March 12, 2013; Source: St. Louis Business Journal

The decision of the Missouri State Senate to pass “paycheck protection” legislation should be seen as a little shot across the bow for nonprofits, not just labor unions. The legislation prohibits unions from deducting dues from employees’ paychecks. It remains to be seen whether Gov. Jay Nixon, a Democrat despite his iconic Republican surname, may issue a veto. Next door, Kansas is considering its own paycheck protection bill that Kansas Democrats say has basically been drafted upon a model created by the American Legislative Exchange Council (ALEC).

As most people know, unions devote part of the dues money they receive from members to political advocacy, including endorsing candidates in elections. This gets to the heart of the paycheck protection legislation. The Missouri bill, amended by Democrats after a 10-hour filibuster, not only requires annual approval from employees for deductions, but approval from public sector union employees if their dues are used for political donations

Why should nonprofits be concerned about paycheck protection legislation? In 2004, we wrote about the danger this practice poses to nonprofits. Remember that public sector union employees, including employees at the state level, typically participate in charitable giving through payroll deduction programs administered by organizations such as the United Way, America’s Charities, Earthshare, and a variety of local funds. Every once in a while, states expand their concern about the use of paycheck deductions from unions to charities, suggesting that donors might not know about (or might not want to support) the public policy advocacy conducted by recipients of payroll deduction donations. This has happened before, as state managers of charitable giving campaigns have suddenly, inexplicably decided that some previously eligible charities were suddenly ineligible due to their public policy—read: political—advocacy.

It’s not a big leap to extend concerns about the political uses of funds by unions to concerns about advocacy uses by nonprofits. Over the years, some of the paycheck protection legislation that has surfaced in state legislatures has been so loosely drafted as to make restrictions on nonprofits a possibility, while other proposals that have been floated have specifically targeted payroll deductions for nonprofits that engage in advocacy and lobbying.

Nonprofits may look at Missouri’s “paycheck protection” bill and confidently assume that, since they are not unions, they aren’t going to be hit by these punitive new statutes. Think again. It might be more appropriate for nonprofits to consider that there but for the grace of the legislature’s focus on 501(c)(5) labor unions go my 501(c)(3) public charity and I. –Rick Cohen