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Emergency Rule for Nonprofits Applying to Employee Giving Program

Emergency Rule for Nonprofits Applying to Employee Giving Program

Document Code No.: ACO-8-24-PR
Department/Issuing Agency: Department of Human Resources, King County Employee Giving Program
Effective Date: June 8, 2020
Approved: /s/ Jay Osborne
Type of Action: New

Signed document (PDF, 262 KB)

    I. Purpose

    King County Code (K.C.C.) 3.36.030.B.1 and B.2 authorize the Employee Giving Program Committee to adopt rules necessary for conduct of the program, including eligibility rules for participation in the Annual Drive. Public Rule PRE 8-1 outlines those eligibility rules and supplements requirements set forth in K.C.C. 3.36.045.

    The purpose of this emergency rule is to waive Public Rule 8-1 Section, requiring tiered financial reviews, for nonprofit organizations applying to participate in the 2020 Annual Drive this fall and to automatically rollover 2019 qualified nonprofit applications for the 2020 year.

    On February 29, 2020, the governor of Washington declared a state of emergency in response to the novel coronavirus (COVID-19). On March 1, 2020, King County Executive Constantine issued a Proclamation of Emergency regarding the significant health emergency caused by COVID-19 in King County. On March 23, 2020, the governor of Washington issued a “Stay Home – Stay Healthy” order prohibiting all people in the state from leaving their homes unless for essential activities and business.

    As a result, extraordinary economic conditions currently exist in King County, causing unprecedented stress on nonprofit organizations. Given that the average cost of an independent financial review is $10,000, the effect of section of Public Rule PRE 8-1 is to further strain limited nonprofit resources. Requiring this independent financial review is especially burdensome during the COVID-19 emergency and in particular for small and medium-sized nonprofit organizations, many of which are run by women and people of color. Waiving this requirement provides short-term financial and operational relief for nonprofit organizations involved in the Annual Drive, which will benefit the public.

    Internal Revenue Service (IRS) Notices 2020-18, 2020-20, and 2020-23 have extended tax filing deadlines for most individuals and many entities, and PRE 8-1 outlines a tiered financial review requirement that is more stringent than the financial review required by RCW 19.09.541. The King County Employee Giving Program Manager and Committee believes that removing this requirement, which involves a higher standard than what is required for charitable organization status under Washington state law, would relieve organizations of added expenditures while maintaining fiscal stewardship. Each nonprofit in the Annual Drive is required to meet the legal financial review requirements in RCW 19.09.541. Finally, due to the filing delay, social distancing requirements, and closing of some organizations not deemed essential, nonprofits may not even be able to fulfill this requirement.

    Quick and decisive activation of county resources, including the Employee Giving Program, for the COVID-19 response delayed the opening of the nonprofit application cycle and has required a change in operations away from in-person service and assistance. Additionally, due to the economic downturn, emergency restrictions, and for some organizations providing basic needs and serving vulnerable populations, sharp increase in service demand, have strained already thin resources. Allowing their approved 2019 applications to rollover to 2020 will reduce administrative burdens on the nonprofits and the Employee Giving Program.

    It is imperative that the county act quickly to respond to and mitigate this emergency. Immediate amendment of PRE 8-1 to waive the requirement for an independent financial review is necessary for the preservation of the general welfare. Given the circumstances with COVID-19 and the upcoming Annual Drive, observing the requirements of notice and opportunity to present views on this amendment would be contrary to the public interest.

    Applicability and Audience

    This rule applies to nonprofit organizations applying to take part in the 2020 Employee Giving Program Annual Drive and other program activities associated with this application cycle.

    II. Definitions

    A. Annual Drive: The annual solicitation of contributions from county employees by representatives of Qualified Nonprofit Organizations and federations through oral presentations, printed materials, audio or video media, or other similar means.

    B. Employee Giving Program: The year-round, King County-sanctioned, employee-based program that provides the process and infrastructure for administration of employee-directed giving to Qualified Nonprofit Organizations and federations through the Annual Drive, natural disaster relief solicitations, volunteering, and other charitable solicitations and that is administered by the Employee Giving Program Committee in accordance with King County Code and rules adopted for the program.

    C. Qualified Nonprofit Organization: A nonprofit organization or federation that applies to participate in the Annual Drive and meets the eligibility criteria as provided in King County Code and any rules adopted herein.

    III. Policy

    A. The following financial review requirements in Public Rule PRE 8-1 are
    modified as follows:

    Entities with an annual gross income of less than $1,000,000 need not provide a review of a certified public accountant. These entities must certify that they have an internally produced complete financial statement.

    Entities with an annual gross income of more than $1,000,000 but less than $3,000,000 may provide either (a) federal financial reporting form (990, 990PF, 990EZ, 990T) the organization normally files with the IRS which must be prepared by a certified public accountant or other professional who normally prepares such forms in the ordinary course of their business; or (b) An audited financial statement prepared by an independent certified public accountant for the preceding accounting year.

    Entities with more than three million dollars in annual gross income averaged over the preceding three years must provide an independent, third-party audit of their financial records for the preceding tax year.

    However, the following eligibility requirements shall remain in effect:

    On their application for the Annual Drive, organizations will indicate their annual gross income for the review period and what level of financial review, if any, was completed.

    The annual eligibility verification requirement in Public Rule PRE 8-1
    7.4.1 is waived for Qualified Nonprofit Organizations that participated in the Employee Giving Program’s annual drive in 2019.

    All other provisions of PRE 8-1 remain in full force and effect.

    IV. Implementation Plan

    A. This rule becomes effective immediately upon filing with the department responsible for archives and records management functions. The Employee Giving Program is responsible for implementation of this policy.

    B. This rule will apply to the application period for nonprofits participating in the 2020 Annual Drive and other Employee Giving Program opportunities in the 2020 program year. Nonprofits who are approved through this application period, and who receive pledges during the Annual Drive, will continue to receive distribution of funds from those pledges until the first quarter 2022.

    C. This rule does not affect future application cycles for the Annual Drive.

    V. Maintenance

    A. This rule will be maintained by the King County Employee Giving Program.

    B. This rule will automatically expire 150 days after the date of signature.

    VI. Consequences for Noncompliance

    A. See PRE 8-1, section 7.3.

    Appendix: Public Rule PRE 8-1.