What Does the 2020 Election Mean for Nonprofits?

9 minute read
Last updated: November 23, 2020

David Heinen, Vice President for Public Policy and Advocacy

With the results of the 2020 election dominating news coverage and social media, you may be wondering what the election results mean for North Carolina nonprofits. To help answer your questions, here is an initial analysis of the nonprofit implications of the election results.

Highlights of election results in North Carolina

More than 5.5 million North Carolinians voted in the 2020 election, far exceeding North Carolina’s voter participation in any previous election. All ballots have been counted, but there will be a statewide recount for the razor-thin race for Chief Justice of the North Carolina Supreme Court.

In federal elections, Senator Thom Tillis (R) was re-elected, and three of North Carolina’s 13 members of the U.S. House of Representatives will be new next year. These include:

  • Congresswoman-elect Deborah Ross (D), a Raleigh attorney who was a champion of many nonprofit issues during her decade of service in the NC House of Representatives;
  • Congresswoman-elect Kathy Manning (D), a Greensboro attorney with extensive background in nonprofit board service; and
  • Congressman-elect Madison Cawthorn (R), a Hendersonville business owner who will become the youngest member of Congress.

At the state level, the overall composition of the state legislature and executive branch remain largely unchanged, although there will be quite a few new faces in the NC General Assembly. The NC House of Representatives will have 22 new members (out of 120 total representatives) in 2021, and 13 of the 50 state senators will be new next year.

Governor Roy Cooper (D) was re-elected, receiving the most votes of anyone on the ballot in North Carolina this year. The two members of the Council of State with regulatory authority over nonprofits – Secretary of State Elaine Marshall (D) and Attorney General Josh Stein (D) – also won re-election, although Attorney General Stein’s race was very close. The three new members of the Council of State will be Lieutenant Governor Mark Robinson (R), Labor Commissioner Josh Dobson (R), and Superintendent of Public Instruction Catherine Truitt (R).

Prior to the election, Democrats held a 6-1 majority on the North Carolina Supreme Court. That majority will be reduced to a 4-3 or 5-2 margin, as Republicans won two of the three seats on the ballot this year. The race for Chief Justice was too close to call with Paul Newby (R) leading incombent Cheri Beasley (D) by just 409 votes out of nearly 5.4 million ballots with a recount pending. You can keep track of the county-by-county details of the recount with live online updates from the NC State Board of Elections.

In the Presidential election, President Donald Trump holds a narrow lead over former Vice President Joe Biden in North Carolina.

Nationally, President-elect Biden won a majority of electoral votes and will become the next President on January 20, 2021. Democrats are likely to retain control of the U.S. House of Representatives, albeit with a smaller majority than they enjoyed in 2019 and 2020. Republicans will probably retain control of the U.S. Senate, although there is a small chance that Democrats could create a 50-50 tie if Democratic candidates were to win two runoff elections in Georgia in early January (since Vice President-elect Kamala Harris would be the tie-breaking vote in the Senate).

Implications of the election on federal policy

With the U.S. Senate and U.S. House of Representatives likely to remain divided along partisan lines, it will be difficult for Congress to pass major legislation for the next two years. This means that nonprofits should not expect Congress to make significant changes to federal tax and employment laws, health care policy, or funding for federal programs.

Now that the election is in the past, though, Congress may begin to reconsider negotiations on much-needed additional COVID-19 relief. The Center and other nonprofits continue to advocate for Congress to act as quickly as possible to pass meaningful relief for nonprofits, individuals, businesses, and communities. Specifically, nonprofits are asking Congress to:

  • Improve the Paycheck Protection Program (PPP). Many nonprofits would greatly benefit from a second round of forgivable PPP loans and simplification of the loan forgiveness process for borrowers.
  • Strengthen the universal charitable deduction. The CARES Act capped the temporary universal charitable deduction at $300 per taxpayer and only allows taxpayers to use this in 2020. The Center and other nonprofits continue to ask Congress to make meaningful improvements to the universal charitable deduction by significantly increasing the cap and extending it through 2021.
  • Extend unemployment insurance (UI) relief. The CARES Act only provides federal funds to cover 50% of self-insured nonprofits’ COVID-related UI costs (the state is covering the other 50% of these costs for self-insured nonprofits in North Carolina). Nonprofits are asking Congress to cover the other 50% and to extend this UI relief into 2021. Nonprofits are also seeking extension of the Pandemic Unemployment Assistance program – which provides UI benefits to self-employed individuals and laid-off or furloughed workers at small and religious nonprofits that are exempt from UI requirements – and restoration of the $600 per week supplemental UI benefits for most laid-off or furloughed workers.
  • Expand the Employee Retention Tax Credit (ERTC). The CARES Act created the ERTC as a refundable tax credit for nonprofits and businesses that maintained their employees during the pandemic. Relatively few nonprofits have used the ERTC, since employers that received PPP loans were ineligible for this tax credit. It is quite possible, however, that Congress could strengthen the ERTC by significantly increasing the amount of the credit for each employee and by allowing nonprofits to use both the PPP and the ERTC for different periods. This could provide significant new relief for many nonprofits that have sustained financial losses during the pandemic.
  • Provide additional aid for state and local governments. Nonprofits are asking Congress to provide more federal support for state and local governments. This additional funding is critical to help state and local governments continue to provide essential services despite growing revenue shortfalls. Thus far, the House has supported more funding for state and local governments, but the Senate has opposed it.
  • Appropriate federal dollars to help nonprofits and communities. Discussions around additional relief have included proposals for a wide range of appropriations, including increased funding for the Supplemental Nutrition Assistance Program (SNAP), food banks, arts and humanities nonprofits, domestic violence organizations, legal services nonprofits, hospitals, mental health service providers, and the Community Development Block Grant.

