Nonprofits seen under siege from states

Moves states are making in the face of their budget deficits could shred the social safety net nonprofits provide, and nonprofits should speak up about damage state actions could have on the critical services they provide, a new report says.

State and local governments are cutting funds for essential services and shifting the cost burdens to nonprofits; withholding payments they contractually owe nonprofits for delivering services, “essentially forcing nonprofits to bankroll public programs;” and taking operating funds from nonprofits through new fees and taxes, says the report by the National Council of Nonprofits.

“When governments shortchange their nonprofit partners, people lose their jobs, the economy suffers and vulnerable citizens go without the help they need,” Tim Delaney, president and CEO of the National Council, says in a statement.

While state and local governments in recent decades increasingly have looked to nonprofits to administer essential services, a growing number of governments that are short on cash are looking for ways to generate new revenue from nonprofits, says report, State Budget Crises: Ripping the Safety Net Held by Nonprofits.

The recession and its aftermath have put “massive burdens on nonprofits and the communities they serve,” the report says.

Individuals hurt by the recession are seeking more services from nonprofits at the same time charitable giving has declined, a one-two punch that has “pushed many nonprofits to the brink,” it says.

State and local policymakers seem to be making decisions that hurt nonprofits, it says, based on the “faulty assumptions” that nonprofits simply can turn to foundations and other private donors “to fill the huge voids created when governments renege on their legal commitments to impose new costs,” and that nonprofits are not important to the economy.

In fact, the report says, nonprofits generate millions of jobs and “serve as vital partners for the delivery of publicly-funded services.”

Nonprofits “operate as invisible yet indispensable economic engines,” the report says, employing 13.5 million people, purchasing billions of dollars in goods and services, and spurring productivity in the business and government sectors by providing services such as care for children and the elderly, and job training.

The report urges government officials to learn more about nonprofits and give them a seat at the “policymaking table,” and asks foundation leaders to convene community leaders so they can better understand the impact of budget cuts on nonprofits and to leverage their investments in nonprofits by supporting policy work.

It also calls for nonprofit leaders to overcome the big challenge of “our own silence.”

Nonprofits need to “step forward and be heard,” it says, and “speak up, not only about the current fiscal year crises, but also to ensure that governments do not abandon essential services in the months and years ahead.”

The picture for nonprofits “is pretty bleak,” Delaney says, “and likely will remain so for the next several years.”

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