2012 Colorado Legislative Session Report
Colorado Nonprofit Association worked on several key bills for Colorado nonprofits during the 2012 Colorado regular and special legislative sessions. Aponté and Busam, a political consulting firm, represents us at the Capitol to advance our positions on legislation.
BUSINESS AND CHARITABLE REPORTING
HB 12-1236 Modify Regulation Charitable Solicitations Actively Support 4/26/12 Signed by Governor
PRIMARY SPONSORS Representative Ken Summers (R–Lakewood); Senator Cheri Jahn (D–Wheat Ridge)
SUMMARY The bill gives a nonprofit an automatic three-month extension on its annual Colorado Charitable Solicitations Act (CCSA) report if the nonprofit has already requested an extension on IRS Form 990 (or 990-EZ, 990-PF, etc.).
The law makes additional changes to specific CCSA reporting exemptions and disclosure requirements as follows:
• Exempts persons who exclusively raise funds to directly benefit a named individual. • Clarifies that grant writers are not required to register separately from the organization as paid solicitors unless their compensation is based on a percentage of the funds they raise. • Requires that paid solicitors state their full name and if contributions are not tax deductible prior to securing a donation over the telephone. • Clarifies that only monetary contributions must be deposited in a charity’s bank account within two business days by a paid solicitor.
RATIONALE FOR SUPPORT Many nonprofits currently have to apply for extensions on both their Form 990 and CCSA reports because necessary financial information from their Form 990 or their financial audits is not ready yet. With this change, nonprofits would not have to request a CCSA extension if they have already requested an extension from the IRS. This makes it easier for the charity to meet its deadline without an additional step and reduces the number of extensions processed by the Colorado Secretary of State’s office.
The other changes simplify reporting by exempting fundraising efforts that only benefit an individual because these efforts do not provide a charitable benefit to the public. Also, the new law exempts grant writers from registering as paid solicitors unless they are compensated based on a percentage of the funds they raise. Paid solicitors must also give a full name and state if contributions are not tax deductible prior to securing a contribution over the telephone. Finally, paid solicitors must deposit monetary contributions into a charity’s bank account within two days of receipt but this requirement does not apply to other kinds of contributions.
Serving nonprofits. Strengthening communities. 455 Sherman Street | Suite 207 | Denver, Colorado 80203-4494 | (303) 832-5710 | (800) 333-6554 | (303) 894-0161 | www.ColoradoNonprofits.org
ASSOCIATION ACTIONS • Worked directly with the Secretary of State’s office and the bill sponsors to draft the bill • Testified in support of the bill • Actively lobbied legislators on the bill • Encouraged members to sign on in support
LINKS Bill to streamline reporting by Colorado nonprofits
SB 12-123 Secretary of State Online Filing System Actively Support 05/11/2012 Signed by Governor
PRIME SPONSORS Senator Scott Renfroe (R–Greeley), Representative J. Paul Brown (R–Ignacio)
SUMMARY The bill requires the Secretary of State to develop and implement enhancements to online business filing systems. Specifically, the enhancements should allow users to: • associate multiple business records in one account; • file multiple documents at one time; • pay for multiple filings at the same time; and • at the discretion of the Secretary: store payment information, view balances, view transaction history, and add money to accounts.
This also includes enhancements to the systems for filing CCSA reports and reporting for charitable bingo and raffle licenses.
RATIONALE FOR SUPPORT Although there are upfront costs to make these changes, it should make it easier for nonprofits to make and pay for required business filings in one visit from a single account (e.g. CCSA filings, periodic reports, applications for trademarks, bingo/raffle licenses). Nonprofits should also be able to complete CCSA filings more easily after updates to the CCSA filing system and the public should be able to access information on charities in a user-friendly way. Overall, these changes should save time and money for both businesses and the Secretary of State’s office.
ASSOCIATION ACTIONS • Actively lobbied legislators on the bill • Testified in support of the bill
LINKS Ed Sealover. Suite deal: Software may streamline Colorado business filings. Denver Business Journal. May 4, 2012.
