Issues to consider in reviewing Texas legislative proposals that affect nonprofits
The 84th Texas Legislature, Regular Session, will be called to order on January 13, 2015, but already hundreds of proposed bills have been pre-filed by sponsors in the House and Senate. About 6,000 bills will be filed during the session. The challenge becomes how to sort through them and identify the bills that directly affect the nonprofit sector and the interests of community leaders, volunteers and those who support community-based organizations, statewide associations and foundations.
A periodic Texas Legislature Summary will be posted here until the session ends in June 2015, and proposed bills and this writer’s analysis will reflect the following factors:
Issues of concern:
• Whether a proposed bill strengthens nonprofit organizations’ viability under Texas law or unduly burdens or threatens their status;
• Whether the legal liability of nonprofit board members, officers, staff or volunteers is increased;
• Whether current “charitable immunity” and “good faith” legal protections under Texas law remain in place;
• Whether laws governing nonprofits are justified, understandable and based on reasonable public policy concerns;
• Whether nonprofit advocacy rights are protected;
• Whether ongoing nonprofit organization operations, compliance and finances are complicated by new laws or governmental regulations; and
• Whether nonprofit organization reporting, disclosure and accountability requirements remain reasonable and balanced.
Lessons learned:
Participating in the Texas legislature process for more than 20 years has yielded a perspective about the legislative policymaking and government regulation of nonprofit organizations:
• Many legislative and regulatory proposals have unintended consequences for nonprofit organizations. Legislators and their staffs are generally uninformed about the real operations of nonprofits and how they are different from businesses or government agencies.
• Most “reform” proposals mean more reporting, compliance and governance time and administrative expense for nonprofits, which then may be judged harshly if their administrative and operations expenses consume too large a percentage of their total budget.
• Volunteer board members and other good people must not be discouraged by lengthy, confusing or threatening governmental regulations that make service risky and enhance their personal legal liability. Criminal enforcement penalties attached to reform legislation can frighten informed and qualified leaders who otherwise might have served on a board.
• One size does not fit all. Many “reform” proposals are intended to cure mis-steps and excesses of large nonprofits or national associations. Sadly, reforms often land hard on good people doing good work in local communities across America.
• The evolving social enterprise movement is composed of innovators and risk-takers who are investing in new ideas, new markets, and new forms of nonprofit operations based on a business model and revenue-based sustainability. Nonprofits increasingly partner with businesses and government agencies to facilitate beneficial programs and new ideas. Innovative operations and leaders should be given breathing room by government regulators.
• Complex governmental regulations will discourage start-ups and the efforts of good people with good ideas who seek to advance our society and their communities. Every beneficial and acclaimed cause, movement, charitable institution, or nonprofit organization probably started with one person, with one idea, in one community. It then grew and grew with hard work and now serves the common good. Government policies that affect the nonprofit sector should preserve an environment that encourages every citizen and group to engage in good works.
By Richard Meyer