The newly published final rule will allow more nonprofit entities to take advantage of the exemption. 

USCIS has published a final rule on November 18, 2016 which introduces a fourth option to meet the exemption from the H-1B quota. A nonprofit entity can claim cap exemption by demonstrating that it has entered into a formal written affiliation agreement with an institution of higher education that establishes an active working relationship between the nonprofit entity and the institution for the purposes of research or education, and the fundamental activity of the nonprofit entity is to directly contribute to the research of education mission of the institution of higher education.

In the proposed rule, the term “primary purpose” was used instead of “fundamental activity.” However, in response to the public comments which suggested the term “primary purpose” was too restrictive, the Department of Homeland Security (“DHS”) replaced “primary purpose” with “fundamental activity.” DHS expects that this substitution of the terms will allow more nonprofit entities to take advantage of the exemption. In the commentary preceding the regulation, DHS also clarified that if a nonprofit entity is engaged in more than one fundamental activity, it can still  take advantage of the exemption because the exemption requires that at least one of these fundamental activities directly contributes to research or education of an institution of higher education. This rule will go into effect on January 17, 2017.