Senator Scott Renfroe testifying for SB 12-123 Serving nonprofits. Strengthening communities. 455 Sherman Street | Suite 207 | Denver, Colorado 80203-4494 | (303) 832-5710 | (800) 333-6554 | (303) 894-0161 | www.ColoradoNonprofits.org
SJM 12-003 Memorialize Congress to Modify Certain Reporting Procedures for Small Nonprofits 5/09/12 House Third Reading Passed Actively Support
PRIME SPONSORS Senator Kevin Lundberg (R–Berthoud); Representative Brian DelGrosso (R–Loveland)
SUMMARY Memorializes Congress to amend 26 U.S.C., Sec. 6033 to require timely notices from the IRS for reminding 990-N filers when their annual filing deadline has passed, and for reminding nonprofits of impending revocation if they fail to file for a third consecutive year.
RATIONALE FOR SUPPORT As amended, SJM 12-003 calls on Congress to amend Pension Protection Act as follows:
Provide timely notices for failing to file on time and upon impending revocation. According to a 2011 analysis by Guidestar.org, 75 percent of revoked organizations have annual budgets less than $25,000. This would ensure clarity about required IRS notices and help ensure nonprofits know the law and how to prevent revocation.
Require suspension, not revocation, of tax-exempt status for failing to file for three consecutive years. About 400,000 nonprofits nationwide are on the IRS revocation list (8,500 in CO) and nearly 9,000 have applied for reinstatement to date. Suspension would ensure nonprofits could restore tax-exemption without having to file for a determination of tax-exempt status all over again. This would make it easier to cure suspension and clarify which organizations are on the suspension list.
ASSOCIATION ACTIONS • Actively lobbied legislators on the bill • Amended the resolution language • Testified in support of the bill
LINKS Senator Kevin Lundberg speaks about SJM 12-003
ECONOMIC DEVELOPMENT
HB 12-1241 Concerning Enterprise Zone Designations Actively Support 06/06/12 Signed by Governor
PRIME SPONSORS Representative Mark Ferrandino (D-Denver); Senator Rollie Heath (D–Boulder)
Serving nonprofits. Strengthening communities. 455 Sherman Street | Suite 207 | Denver, Colorado 80203-4494 | (303) 832-5710 | (800) 333-6554 | (303) 894-0161 | www.ColoradoNonprofits.org
SUMMARY As amended, creates an Enterprise Zone Review Task Force from 2012 to 2014 to ensure that enterprise zone tax credits achieve intended economic development objectives and that designations are reviewed every five years to ensure they meet existing criteria. The original bill would have required that designated enterprise zones meet two, rather than one, of the following criteria: high unemployment, slow population growth, or per capita income below the state average.
Currently, donors to designated enterprise zone projects - which include nonprofits providing economic and community development services and homeless assistance - receive tax credits for their donations. The Association supported further amendments to require nonprofit representation on the task force.
RATIONALE FOR SUPPORT Taxpayers who donate to these projects can receive tax credits of 25% of the cash amount donated (12.5% for in-kind). More than 400 Enterprise Zone Contribution Projects statewide are integral to the implementation of enterprise zone plans and accomplishment of the program’s objectives.
A December 2011 Association survey of nonprofits participating in the Enterprise Zone Contribution Project program found that about 87% of the ninety respondents felt that donors have given more to their projects because of enterprise zone tax credits. 81% felt that their ability to deliver services would be negatively impacted if their donors could not receive enterprise zone tax credits.
Since this program supports the ability of nonprofits to serve their communities, 1241 ensures they can be part of discussions to address concerns about the program and improve its overall effectiveness.
ASSOCIATION ACTIONS • Actively lobbied legislators on the bill • Testified in support of the bill
LINKS Christopher N. Osher. Colorado Lawmakers OK Task Force to Scrutinize Enterprise Zone Tax Breaks. Denver Post. May 16, 2012.
Ed Sealover. The strange case of business-backed enterprise-zone reform. Denver Business Journal. Feb. 23, 2012.
