Commission Agenda Item No. 2
Presenter:
Kevin Good
Action
Nonprofit Partner Rules
Recommended Adoption of Proposed Changes
November 2, 2017
I. Executive Summary: This item seeks adoption of proposed changes to Title 31 Texas Administrative Code (TAC), Chapter 51. These proposed amendments will simplify and update rules regarding the agency’s relations with nonprofit partner organizations.
II. Discussion: Nonprofit partners serve an important function for the Texas Parks and Wildlife Department (TPWD), as these organizations provide valuable financial and in-kind support to TPWD. The Parks and Wildlife Code authorizes TPWD to work with nonprofit organizations to carry out the mission of TPWD. Parks and Wildlife Code, §11.202, requires the Texas Parks and Wildlife (TPW) Commission to adopt rules to “establish the best practices for nonprofit partners.” Parks and Wildlife Code, §11.203, requires the commission to adopt rules regarding “state standards and safeguards for accounting for state assets held by the nonprofit partner.” Parks and Wildlife Code, §11.205, authorizes the commission to designate an official nonprofit partner dedicated to meeting TPWD goals. Parks and Wildlife Code, §11.205(f), requires the TPW Commission to establish by rule guidelines for the official nonprofit partner’s solicitation and acceptance of sponsorships and the best practices of the official nonprofit partner.
The current rules, promulgated in 2007, categorize each of TPWD’s nonprofit partners as a general nonprofit partner (GNP), a closely related nonprofit partner (CRNP), or the official nonprofit partner (ONP). Because the ONP and CRNPs enjoy a closer relationship with TPWD, the rules impose additional requirements on those organizations. The term “nonprofit partner” refers collectively to GNPs, CRNPs and the ONP.
The TPWD has determined that in practice, the categories created by the current rules for various types of nonprofit organizations have resulted in a cumbersome structure that is problematic in light of the time and expense incurred by TPWD with respect to recordkeeping and reporting functions. On that basis, TPWD staff have determined that the category of GNP is superfluous and therefore unnecessary. Accordingly, the proposed amendments would eliminate the category of GNP, all provisions applicable to GNPs, and all references to GNPs. Additionally, in the interest of clarity the proposed amendments would eliminate individual references to the ONP and CRNPs and instead refer to those entities generically as Nonprofit Partners (NPs), where appropriate.
III. RECOMMENDATION: Staff recommends that the TPW Commission adopt the proposed motion:
“The Texas Parks and Wildlife Commission adopts the proposed amendments to §§51.161 — .167, Texas Administrative Code as published in the September 29, 2017, issue of the Texas Register, (42 TexReg 5227) .”
Commission Agenda Item No. 2
Exhibit A
NONPROFIT ORGANIZATION RULES
PROPOSAL PREAMBLE
1. Introduction.
The Texas Parks and Wildlife Department proposes amendments to §§51.161 — 51.167, concerning Nonprofit Organizations.
The Parks and Wildlife Code authorizes the department to work with nonprofit organizations to carry out the mission of the department. Parks and Wildlife Code, §11.202, requires the Parks and Wildlife Commission (the commission) to adopt rules to “establish the best practices for nonprofit partners.” Parks and Wildlife Code, §11.203, requires the commission to adopt rules regarding “state standards and safeguards for accounting for state assets held by the nonprofit partner.” Parks and Wildlife Code, §11.205, authorizes the commission to designate an official nonprofit partner dedicated to meeting department goals. Parks and Wildlife Code, §11.205(f), requires the commission to establish by rule guidelines for the official nonprofit partner’s solicitation and acceptance of sponsorships and the best practices of the official nonprofit partner.
Similarly, Government Code, Chapter 2255, requires a state agency to adopt rules regarding the relationship between donors and the agency, including the agency’s employees if the agency is authorized to accept donations or if “a private organization exists that is designed to further the purposes and duties of the agency.” Tex. Gov’t Code, §2255.001(a).
Nonprofit partners serve an important function for the department. These organizations provide valuable financial and in-kind support to the department.
