Powerful nonprofits oppose a Senate tax reform plan.

A handful of large urban hospitals and private colleges oppose a measure proposed by Senate Democrats to limit the amount of refunds they can recieve on sales taxes at $5 million a year.

They think it would set a bad precedent for tax-exempt institutions.

"You're either tax-exempt or you're not," said Tim McDowell with North Carolina Independent Colleges and Universities. "That's why I think every nonprofit should be worried about this."

But Democrats say the plan will only work if everyone gives up something.

"We're not trying to gore anybody's ox here in particular. But we're just saying we have got to have some help from all segments from our economy," said Sen. David Hoyle, D-Gaston, co-chair of the Senate Finance Committee. (AP)

The IRS heavily taxes "excess lobbying expenses" by nonprofits.

According to Section 4911 of U.S.C. 26(D)(41), nonprofit organizations and public charities' lobbying expenditures are taxed at 25 percent above a certain threshold.

As with all federal tax questions, the rules are a little tricky, but the nontaxable amount can be as high as $1 million.

The IRS considers lobbying separate from grassroots activity aimed at influencing legislation. It also does not include nonpartisan research, providing technical advice to lawmakers, appearing before committees or communicating with members.

As noted previously, this sets up a "tension" between nonprofits who wish to keep their taxes low and state reporting requirements on lobbying, which follow different rules.

State Rep. Nelson Dollar was one of a handful of House members who voted against a bill that would allow nonprofits to serve mixed drinks at fundraisers.

Nonprofits are already allowed to serve beer and wine with their special one-time permits, Lynn Bonner reports.

The vote was 104-7. The bill must be heard in the Senate.

If the bill passes, the Cary Republican said, he would encourage nonprofits not serve mixed drinks at their fundraisers.

"It's so much easier to become impaired than if someone is having one beer or a glass or two of wine," he said.

Fred Smith likes proclamations. Pat McCrory doesn’t.

The two Republican gubernatorial candidates expressed strong opinions today about the value of the formal statements given by governors, mayors, city councils and other government entities.

At a forum sponsored by the N.C. Center for Nonprofits, they were asked whether they would proclaim November as nonprofit awareness month.

“Proclamations don’t accomplish a whole lot, and I say that as someone who’s signed probably a 1,000 of them,” said McCrory, Charlotte’s mayor. “When you read them, most people aren’t listening anyway.”

Smith, a state senator from Clayton, said he disagrees.

“Proclamations are a call to action. Many times in life you need a call to action,” Smith replied. He added, “It’s through our nonprofits that the moral fiber of our state is woven.”

Two other GOP candidates for governor – Salisbury lawyer Bill Graham and former N.C. Supreme Court Justice Bob Orr – also seemed warm toward proclamations, though their answers were more tongue-in-cheek than Smith’s.

“I think we ought to just declare the Year of the Nonprofit,” Graham said.

Update: Democratic candidates Richard Moore and Dennis Nielsen said they like the idea of a nonprofits Awareness Month, but they didn't take a position on proclamations. Beverly Perdue did not attend the forum.

The four major Republicans running for governor are fans of nonprofits.

They expressed their gratitude today at a forum in Raleigh sponsored by the N.C. Center for Nonprofits and Generation Engage, reports David Ingram of The Charlotte Observer.

One candidate cited the 19th century French writer Alexis de Tocqueville, who toured America.

"He went and looked at the nonprofits, which were at that time the churches, and he said that’s what makes America great," said state Sen. Fred Smith.

Charlotte Mayor Pat McCrory said nonprofits are important in economic development, citing the Charlotte area’s recruitment of Johnson & Wales University, a culinary school.

"It took cooperation between the private and public sectors, and a lot of speed to beat out our competition," McCrory said.

Read more after the jump.

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As a general rule, nonprofits should disclose all donors, argues a local fundraising expert.

Gail Perry, president-elect of the Research Triangle chapter of the Association of Fundraising Professionals, said that full disclosure would prevent conflicts of interest, such as the scholarships given to relatives of state lawmakers by a nonprofit they ran.

"Transparency is the best possible rule of life and business," she told Dome. "Full disclosure is the only way to be clear and clean."

Perry, author of the book "Fired-Up Fundraising," said that many nonprofits seek to have legislators sit on their boards or endorse their groups because it lends them prestige, which can be important when raising money.

She said a blanket ban on lawmakers soliciting money could end up hurting nonprofits.

Senate leaders boast that their $20 billion budget proposal provides more accountability for nonprofits that receive state funds. But State Auditor Les Merritt said in a letter today to legislative leaders that the Senate plan undercuts his effort to keep an eye on nonprofits.

"By striking a mere $230,000 out of a $20,000,000,000 budget, you may have inadvertently cut a primary accountability mechanism in State government, and hampered (the state auditor's) mandate to increase transparency in the largely unmonitored field of State grant recipients," Merritt wrote in a letter to Senate leader Marc Basnight, a Manteo Democrat, Dan Kane reports.

Merritt said budget proposals in the House and from Gov. Mike Easley include the spending, which would help the auditor's office expand its database that monitors the thousands of state grants to nonprofits to catch conflicts of interest between nonprofit officials and state government.

State Sen. Katie Dorsett, a budget writer who oversees the auditor's office, said Merritt's concerns have merit, but that Senate leaders did not think there was enough money available this year.

"We tried to make sure we were fair to everybody," Dorsett said.

The money could end up in the final budget, which is under negotiation between the House, Senate and Easley.