocacy are fundamental to both our identity and our operational model. Fortunately – we and a host of nonprofit partners successfully pushed back most of the threats we confronted on these issues. Thank you deeply for giving time and attention as advocates. Together, we made a real difference. But the themes will come up again. What we do between now and then to build relationships and listen with an ear to really understand will give us more voice and influence next time around.
Specific issues addressed by MNA
Following is a recap of specific issues MNA addressed in the context of our Public Policy Agenda. If it seems long, well… it was a long session. Every success represents the power of association.
Nonprofit Practices, Reputability, and Accountability
It may seem odd that MNA opposed SB307 which revised reporting requirements for nonprofits and charitable trusts. The bill tightened up the possibility for names of donors, as well as other types of reports, to be requested without legislative approval. Our concern was that the bill was solving a problem that doesn’t exist – and rather than protecting nonprofits, it veers into secrecy. Transparency within appropriate boundaries generates trust, which is the hallmark of the nonprofit sector. HB307 ultimately passed and was signed into law. We were successful in getting the bill amended so that it only relates to 501(c)(3) organizations, which alleviated our concern that it would create a loophole for increased dark money in politics.
We did not go into the Session with any thoughts of making changes to the Montana Endowment Tax Credit. It wasn’t due to expire until 2025 so our initial strategy was to monitor for any possible changes. However, thanks to the budget surplus early in the session, it became clear that we had an opportunity to increase the credit amount. And then as events unfolded that opportunity expanded to include permanency. SB506 increased the maximum amount of the tax credit for an individual to $15,000 and made the credit permanent. Like all tax credits – it will be reviewed periodically, but it won’t need to be renewed in future legislative sessions.
Join us in a shout out to Senator Greg Hertz, thanking him for his work in shepherding this bill successfully through to the Governor’s desk, where it was signed into law.
Tax Treatment of Nonprofits
This was the most challenging aspect of the Session. We successfully testified against six attempts to tax nonprofits, including property taxation of all healthcare organizations, unique taxes on nonprofit agricultural land, and the most perplexing of all, a bill that would charge unrelated business income tax on certain litigation expenses. MNA opposed HB319, SB507, SB513, SB524, HB870, and HB906. All were tabled in committee except for SB507, which was amended in such a way that it was no longer a threat to nonprofit tax exemption. The advocacy our members undertook throughout the Session to protect tax exemption was extraordinary and effective. Bravo.
Workforce Development & Capacity Building
It’s unusual for MNA to weigh in on subsector issues like childcare and housing. However – we supported several bills designed to bolster access and availability of childcare and housing. These are issues you, our members, have cited as barriers to obtaining and retaining employees. We supported and continue to watch HB648, a bill to expand the Best Beginnings Scholarship Program and HB819, a bill to expand workforce housing. Both bills passed and are awaiting the Governor’s signature.
Please consider emailing the Governor to urge passage of these bills. You can do that here.
Advocacy and Lobbying Rights
In 2021 we successfully warded off a bill that would penalize nonprofits that participate in litigation. Sadly, we saw more of this in 2023. Like SB524, SB557 would have made litigation expenses for nonprofits a non-charitable activity, subject to taxation. It would also have required a list of donors to be provided. The bill passed, but the section related to nonprofits and litigation was amended out, at which point MNA moved from opposing to monitoring.
This is a new addition to the MNA Public Policy agenda, included so that MNA can appropriately promote the ability of nonprofits and the people they serve to participate fully in the institutions and processes of democracy. Most specifically, MNA supports policies that protect and increase citizens’ ability to exercise voting rights and clarify nonprofits’ appropriate role in advancing civic engagement. Throughout the session we monitored several election-related bills, and successfully opposed HB806 and SB441 – both of which would have made voting more difficult for some people.
Budget – Revenue and Appropriations
MNA advocated for the implementation of the Provider Rate Study at the rates recommended by Guidehouse, the contractor that performed the study. The budget passed by the legislature includes rate increases at 100% of the Guidehouse study recommendations, exceeding the Governor’s budget which supported partial implementation. As of this writing, this remains unresolved as the Governor considers potential cuts to HB2, including cutting back the provider rate increases.
I close with thanks: to Tylyn Newcomb, MNA’s Membership Manager who spent almost half her time during the session on public policy work; to our University of Montana Intern, Jorgia Hawthorne who organized our bill tracking and made sure we were up to date as events changed quickly; to the MNA team who supported last minute action alerts or research requests; to the MNA Board of Directors who engaged thoughtfully on policy issues; and finally, to Todd Wilson, chair of MNA’s Public Policy Council – and the entire Council for your wisdom and guidance during an extraordinarily busy Session.
Together we are a force for good!
Liz, Executive Director