The current rules, promulgated in 2007, categorize each of the department’s nonprofit partners as a general nonprofit partner (GNP), a closely related nonprofit partner (CRNP), or the official nonprofit partner (ONP). A general nonprofit partner is a nonprofit partner that is not a closely-related nonprofit partner or the official nonprofit partner and has an agreement of any kind with the department, has a representative serving on a department or commission advisory committee, or otherwise has a relationship with the department. A closely related nonprofit partner is a nonprofit partner whose primary purpose is to benefit a specific department property, facility or program. Closely related nonprofit partners include “friends groups” (e.g., Friends of Cedar Hill, Friends of San Angelo State Park). The official nonprofit partner is the entity designated as the official nonprofit partner of the department by the commission in accordance with Texas Parks and Wildlife Code, §11.205. In 2001, the commission designated the Texas Parks and Wildlife Foundation as the department’s official nonprofit partner. Because the ONP and CRNPs enjoy a closer relationship with the department, the rules impose additional requirements on those organizations. The term “nonprofit partner” refers collectively to GNPs, CRNPs and the ONP.
The department has determined that in practice, the category of GNP is superfluous and therefore unnecessary. Listing GNP’s produces little useful information to the department and is problematic in light of the time and expense incurred by the department with respect to recordkeeping and reporting functions. Accordingly, the proposed amendments would eliminate the category of GNP, all provisions applicable to GNPs, and all references to GNPs. Additionally, in the interest of clarity the proposed amendments would eliminate individual references to the ONP and CRNPs and instead refer to those entities generically as Nonprofit Partners (NPs), where appropriate.
The proposed amendment to §51.161, concerning Definitions, would eliminate the definition for General nonprofit partner (GNP) and make nonsubstantive conforming changes as necessary.
The proposed amendment to §51.162, concerning Criteria and General Requirements, would remove provisions relating to the designation and listing of General Nonprofit Partners and make nonsubstantive conforming changes as necessary.
The proposed amendment to §51.163, concerning Best Practices (General), would eliminate provisions pertaining to GNPs and make nonsubstantive conforming changes as necessary.
The proposed amendment to §51.164, concerning Best Practices (Officers and Directors), would remove individual references to the ONP and CRNP and replace them with a generic reference to Nonprofit Partners (NPs). The proposed amendment also would make nonsubstantive conforming changes as necessary.
The proposed amendment to §51.165, concerning Best Practices (Fundraising), would make nonsubstantive edits to clarify existing best practices for nonprofit partner fundraising.
The proposed amendment to §51.166, concerning Best Practices (Sponsorship), would require NPs to comply with non-regulatory written guidance from the department in addition to the requirements of the rules. The department has determined that the rules cannot address every possible scenario in detail; thus, the department intends to create supporting guidance to do so. The proposed amendment also would allow for written approval of sponsorship recognition to be provided by department employees other than regional directors, which is intended to accommodate organizational differences within the department, since the position of regional director does not exist in every division within the agency. The proposed amendment also would make nonsubstantive conforming edits as necessary.
The proposed amendment to §51.167, concerning Department Procedures, would eliminate provisions related to General Nonprofit Partners and add a proviso to subsection (b) that the department will not obligate NP funds except by written, signed agreement. The proposed amendment would also remove the word “hold” from subsection (b) because the department can obligate but not hold such funds.
2. Fiscal Note.
Kevin Good, Special Assistant to the Director of State Parks, has determined that for each of the first five years that the rules as proposed are in effect, there will be no fiscal implications to state or local governments as a result of administering or enforcing the proposed amendments.
3. Public Benefit – Cost Note.
Mr. Good also has determined that for each of the first five years that the rules as proposed are in effect:
(A) The public benefit anticipated as a result of enforcing or administering the proposed rules will be the elimination of unnecessary regulations and more clear language governing the processes and entities administered under the provisions of Chapter 51, Subchapter G.
(B) There will be no adverse economic impacts to persons required to comply with the rules as proposed.
(C) Under the provisions of Government Code, Chapter 2006, a state agency must prepare an economic impact statement and a regulatory flexibility analysis for a rule that may have an adverse economic effect on small businesses, micro-businesses, and rural communities. As required by Government Code, §2006.002(g), the Office of the Attorney General has prepared guidelines to assist state agencies in determining a proposed rule’s potential adverse economic impact. Those guidelines state that an agency need only consider a proposed rule’s “direct adverse economic impacts” to determine if any further analysis is required. For that purpose, commission considers “direct economic impact” to mean a requirement that would directly impose recordkeeping or reporting requirements; impose taxes or fees; result in lost sales or profits; adversely affect market competition; or require the purchase or modification of equipment or services.