OEDIT Enterprise Zone Information
HB 12-1154 Regional Approach Economic Development Actively Support 04/20/2012 House Appropriatins Commiteee Postponed Indefinitely
PRIME SPONSORS Representative Don Coram (D–Montrose); Senator Cheri Jahn (D–Wheat Ridge)
Serving nonprofits. Strengthening communities. 455 Sherman Street | Suite 207 | Denver, Colorado 80203-4494 | (303) 832-5710 | (800) 333-6554 | (303) 894-0161 | www.ColoradoNonprofits.org
SUMMARY This bill directs the Office of Economic Development and International Trade (OEDIT) to support regional economic development partnerships. These partnerships must include all necessary regional stakeholders, including nonprofits, and establish 8 to 12 member regional partnership boards to oversee implementation and support of regional economic development plans. The bill also creates a state regional economic development council consisting of representatives of each regional partnership.
RATIONALE FOR SUPPORT The bill sets up a regional structure to oversee implementation of regional economic development. Through the state regional economic development council, it allows for coordination between regions and collaboration with OEDIT. The bill also requires that nonprofits be among the stakeholders involved in regional economic development partnerships.
ASSOCIATION ACTIONS • Actively lobbied legislators on the bill
SB 12-005 OEDIT Business Retention and Expansion Program Actively Support 5/9/2012 House Second Reading - Died on House Calendar
PRIME SPONSORS Senator Linda Newell (D–Littleton); Representative Tom Massey (R–Poncha Springs)
SUMMARY: SB 12-005 focuses the role of the Colorado Office of Economic Development and International Trade’s (OEDIT) to support key aspects of business retention and expansion including the following: • facilitating communication and strengthening relationships between economic development partners and efforts throughout the state; • conducting trainings and serving as a clearinghouse of resources and data to support local efforts to attract and retain businesses; • facilitating collection of and access to data on business including needs and growth potential; • developing an early detection and response system to businesses’ needs and challenges; and • developing procedures for expeditious responses to businesses’ needs and challenges.
RATIONALE FOR SUPPORT: SB 12-005 aligns economic development efforts throughout the state with the Governor’s Colorado Blueprint created by Executive Order D 2011-003. The Association supported an amendment to specifically include nonprofits in the definition of business in the bill.
ASSOCIATION ACTIONS • Actively lobbied legislators on the bill • Testified in support of the bill
Serving nonprofits. Strengthening communities. 455 Sherman Street | Suite 207 | Denver, Colorado 80203-4494 | (303) 832-5710 | (800) 333-6554 | (303) 894-0161 | www.ColoradoNonprofits.org
SB 12-144 Office of Economic Development Industry Strategy Actively Support 05/04/2012 House Appropriations Committee Postponed Indefinitely
PRIME SPONSORS Senator Rollie Heath (D–Boulder); Representative Ken Summers (R-Lakewood)
SUMMARY This bill directs the Office of Economic Development and International Trade (OEDIT) to work with key industry network groups to develop a strategy for growing key industries in the state. A working group is tasked with developing and implementing a 3-year business plan to grow its key industry and this business plan will be incorporated into the office's key industries strategy. The office must annually report its progress to the general assembly.
RATIONALE FOR SUPPORT The bill develops a key industry based strategy for creating jobs and fostering a competitive environment; it helps align local, state and regional strategies for these industries, and provides state resources to help support the efforts of industry network groups. Other industries can be added upon review of state economic data even though the current list of industries is already defined. As amended, expands definitions of business to specifically include nonprofits.
ASSOCIATION ACTIONS • Actively lobbied legislators on the bill • Supported amendments to the bill • Testified in support of the bill
LINKS OEDIT Update of Blueprint Execution
Ed Sealover. House Republicans, OEDIT spent session squabbling. Denver Business Journal, May 11, 2012.
OTHER BILLS OF INTEREST
Unemployment Insurance Bills
HB 12S-1002 – Unemployment Insurance Revenue Bonds 06/08/2012 Signed by Governor
PRIME SPONSORS Representative Larry Liston (R-Colorado Springs)/Representative Dan Pabon (D–Denver); Senator Cheri Jahn (D-Wheat Ridge)
SUMMARY Allows the newly formed Division of Unemployment Insurance (see HB 12-1120) to also issue revenue bonds on behalf of the unemployment insurance program - in addition to Colorado Housing and Finance Authority (CHFA) - to stabilize unemployment insurance rates paid by employers. Prior to a bond issuance, the bill Serving nonprofits. Strengthening communities. 455 Sherman Street | Suite 207 | Denver, Colorado 80203-4494 | (303) 832-5710 | (800) 333-6554 | (303) 894-0161 | www.ColoradoNonprofits.org
requires that the Governor, Treasurer , and Executive Director of the CDLE certify that bonds are the most cost-effective means to repay federal loan balances, stay in compliance with federal law, and maintain adequate balances in the UI trust fund.
