Nonprofit groups should act quickly following today’s election to convince the new president and Congress to bolster the ability of charities to tackle the nation’s social problems, speakers at a panel here said today.
“Nonprofits need to be at the table and they need to be exercising their advocacy muscles,” said Shirley Sagawa, a nonprofit-strategy consultant who served in the federal government in positions appointed by both President George H.W. Bush and Bill Clinton. Ms. Sagawa said she hopes the new administration will pledge to pass the Serve America Act, a bill to expand the country’s national-service programs and funnel money to innovative charities, within the first 100 days.
The panel, sponsored by the Urban Institute, discussed the post-election pressures that will face nonprofit groups as the country’s economic crisis threatens to eat into their revenues while increasing demand for their services.
Potential Job Cuts
Paul Light, professor of public service at New York University, said the situation could force many nonprofit groups to “survive on the edge” — for example, cutting back on workers or pay. It could also convince grant makers to take a “winnowing approach” and allow some charities to die, he said.
But under a third scenario, he said, nonprofit groups could use their voice during the new administration’s transition period to argue that they need government help. “One of the things we’re not talking about very aggressively is how to help distressed nonprofits,” he said.
Mr. Light said nonprofit groups would find a sympathetic ear in Sen. Barack Obama, the Democratic nominee, if he wins the election. However, he warned that the new federal agency to help charities that the Democratic candidate has proposed — the Social Entrepreneurship Agency — could be politicized by post-Obama administrations. “Don’t create it unless you want to live with it for 100 years,” he said.
The economic crisis will affect nonprofit groups differently, said Tom Pollak, program director of the Urban Institute’s National Center for Charitable Statistics.
He said the stock market’s “unprecedented volatility” is bound to make donors wary. However, only 20 percent of nonprofit groups (excluding religious congregations) get at least 80 percent of their revenue from private contributions, he said. So the overall impact “is likely to be muted although severe for organizations that depend on them,” he said. Organizations that rely heavily on government contracts and fees, however, could suffer from spending cuts in the 39 states that are facing budget shortfalls this year or next year.
If Senator Obama wins, his tax proposals may help to stimulate charitable giving, said Roberton Williams, principal research associate at the Urban Institute and Brookings Institution’s Tax Policy Center. The senator’s proposal to increase income taxes for families making $250,000 a year or more could increase giving among those affected by 4 percent to 8 percent by increasing the value of the charitable tax deduction, according to rough estimates, he said.