Ultimately, the biggest federal policy shifts resulting from the election may be in the Executive Branch. It is quite likely that President-elect Biden will changes some of the current administration’s policies that affect nonprofits. Most notably:

  1. There is a good chance that the Biden Administration will rescind President Trump’s recent executive order that limits the ability of federal contractors and grantees to provide workplace trainings on equity, diversity, and inclusion. This executive order creates many serious problems for nonprofits, so its revocation would be welcome.
  2. The Biden Administration will also presumably bring an end to the White House’s efforts to undermine the Johnson Amendment, the provision in Section 501(c)(3) of the Internal Revenue Code that protects charitable nonprofits from being caught up in partisan politics. The White House’s support for nonprofit nonpartisanship would be great news for the nonprofit sector.
  3. Under the Biden Administration, the U.S. Department of Labor could be more generous to workers – and less deferential to employers – in its rulemaking on matters like overtime pay and worker classification.

Implications of the election on state policy affecting nonprofits

After the election, the political dynamics in state government remain essentially the same as they have been the past two years. The Republican majorities in the NC Senate and NC House of Representatives will not have enough votes to override Governor Cooper’s vetoes of major legislation that does not have bipartisan support. This ongoing gridlock has several implications on issues that affect the nonprofit sector:

  1. North Carolina’s state and local governments will probably have a significant revenue shortfall next year, and it is unlikely that legislators will make significant tax code changes to make up for this revenue. That could lead policymakers to consider new taxes on nonprofits – such as limits on nonprofit sales tax refunds, partial elimination of property tax exemption, or new payments in lieu of taxes. It also could force legislators and/or state agencies to make spending cuts, including cuts to state grants to nonprofits and state investment in critical safety net programs.
  2. It will be challenging for the General Assembly and Governor Cooper to agree on a new state budget. The state has operated without a new state budget in FY2019-20 and FY2020-21, with legislators simply making tweaks to the previously-approved budget each year. This process means that policymakers have fewer options for making changes to state spending to address population shifts and changing needs in communities throughout the state.
  3. Currently, more than 500,000 North Carolinians lack health care because their incomes are too high to qualify for Medicaid, but they do not earn enough income to qualify for health coverage through the Affordable Care Act health exchange. Governor Cooper has made Medicaid expansion – which would close this health insurance coverage gap – one of his top policy priorities the past few years, but the leadership in the General Assembly has shown little interest in considering it. Medicaid expansion is a critical policy issue for many nonprofits. With ever-rising health care costs, North Carolinians in the coverage gap are turning more and more to nonprofits to meet many of their basic needs, such as health care, food, housing, and childcare. Unfortunately, it is unlikely that the state will make progress on this issue during the next two years as the Governor and legislature remain at an impasse.
  4. Nonprofits could find success advocating for policy solutions that have bipartisan support. It is likely that legislative leadership will look to work across party lines on some substantive issues that would benefit North Carolina’s communities. Since Governor Cooper cannot run for re-election in 2024, legislators may also be more willing to work with him on a variety of policy issues that aren’t political divisive, since there may be less concern about Governor Cooper getting popular policy “wins.” The Center is working on developing a policy agenda that will provide legislators an opportunity to make meaningful, bipartisan policy changes that will help nonprofits operate more effectively to achieve their mission and improve North Carolina’s communities. Look for more details soon.

One other implication of the election is that the Republican-controlled General Assembly will have the opportunity to draw North Carolina’s congressional and state legislative districts for the next decade, since the decennial redistricting process takes place in 2021. The Center and other nonprofits have long advocated for legislators to replace North Carolina’s current system of gerrymandering districts for political gain with an independent redistricting process. It is unlikely that legislators will make this change in time for next year’s redistricting.

Overall implications for nonprofits

Aside from the impact on specific policy proposals, there are four important actions steps that nonprofits should take after the 2020 election:

  1. Now is a great time for nonprofits to get to know your new representatives in Congress, the state legislature, your county board of commissioners, and other elected offices that are important to your organization’s work. It is important for elected officials to understand the important work that your nonprofit does in your community so they can make decisions that will improve the lives of the people your nonprofit serves.
  2. Next year will provide an excellent opportunity for nonprofits to focus on policy initiatives at the local level. Realistically, there is a good chance that the gridlock in Congress and the state legislature will mean little or no progress will be made on major policy issues in the early part of 2021. For many nonprofits, the decisions made by local elected officials - such as investment in affordable housing, transportation priorities, protection of local waterways, or arts funding – have the greatest impact on their organization’s work. Advocacy on local issues is a great way for nonprofits to have a meaningful impact on policies that will improve lives in their communities.
  3. This fall’s election showed the power of nonprofits’ nonpartisan voter registration, voter education, and get-out-the-vote work. These efforts helped produce a record high – 75.32% of registered voters cast their votes during Early Voting, on Election Day, or through mail-in absentee ballots. Overall, a record 5.5 million North Carolinians voted in this year’s election. Even if many of the individual races didn’t turn out the way you would have liked, you should celebrate this high level of civic engagement as a tremendous victory for our democracy – and one that nonprofits played a significant role in achieving!
  4. Every nonprofit should find ways to use its voice to advocate for its mission. As elected officials, the media, and everyday North Carolinians turn their attention away from the election in the coming days, weeks, and months, there will be a great opening for nonprofits to begin to share stories about the important work they are doing every day and the ways that decision-makers can help their organizations make an even bigger difference in their communities.Look for more resources from the Center to help your nonprofit get started in advocating for your mission – or strengthening your existing advocacy work – in the coming months.
Advocacy & Civic Engagement