2015 Texas Legislative Summary for nonprofits – “60th day” report

With more than 6,000 bills filed by Texas legislators by the filing deadline, any observer attempting a snapshot of the issues ahead in the coming weeks will need a wide-angle lens. There is a lot to read and understand, no matter what your area of interest.

Nonprofit organizations, state associations and foundations are affected by dozens of proposed bills, directly or indirectly. The March 13, 2015 SUMMARY OF ISSUES AFFECTING NONPROFIT ORGANIZATIONS is available here and will be updated regularly through the June adjournment of the 84th regular session and after. Share it with your colleagues and friends and subscribe to receive updates by clicking the Subscribe box on this page.

Rather than a needle-in-the-haystack approach, it is useful to review groups of bills and issues that have surfaced:

Volunteers, first-responders and good Samaritans deserve and get respect and attention in proposed bills

Good people who donate goods or their time to community nonprofit organizations are currently given certain immunity from legal liability. Several bills provide that organizations sponsoring volunteer activities would also be covered by immunity under the law, and persons officiating athletic competitions or other youth competitions would have the same. The proposals generally extend the existing Texas volunteer immunity statute, Chapter 84 of the Civil Practices and Remedies Code, to some new group, situation or venue.   See the SUMMARY section entitled Limiting Legal Immunity.

“Dark money” legislation makes a repeat appearance

Legislators and activist groups who wore themselves out in the 2013 legislative session debating so-called “dark money” were hardly finished when Governor Perry vetoed SB 346. Following came other court challenges directed at Texas Ethics Commission agency rules covering the same ground as SB 346. The issue is the limits of advocacy and political activity of Section 501(c)(4) organizations and whether state law can be crafted to treat such groups as political committees subject to disclosure and reporting requirements of the Texas Elections Code. Looming above these Texas controversies is a substantial body of federal constitutional issues unsettled since the U.S. Supreme Court’s Citizens United opinion, along with proposed I.R.S. rulemaking focused on 501(c)(4) organizations (rules withdrawn after a nationwide firestorm of objections), and other federal court litigation. The focus should be to ensure that community-based volunteer organizations are not inadvertently pulled into a regulatory realm of cumbersome political committee compliance and reporting or are subjected to the onerous criminal or civil penalties linked to technical violations of the Elections Code. See HB 37, 38 and 3373 in the SUMMARY and read about the 2013 “dark money” debates here.

Special-purpose nonprofit corporations for special constituent groups

Although the Texas Nonprofit Corporation Law (Chapter 22, Bus.Org.Code) is the template for creation of nonprofit entities, special groups that have a legislator’s ear can seek to tailor a special-purpose nonprofit corporation to suit some particular need or benefit. For example: a corporation to develop and commercialize technologies chartered by a university with partner institutions (HB 590); a charitable hospital corporation that might own or manage a captive insurance company; further expansion of the definition of a nonprofit community business organization as a nonprofit entity created by other laws (HB 3420), or; special fundraising privileges for a charitable organization attached to a National Football League team (HB 975). The concern is that too many other types of nonprofit entities should not be authorized across the Texas statutes and outside Chapter 22, lest a parallel universe of special-purpose corporations and statutes becomes too varied.

Verifying the employment eligibility of employees

If your organization is a grantee of state funds or has a contract with any state or local government agency, you may already be familiar with E-Verify, the federal government’s online system to verify the employment eligibility of new hires. Texas legislators love E-Verify and appear to want every employer to use it. A dozen bills are filed requiring E-Verify use for employers that have a government agency grant, or a contract, and also including subcontractors and vendor employees in some bills. How state agency overseers of this quantity of employer compliance would handle all this personal information—most of it confidential—is never explained in the bills. See SUMMARY section entitled Nonprofit Board Governance.

And finally, the dogs that didn’t bark

It’s equally important to note what bills and issues popular in the past have not re-appeared in the 2015 session:

  • Bills extending government agency open meetings and open records laws and related compliance regulations to certain nonprofit organizations
  • Detailed regulatory and compliance requirements aimed at property owner associations (POAs) or condominium owner associations (COAs) and their boards that inadvertently pull in all nonprofit organizations
  • Increased state oversight of charitable raffles, auctions and other regulated fundraising (bingo, poker runs)
  • “PILOT” legislation, directed to address payments-in-lieu-of-taxes, which are local public agency fees, assessments or charges imposed on tax-exempt entities without calling them taxes.

Read the entire 60th day legislative summary here.

Stay tuned to www.NonprofitLawandPolicy.com, stay informed and stay involved during this legislative session for the benefit of your fellow citizen leaders, board members, colleagues, volunteers and their organizations, who are all doing good works in our Texas communities.

© 2015 Richard W. Meyer, All Rights Reserved


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