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Serving Nonprofits. Strengthening Communities. 2016 Colorado Legislative Session Report

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2016 Colorado Legislative Session Report This report is a summary of key bills affecting Colorado’s nonprofit sector that we tracked during the 2016 legislative session. Special thanks to the firm of Aponté and Busam for representing us at the Capitol and to our Public Policy Committee, which provided invaluable guidance throughout the session. For more information, contact Mark Turner at (303) 813-4203 or [email protected] CHARITABLE GIVING AND FUNDRAISING HB 16-1089 Colorado Endowment or Institutional Fund Gift Tax Credit- SUPPORT Thanks to the bill sponsors! Rep. Dominick Moreno (D-Commerce City) and Sen. Chris Holbert (R- Parker). Summary: 1089 proposes a new tax credit of 25 percent of the value of a donation of cash, securities, or property to an endowment fund held by a Colorado-based nonprofit or community foundation. The maximum credit amount is $25,000. The credit is not refundable and can be carried forward up to five years. Donors claiming this tax credit cannot claim other state tax credits for the same donation. Implications for Nonprofits: We supported the creation of this endowment tax credit for several reasons: • It encourages increased charitable giving, allowing nonprofits and community foundations to support communities through sustained funding for programs and grant-making. • It introduces many donors to the option of giving to an endowment fund, which enables their gifts to grow in value over time. • It will help nonprofits benefit from generational wealth transfer by encouraging donors to make lifetime and estate gifts. Final Status: Passed the House Finance Committee on March 22. Postponed indefinitely by the House Appropriations Committee on May 5. Resources: • More information on the bill and laws in other states • Fiscal impact HB 16-1051 Forms to Transfer Vehicle Ownership upon Death Prime Sponsors: Rep. Kevin Van Winkle (R-Highlands Ranch) and Sen. Chris Holbert (R-Parker). Summary: 1051 authorizes the Department of Revenue to create a beneficiary designation form. Upon death of the vehicle owner, a named beneficiary can use the form to request ownership of the vehicle’s title. This request must be accompanied by the notarized form, an application fee, and proof of the vehicle’s owner’s death. This transfer of ownership is exempted from requirements of the Colorado Probate Code. Implications for nonprofits: Under Colorado law, probate court hearings are required if the net assets transferred upon an individual’s death exceed $64,000. An individual can use the form to bequest a vehicle to Serving nonprofits. Strengthening communities. 789 Sherman Street | Suite 240 | Denver, Colorado 80203-3530 | (303) 832-5710 | (800) 333-6554 | (303) 813-4210 | www.ColoradoNonprofits.org a nonprofit organization prior to death. This bequest would reduce the value of the individual’s assets. Final Status: The Governor signed this bill on March 23. Resources: Fiscal impact SB 16-016 Modifications to the Scientific and Cultural Facilities District (SCFD) Prime Sponsors: Reps. Dickey Lee Hullinghorst (D-Gunbarrel) and Polly Lawrence (R-Roxborough Park) and Sens. Pat Steadman (D-Denver) and Bill Cadman (R-Colorado Springs). Summary: Under current law, 0.1 percent of sales and use tax in the seven county metro area is allocated to SCFD to fund scientific and cultural organizations. The current tax is scheduled to expire on June 30, 2018 and is estimated to provide $61 million of revenues in FY ’17-18. SB 16-016 would submit a ballot question to voters in the area renewing the tax through 2030. Additionally, the bill makes the following key changes: • Allows Castle Rock and Larkspur to hold elections prior to 2025 to join SCFD. • Increases revenue allowed for SCFD’s administrative expenses from 0.75 percent to 1.5 percent. • Makes the following key changes for Tier 2 organizations: o Allows the SCFD board to consider income, attendance, and free days offered by Tier 2 organizations when determining distributions of funds. o Requires Tier 2 organizations to be in operation for seven years and demonstrate regional impact in their application for funding. • Makes the following key changes to Tier 3 organizations: o Disqualifies facilities from receiving Tier 3 funding if they already receive Tier 2 funding. o Requires that a facility be in operation for five years rather than three years. o Allows county cultural councils to consider a facility’s financial and organizational capacity to spend tax dollars to serve the public and achieve their organizational mission. • Makes the following changes to funding allocations for tiers (from Legislative Council): Current allocation First $38 million under Allocations above SB 016-016 $38 million Tier 1 65.5 percent 64.0 percent 57.0 percent Tier 2 21.0 percent 22.0 percent 26.0 percent Tier 3 13.5 percent 14.0 percent 17.0 percent Implications for nonprofits: SCFD funds arts, cultural, and scientific nonprofits of various sizes in the seven county metro area. If voters approve the ballot measure to renew SCFD, the program will continue through 2030 and provide an estimated $65 million in FY ’18-19. If voters do not approve the measure, then the tax and funding formula will end in 2018. Changes made by SB 16-016 will increase funding for SCFD’s administration, potentially expand the number of participating cities in Douglas County, and implement tighter criteria for funding of Tier 2 and 3 organizations. SB 16-016 also increases the overall funding percentages for Tiers 2 and 3 particularly of Serving nonprofits. Strengthening communities. 