From Capitol Hill

Nonprofit Face An Uphill Funding Battle On Capitol Hill

By Eleanor Clift

The bad old days for nonprofits are behind them on Capitol Hill now that the investigations launched by Senate and House committees are over and bipartisan pro-philanthropy caucuses have sprung up in both legislative bodies.

A new administration will soon take up residence in Washington along with a flock of new lawmakers, signaling a fresh start that holds both promise and peril. Promise because political change is invigorating; peril because budgets are tight, recession looms, and nonprofits historically lack the collective clout to muscle their way onto a crowded agenda of pent-up needs and priorities.

Lester Salamon is trying to improve the outlook for nonprofits on the eve of what looks like a significant upheaval in Washington. Salamon is the director of the Johns Hopkins Center for Civil Society Studies and the creator of what he calls the Listening Post Project, a network of about a 1,000 nonprofit agencies in different fields around the country that he can tap into for feedback and data at any time. He likens it to “a machine running and purring that is our eyes and ears.” Many major nonprofits are linked to the Listening Post, “and to make sure we’re not getting a distorted sense of reality, we included organizations picked at random from an IRS list,” Salamon explains.

The latest “sounding” (Salamon prefers that to survey) was posted in late September, and asked respondents to rank a number of things from extremely useful to not useful at all, and then give their top three priorities for the new president. The number-one priority with 45% was the restoration and/or growth of federal funds not necessarily for their organization, but in their field. Second with 37% was the reinstatement and expansion of tax incentives for charitable giving and volunteering, including the estate tax. The items that came in third and fourth were just about tied, so both are included. They call for more federal grant support for training and capacity building, and reform of reimbursements under Medicare and Medicaid to actually cover the cost of services.

Reviewing the list, it’s tempting to say lots of luck. With the exception of the estate tax which a more heavily Democratic Congress is certain to reform and not eliminate, the combination of the federal budget crunch and the financial crisis draining resources and attention, anything that contains the word “expansion” will be a tough sell at the White House and on Capitol Hill. The September sounding was taken before the financial storm hit.

“We didn’t have the wisdom – or the pessimism – to ask about that,” said Salamon. Respondents were asked if they thought the general policy climate for nonprofits had improved, “and very, very few responded yes to that,” said Salomon.

“There’s never enough money and money is never enough,” said Susan Conner, the outgoing chair of Grantmakers for Education (GFE) as she convened the organization’s annual conference in Baltimore in mid-October. The more than 300 attendees represent large national foundations as well as regional and local foundations together with individual philanthropists with a particular interest in education. The theme of the opening plenary session was closing the achievement gap and featured a panel of experts debating how much could be accomplished if the focus is on schools alone, as opposed to a model that delivers a broader set of services. (Full disclosure: I moderated the panel)

The debate over where best to focus resources is a familiar one, worsened by the ripple effect of the financial meltdown on Wall Street. “Foundations and charities are going to take a big hit in their assets, and they don’t know where the bottom is. Right now they’re doing calculations on whether they have to liquidate assets to meet pay-outs. That’s a bad thing because you don’t want to sell low,” says Conner. Like every other sector lobbying for a toehold in a new administration, the financial picture is harsh.   

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Eleanor Clift is a contributing editor for Newsweek magazine. Her column, “Capitol Letter” is posted each week on Newsweek.com and MSNBC. She is a regular political panelist on the nationally syndicated show The McLaughlin Group, which she has compared to “a televised food fight.” She is also a political contributor for the Fox News Channel.