In the event of a bond issuance, this bill also allows special assessments charged to employers for bond principal repayment to be deposited in the UI Trust Fund (i.e., the Unemployment Compensation Fund). By crediting employer assessments to the UI Trust Fund, not only will this allow repayment of federal borrowing and prevent paying higher federal UI tax rates, but the experience rating of employers paying these assessments should be improved.
HB 12-1127 Unemployment Insurance Rate Reduction New Employers 03/19/2012 Signed by Governor
PRIME SPONSORS Representative Larry Liston (R-Colorado Springs); Senator Suzanne Williams (D-Aurora)
SUMMARY Reduces the premium rate for unemployment insurance for new employers to the lowest rate of 1.7 percent unless they have benefits charged from a previous business entity. Otherwise, their premium would be between 2.96 percent and 4.65 percent of the first $11,000 of an employee’s wages.
Last year, HB 11-1288 restructured the UI rate schedule to pay down federal borrowing and prevent premium rate spikes during economic downturns when employers experience high rates of layoffs. Employer premium rates are higher when the reserve ratio of the UI Trust Fund is low and lower when the reserves are high. 1127 prevents startup businesses from paying higher rates immediately when they do not have a history of layoffs.
Links Ed Sealover. New Law to Save Colorado Employers $120 a Worker. Denver Business Journal. June 8, 2012. Ed Sealover. More UITF Reform Sought in 2012 Legislature. Denver Business Journal. February 17, 2012. Aldo Svaldi. Colorado Sells Bonds to Restock Unemployment Insurance Fund. July 2, 2012.
Tax Checkoffs The Governor signed the following bills establishing or maintaining voluntary check-off contributions on state tax forms:
Extensions (through 2016) • HB 12-1050 Extend Nongame & Endangered Wildlife Tax Checkoff (Wilson; Nicholson) • HB 12-1096 Extend Make-A-Wish Foundation Of CO Tax Checkoff (A. Kerr; Brophy)
Queued (appears when another checkoff is not renewed or does not raise the $75,000) • HB 12-1006 Red Cross Colorado Tax Checkoff (Todd; Spence) • HB 12-1290 Create CO Healthy Landscapes Tax Checkoff (Brown; Tochtrop)
Serving nonprofits. Strengthening communities. 455 Sherman Street | Suite 207 | Denver, Colorado 80203-4494 | (303) 832-5710 | (800) 333-6554 | (303) 894-0161 | www.ColoradoNonprofits.org
Other • HB 12-1104 CO Cancer Fund Tax Checkoff Name Change (Swerdfeger/Giron) Changes the name of the Colorado Breast and Women's Reproductive Cancers Fund checkoff program to the Colorado Cancer Fund.
• SB 12-055 9 Health Fair Checkoff (White/McCann) 9 Health Fair Fund did not raise enough to remain on the form for 2011; places 9HealthFair back into the queue. Links Checkoff Colorado
Charitable Giving
HB 12-1117 Local Government Allow Charitable Giving From Motorists 03/22/2012 Signed by Governor
PRIME SPONSORS Representative David Balmer (R-Centennial); Senator Jeanne Nicholson (D-Blackhawk)
SUMMARY This bill allows local governments to grant permission to charitable organizations to solicit donations on public roadways. The area of solicitation must be wholly within the jurisdiction of the local government providing the permission. Permission cannot be granted more than five times per year.
Benefit Corporations
SB 12S-003 Benefit Corporations 05/14/2012 House Committee on State, Veterans, & Military Affairs Postpone Indefinitely
PRIME SPONSORS Senator Bob Bacon (D-Fort Collins); Representative Tom Massey (R-Poncha Springs)
SUMMARY This bill establishes the requirements for a corporation to be created as, or elect to become, a benefit corporation. Electing to become or terminate benefit corporation status requires a minimum status vote of two-thirds of the votes that all shareholders of a particular voting class or series are entitled to cast.
