State Aid - Nonprofits - Status
HB 122 would restrict the State and other State entities from awarding state aid to nonprofit organizations unless the nonprofit meets several compliance conditions. Those conditions include being in good standing with the IRS, being current on federal, state, and local tax obligations, maintaining a current charter on file with the Maryland Department of Assessments and Taxation, and, where required, having filed the most recent IRS Form 990 or a personal property tax return.
The bill defines “state aid” broadly to include contributions, grants, and subsidies provided through the State operating or capital budget, or through action by a State unit using appropriated State funds. It applies to any “grantor,” meaning a unit of State government or other State entity that provides aid to a nonprofit. The bill is set to take effect July 1, 2026.
If enacted, the bill would add a new section to the State Finance and Procurement Article governing eligibility for State-funded assistance to nonprofits. It would create a compliance screen that State agencies and other grant-making entities must use before distributing grants, subsidies, or other aid to nonprofit recipients. Nonprofits that are not current on taxes, are not in good standing with the IRS, lack a current charter, or have not filed required annual returns could become ineligible for State aid until they cure those deficiencies.
Based on the bill text and the limited procedural context available, the measure appears to be framed as an accountability and eligibility requirement rather than a controversial policy expansion. There are no recorded committee transcripts or votes in the provided materials, so no direct evidence of support or opposition is available. The bill’s sponsors suggest an interest in ensuring that organizations receiving public funds are properly registered and compliant with tax and reporting obligations.
The main potential point of contention is the bill’s use of State aid as leverage to enforce nonprofit compliance, which could be viewed by supporters as prudent oversight but by critics as an added administrative burden or a barrier for smaller nonprofits. Another possible issue is the breadth of the definition of state aid, which could affect a wide range of grants and subsidies across State programs. No specific objections, amendments, or opposing arguments are included in the available record.