The department has determined that because the rules apply only to entities that enter into voluntary agreements to assist the department (nonprofit partners), there will be no adverse economic effects on small businesses, microbusinesses, or rural communities. Accordingly, the department has not prepared a regulatory flexibility analysis under Government Code, Chapter 2006.
(D) The department has not drafted a local employment impact statement under the Administrative Procedures Act, §2001.022, as the agency has determined that the rules as proposed will not impact local economies.
(E) The department has determined that there will not be a taking of private real property, as defined by Government Code, Chapter 2007, as a result of the proposed rules.
(F) The department has determined that because the rules as proposed do not impose a cost on regulated persons, it is not necessary to repeal or amend any existing rule.
(I) In compliance with the requirements of Government Code, §2001.024, the department has prepared the following Government Growth Impact Statement (GGIS). The rules as proposed, if adopted, will:
(1) neither create nor eliminate a government program;
(2) not result in an increase or decrease in the number of full-time equivalent employee needs;
(3) not result in a need for additional General Revenue funding;
(4) not affect the amount of any fee;
(5) not create any new regulations;
(6) not expand, limit, or repeal an existing regulation;
(7) neither increase nor decrease the number of individuals subject to regulation; and
(8) will have neither a negative nor positive impact on the state’s economy.
4. Request for Public Comment.
Comments on the proposed rule may be submitted to Kevin Good, Texas Parks and Wildlife Department, 4200 Smith School Road, Austin, Texas, 78744; (512) 389-4415 (e-mail: kevin.good@tpwd.texas.gov) or on the department’s website at www. tpwd.texas.gov.
5. Statutory Authority.
The rules are proposed under the authority of Parks and Wildlife Code, §§11.202, 11.203, 11.205, and Government Code, §255.001
The proposed rules affect Parks and Wildlife Code, §§11.202, 11.203, 11.205, and Government Code, §255.001.
6. Rule Text.
§51.161. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.
(1) – (5) (No change.)
[(6) General nonprofit partner (GNP) — A nonprofit partner that is neither a closely-related nonprofit partner nor the official nonprofit partner.]
(6)[(7)] Gift — A donation of money or property other than volunteer time for which there is no consideration or expectation of consideration in return.
(7)[(8)] Improvement — A permanent addition to real property which is in the nature of a fixture.
(8)[(9)] IRS 990 — United States Internal Revenue Service Form 990, Return of Organization Exempt from Tax.
(9)[(10)] In-kind donation — A non-cash donation, such as services, personal property or real property.
(10)[(11)] Local sponsorship — A campaign to raise funds in support of a department program that is intended to benefit a single department facility.
(11)[(12)] Nonprofit entity — An incorporated entity that is exempt from federal taxation under §501(c) of the Internal Revenue Code of 1986 (Title 26, United States Code).
(12)[(13)] Nonprofit partner (NP) — A nonprofit entity as defined by Parks and Wildlife Code, §11.201(1) that has been designated by the commission as a nonprofit partner of the department pursuant to Texas Parks and Wildlife Code, §11.202. "Nonprofit partners" include [general nonprofit partners,] closely-related nonprofit partners and the official nonprofit partner.
(13)[(14)] Official nonprofit partner (ONP) — An entity designated as the official nonprofit partner of the department by the commission in accordance with Parks and Wildlife Code, §11.205.
(14)[(15)] Program — An activity, event or project undertaken by a nonprofit partner for the benefit of the department.
(15)[(16)] Regional director — A department manager who reports directly to a department division director and is responsible for the management of the portion of a division covering a defined geographic area of the state.
(16)[(17)] Sponsor — A person, corporation, company, or other organization that provides funds in support of a specific department project, program or event.
(17)[(18)] Sponsorship — The payment of money, transfer of property, or performance of services by a person, corporation, company, or other organization with respect to which there is no arrangement or expectation of any substantial return benefit other than recognition or a non-substantial benefit.
(18)[(19)] Statewide sponsorship — A sponsorship or campaign to raise funds in support of a department program that is intended to benefit more than a single department facility or is intended to reach the majority of the population of the state.