A benefit corporation must promote a general public benefit meaning dedication to a material positive impact on society and the environment in terms of the corporation’s business and operations as measured against a third-party standard. The corporation may identify other specific public benefits in its articles of incorporation including serving low-income populations, promoting economic opportunity, preserving the environment, improving health, promoting arts and sciences, increasing the flow of capital to entities with a public benefit purpose, and conferring any other benefit on society and the environment.
Also, it requires that the board elect a benefit director to prepare an annual benefit report explaining whether Serving nonprofits. Strengthening communities. 455 Sherman Street | Suite 207 | Denver, Colorado 80203-4494 | (303) 832-5710 | (800) 333-6554 | (303) 894-0161 | www.ColoradoNonprofits.org
or not the corporation acted in accordance with its stated purposes and whether or not directors and officers complied with their statutory duties.
The duties of directors and officers, and the specific or public benefit purposes may only be enforced in a benefit enforcement proceeding. A benefit enforcement proceeding may be commenced or maintained only directly by the corporation or derivatively by a shareholder, director, or a person or group that owns at least 5% of equity interests in an entity of which the benefit corporation is a subsidiary; or other persons specified in the articles of incorporation or bylaws.
Officers of the corporation are not personally and financially liable if they perform their duties according to law and if the corporation fails to create or pursue state general and specific public benefits.
A shareholder is also entitled to dissent and obtain payment of the fair market value of the shareholder's shares in the event of a corporation merger, conversion, or election to become or cease to be a benefit corporation.
If a benefit corporation is also a charitable organization and intends to solicit contributions other than the offer or sale of a security of the benefit corporation, it must comply with the obligations of the "Colorado Charitable Solicitations Act" (CCSA). Further, the offer or sale of a security of a benefit corporation is not a solicitation for purposes of the CCSA if it complies with the "Colorado Securities Act".
HB 12S-1007 Concerning Benefit Corporations 05/14/2012 House Committee on State, Veterans, & Military Affairs Postpone Indefinitely
PRIME SPONSORS Representative Claire Levy (D-Boulder); Senator Ellen Roberts (R-Durango)
SUMMARY Defines benefit corporation as a corporation that includes, in its listed purposes in its articles of incorporation, additional purposes to provide any general or specific benefit for the public or for its employees, suppliers, or customers. The corporation shall also state that it is a benefit corporation on any subsequent amendments to its articles of incorporation and on each issued certificate of stock.
The bill also requires that amendments to add or modify a statement of the entity’s status as a benefit corporation be approved by two-thirds of all votes entitled to be cast by shareholders or of each voting group entitled to vote separately.
Allows shareholders to dissent and obtain payment of the fair value of their shares in the event of a corporation becoming a benefit corporation by merger or by amendments to the articles of incorporation.
Specifies that the reporting requirements of the Colorado Charitable Solicitations Act (CRS Title 6, Article 16) apply if the benefit corporation falls under the definition of “charitable organization” under CRS 6-16-103 (1) and intends to solicit contributions in Colorado directly or indirectly. These reporting requirements apply only if the Secretary of State requires them to by rule.
Clarifies that the offer or sale of a security of a benefit corporation is not a charitable solicitation provided it Serving nonprofits. Strengthening communities. 455 Sherman Street | Suite 207 | Denver, Colorado 80203-4494 | (303) 832-5710 | (800) 333-6554 | (303) 894-0161 | www.ColoradoNonprofits.org
complies with requirements of the Colorado Securities Act (CRS Title 11, Article 51).
Links Ed Sealover. Failed Bill Doesn’t Benefit from Political Fervor. May 15, 2012. Ed Sealover. Benefit Corporations Proposal Back in Legislature. January 13, 2012.
For more information on these bills and others affecting nonprofits, contact:
Mark Turner, Manager of Public Policy, Colorado Nonprofit Association, (303) 813-4203, [email protected]
Serving nonprofits. Strengthening communities. 455 Sherman Street | Suite 207 | Denver, Colorado 80203-4494 | (303) 832-5710 | (800) 333-6554 | (303) 894-0161 | www.ColoradoNonprofits.org