789 Sherman Street | Suite 240 | Denver, Colorado 80203-3530 | (303) 832-5710 | (800) 333-6554 | (303) 813-4210 | www.ColoradoNonprofits.org revenues in excess of $38 million. Final status: The Governor signed this bill on April 29. Resources: Fiscal impact CHARITABLE GAMING HB 16-1189 Bingo-Raffle License Regulation Prime sponsors: Rep. Cole Wist (R-Centennial) and Sen. Ellen Roberts (R-Durango). Summary: 1189 makes the following changes to licensure for charitable bingo and raffle games: • Requires an administrative review to occur within sixty days of denial of a bingo/raffle license. • Allows a licensee to manage more than five bingo/raffle licenses simultaneously. • Allows off-site use of equipment leased by a landlord of a bingo hall. • Allows a licensee to also award a consolation prize when a progressive prize is won. • Directs the Secretary of State to establish rules for when a license suspension can be overturned. Implications for nonprofits: 1189 gives bingo/raffle licensees more flexibility in use of equipment, awarding of prizes, and the number of licenses they may hold simultaneously. It also clarifies processes for administrative review of a denied license and for challenging suspension of a license. Final Status: The Governor signed this bill on April 15. Resources: Fiscal impact HCR 16-003 Operation of Raffles at Professional Sporting Events Prime sponsors: Reps. Jonathan Singer (D-Longmont) and Kevin Priola (R-Brighton) and Sens. Ray Scott (R- Grand Junction) and Nancy Todd (D-Aurora). Summary: Proposes a constitutional amendment to permit a nonprofit entity affiliated with a professional sports team to hold raffles for charitable purposes at a venue that seats at least 5,000 people if the entity holds a raffle license, has existed for at least three years continuously, and board members or volunteers manage the raffle. The resolution establishes additional rules for raffles at professional sporting events. Implications for nonprofits: Would have allowed foundations affiliated with sports teams to hold raffles where 50 percent of the proceeds are awarded to the winner and the other 50 percent benefits the foundation. Unlike existing constitutional rules for raffles, these foundations could obtain a license three years after formation rather than five. Also, these raffles could be managed by volunteers rather than just members. Final Status: Postponed indefinitely by the House State, Veterans, and Military Affairs Committee on May 2. Resources: Fiscal impact Serving nonprofits. Strengthening communities. 789 Sherman Street | Suite 240 | Denver, Colorado 80203-3530 | (303) 832-5710 | (800) 333-6554 | (303) 813-4210 | www.ColoradoNonprofits.org COLORADO CHARITABLE SOLICITATIONS ACT HB 16-1129 Charitable Fraud Enhanced Enforcement Measures- SUPPORT Thanks to the bill sponsors! Reps. Polly Lawrence (R-Roxborough Park) and Beth McCann (D-Denver) and Sens. Larry Crowder (R-Alamosa) and Rollie Heath (D-Boulder). Summary: This bill strengthens the Colorado Attorney General’s ability to enforce Colorado’s laws against charitable fraud and deceptive solicitations as follows: • Increases the maximum penalty from $2,000 to $10,000 per violation with a total cap of $3 million for a series of related violations; • Holds a nonprofit liable if it knows or should have known that a paid solicitor committed charitable fraud while soliciting funds for the nonprofit; • Requires a paid solicitor to obtain a surety bond, or have a savings account or certificate of deposit, valued at $15,000 or more; • Requires paid solicitors to state their compliance with Colorado’s conflict of interest law if they serve on the board, direct operations, or have financial interests in charities they represent; • Adds a new violation for membership organizations of law enforcement, firefighters, first responders or veterans who misrepresent their membership numbers from those groups; • Exempts businesses that provide services to nonprofits from registering as paid solicitors if they don’t directly solicit contributions. Implications for Nonprofits: We supported 1129 because it is important to ensure that nonprofits exercise due diligence when working with paid solicitors and to deter bad actors from committing charitable fraud. Even occasional media stories on charitable fraud can undermine the public’s trust in nonprofits and generally discourage donors from giving to important causes. As a result, we support vigorous enforcement against fraud so Colorado’s donors are assured that they can trust the charities that ask them to give.
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