March 03, 2009
Increasing Service Opportunities Would Revive Nonprofit Finances, Report Says
By Marty Michaels
Reversing the “quiet crisis” affecting the nation’s charities as their resources and donations dwindle could best be accomplished by creating concerted local and national service opportunities, says a new report by Civic Enterprises and the Democratic Leadership Council, both in Washington.
“Everything is being viewed through an economic lens, so we wanted to make an economic case that showed the huge impact of the nonprofit sector, as well as highlighting economic policies” that could offer low-cost solutions to countering unemployment and other effects of the recession, says John Bridgeland, chief executive of Civic Enterprises and one of the report’s authors.
The report outlines the “triple whammy” that is dealing a blow to nonprofit groups: fewer charitable donations from grant makers and individuals, shortfalls in state and local funds, and increased demand for social services as unemployment rates continue to climb. United Way affiliates, for example, reported an overall 68-percent increase in 2008 in requests for assistance with food, shelter, and other basic needs.
Mr. Bridgeland says that he and others are concerned that not enough national attention is being given to both the travails and potential promise of the nonprofit world amidst talk of the economic recession and proposals on how best to mitigate the crisis.
11% of U.S. Workforce
According to the report, with 9.4 million employees and 4.7 million full-time volunteers nationwide, the nonprofit world constitutes roughly 11 percent of the American work force. That percentage is greater than the combined number of Americans employed by the struggling auto and financial industries, says the report.
“We need to move from a public discussion about bailouts to a spirit of challenge and to enlist more Americans in helping solve that challenge,” says Mr. Bridgeland. “Come May and June, we’re going to see a huge influx of recent graduates entering the work force,” he adds, saying many are interested in nonprofit jobs or national service. He cites a spike in applications to Teach for America, AmeriCorps, and the Peace Corps that has far outstripped the number of available slots.
National-service volunteers — those who spend one or more years in civilian service — provide an immense “bang for the buck,” says the report, which estimates that they earn $5.67 per hour, less than private-sector employees who earn the minimum wage of $6.55 per hour. And an expanded number of national-service members could help meet many of the country’s pressing problems in education, energy, health care, and other areas.
Moreover, national service has a lasting effect on both the participants and the people they serve, says the report, citing several studies. A study of former participants found that those who did not volunteer prior to their national-service stint were 25 percent more likely to volunteer afterwards than others who expressed interest — but did not enroll — in national service.
In other examples, third graders working with Experience Corps members scored higher on reading tests than their peers, and 75 percent of former participants in the YouthBuild program — most of whom were high-school dropouts — either returned to school, enlisted in vocational training, or earned an average of $10 per hour.
In the 70-plus years since President Franklin D. Roosevelt created the Civilian Conservation Corps during the Great Depression, “we’ve gotten a lot more sophisticated in how we link people and organizations,” says Mr. Bridgeland. He adds that the proposals outlined in the report are “cost-efficient and create no new bureaucracy,” instead relying on the existing infrastructure of hundreds of thousands of nonprofit groups nationwide.
‘Modest Changes’
Among the report’s recommendations for how best to “permit more Americans to do good works in hard times”:
- Pass the bipartisan Serve America Act, which includes a tax incentive for employers who allow their workers to take paid leave for full-time national-service stints, and would provide money that nonprofit groups can use to recruit, train, and place community-service volunteers.
- Make a “handful of modest changes in the tax code” that could help counter the trend decreasing giving by individual Americans and grant makers alike. Among the suggestions: Suspend the 2-percent excise tax on foundation earnings for those grant makers who spend more than the required 5-percent payout rate; allow the estimated 65 percent of American who don’t itemize their tax deductions to claim a deduction for charitable gifts; and extend beyond this year the so-called IRA rollover that allows people ages 70½ and older to avoid taxes on withdrawals from their retirement accounts that go toward charitable gifts.
- Create a federal “Social Innovation and Compassion Capital Fund” to help struggling charities diversify their income sources, better provide services to needy people, and inspire new ideas and programs among social entrepreneurs.
- Allow nonprofit housing groups and community-development financial institutions to play a prominent role in helping solve the nation’s mortgage and foreclosure debacle.
The report, “Quiet Crisis: The Impact of the Economic Downtown on the Nonprofit Sector,” is available online.
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Good recommendations. I’ve passed on your link via my blog and web site and hope others will do the same.
— Dan Bassill Mar 29, 11:28 AM #