§51.162. Criteria and General Requirements.
[(a)] All NPs must meet the requirements and criteria of this section[subsection].
(1) In order to be considered a NP of the department, the nonprofit organization must be designated by the commission voting in a public meeting. The commission will designate an ONP, as necessary.
[(2) In order to maintain a current list of all nonprofit entities associated with the department, the commission will seek to designate as a GNP all non-profit partners, other than CRNPs and the ONP, that have an agreement of any kind with the department, have a representative serving on a department or commission advisory committee, or otherwise have a relationship with the department.]
(2)[(3)] The commission may remove a nonprofit partner from the NP list.
(3)[(4)] All NPs must carry out the fiscal, business, legal, and tax responsibilities of a nonprofit entity as required by state and federal law.
(4)[(5) All] NPs must have obtained from the Internal Revenue Service a valid determination letter that it is an organization described in §501(c) of the Internal Revenue Code of 1986 (Title 26, United States Code), as amended. Such a letter must be obtained no later than 180 days after being designated by the commission as a NP.
(5)[(6)] A [All] NPs’ work with the department must be consistent with the department’s mission and goals.
(6)[(7)] Upon dissolution, a NP may be required to dispose of funds raised for the benefit of the department in a way that will benefit the department, in accordance with applicable law.
[(b) In addition to the requirements and criteria stated in subsection (a) of this section, CRNPs and the ONP must comply with the requirements and criteria of this subsection.]
(7)[(1)] CRNPs and the ONP must be incorporated in accordance with the Texas Nonprofit Corporation Act (Business Organizations Code, Chapter 22).
(8)[(2)] Within 60 days of its designation as a nonprofit partner, each NP[CRNP and the ONP] must enter into an agreement with the department detailing the responsibilities and duties of the nonprofit partner and the department. Each NP[CRNP and the ONP] must maintain such an agreement with the department for as long as the entity is designated as a NP[CRNP or the ONP]. The agreement may also address the obligations of a NP[CRNP or the ONP] upon termination of the relationship [with] between the NP[CRNP or the ONP] and the department, including termination resulting from the dissolution of the NP[CRNP or the ONP].
(9)[(3)] NPs[CRNP and the ONP] must promptly notify the department of any change in its legal or tax-exempt status.
§51.163. Best Practices (General).
(a) [All] NPs must comply with the general best practices prescribed in this subsection.
(1) – (5) (No change.)
[(b) In addition to subsection (a) of this section, NP must comply with the general best practices prescribed in this subsection.]
(6)[(1)] NPs[CRNP and the ONP] shall conduct business in a way that will ensure public access and transparency. As used in this subsection, "transparency" shall mean that the CRNP’s and ONP’s business practices and internal processes are conducted in a way that is open, clear, measurable, and verifiable.
(7)[(2)] NPs[CRNP and the ONP] shall file with the department and make available to the public an annual report that includes a list of the primary activities undertaken during the previous year, a summary of significant achievements and challenges over the previous year, and other information requested by the department.
(8)[(3)] Regardless of whether a NP[CRNP or the ONP] is required to file an IRS 990 with the Internal Revenue Service, each NP[CRNP and the ONP] must complete and file an IRS 990 with the department each year, regardless of income[, and must make the IRS 990 available to the general public, upon request].
(9)[(4)] NPs[CRNP and the ONP] shall file with the department its articles of incorporation, by-laws, and most recent financial statements, and any updates to these documents[, and shall make these documents available to the public,] upon request of the department.
(10)[(5)] NPs[CRNP and the ONP] shall not engage in activities that would require it or a person acting on its behalf to register as a lobbyist under Texas law, Texas Government Code, Chapter 305. However, this subsection is not intended to restrict NP[CRNP and the ONP] from providing information to the legislature or to other elected or appointed officials.
(11)[(6)] NPs[CRNP and the ONP] shall not donate funds to a political campaign or endorse a political candidate.
(12)[(7)] NPs[CRNP and the ONP] shall notify the department of all meetings and allow a department representative to attend all meetings, including, but not limited to, meetings of its general membership, managing board, and committees. Meeting notices must be provided to the department sufficiently in advance of the meeting so that the department representative has ample opportunity to attend. Such notice may be provided by letter, email, or telephone. A CRNP should also notify other CRNPs associated with the property, facility, or program of all meetings and allow a representative to attend.
(b)[(c)] In addition to subsection (a)[subsections (a) and (b)] of this section, the ONP must comply with the general best practices prescribed in this subsection.
(1) The ONP must have an annual audit by an independent accounting firm and shall make the results of that audit available to the department.
(2) The ONP must maintain an adequate directors and officers liability insurance policy.
§51.164. Best Practices (Officers and Directors).
(a) (No change.)
(b) In addition to subsection (a) of this section, CRNPs and the ONP must comply with the best practices regarding officers and directors as prescribed in this section.
(1) NPs[CRNP and the ONP] must adopt and maintain a conflict of interest policy, which includes safeguards to prevent board members or their families from benefiting financially from any business decision of the CRNP or the ONP.
(2) NPs[CRNP and the ONP] shall ensure that any compensation paid to executives or managers is reasonable.
(3) NP[CRNP and the ONP] shall not elect or designate or otherwise select a department employee as an officer or director, other than as a non-voting uncompensated representative of the department.
(4) NPs[CRNP and the ONP] shall hold regular meetings of its Board of Directors.
(5) NPs[CRNP and the ONP] shall ensure that each board member and/or director is fully informed of activities and shall provide the following information to new board members:
(A) articles of incorporation and by-laws;
(B) most recent financial statements;
(C) department rules on NPs and sponsorship; and
(D) current agreements with the department.
§51.165. Best Practices (Fundraising).
(a) All NPs must comply with the requirements of this subsection regarding fundraising.
(1) – (3) (No change.)
(4) Funds accepted by a NP [on behalf of or] for the benefit of the department are to be managed as a reasonably prudent person would manage funds if acting on his or her own behalf and such funds are to be accounted for according to Generally Accepted Accounting Principles (GAAP).
[(b) In addition to subsection (a) of this section, CRNPs must comply with the provisions of this subsection.]
(5)[(1)] All projects undertaken for the department by a CRNP must be related to and supportive of the facility, property, or program with which a[the] CRNP is associated or must further the CRNP’s mission related to the facility, property or program.
(6)[(2)] All donations to a[the] CRNP must benefit the facility, property, or program with which the CRNP is associated or must further the CRNPs mission related to the facility, property, or program.
(7)[(3)] For purposes of this subsection, a donation for the purpose of defraying the CRNP’s operating costs furthers the CRNP’s mission related to the facility, property, or program.
(8))[(c)] NPs [In addition to subsections (a) and (b) of this section, CRNPs and the ONP] shall adopt [financial] procedures that address[govern] acceptance and granting of [and access to] funds raised for to[the] benefit projects and/or programs of the department.
(b)[(d)] Nothing in this subchapter shall limit the ability of a NP to make an unrestricted cash donation to the department. Such a donation may be for a specific purpose or program.
(c)[(e)] NPs[,CRNPs and the ONP] may work together towards a common fundraising goal for the benefit of the department, consistent with the requirements of this subchapter.
§51.166. Best Practices (Sponsorship).
(a) NPs may solicit and accept sponsorships for department programs, so long as the NP complies with the provisions of this subsection and other written guidance that be provided by the department.
(1) All sponsorships of department programs and the level of sponsorship recognition provided by the department must have prior written approval of the department as set forth in this paragraph.
(A) (No change.)
(B) A local sponsorship and the associated sponsorship recognition must have prior written approval by the regional director or equivalent whose area of responsibility includes the facility, property or program to be supported by the local sponsorship.
(2) – (6) (No change.)
(b) (No change.)
§51.167. Department Procedures.
(a) The department will maintain and periodically update [a list of GNPs and] a [separate] list of CRNPs. This list will be made available to the public.
(b) The department will not [hold or] obligate NP funds or property except by written agreement signed by the NP.
(c) (No change.)
(d) The department may develop model policies and procedures for adoption by [CRNPs or other] NPs. Where a NP[CRNP or the ONP] is required by these rules to adopt a policy or procedure, adoption of the model policy or procedure shall be deemed to comply with that requirement.
(e) (No change.)
This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency’s authority to adopt.
Issued in Austin, Texas, on