Scrambling for Dollars

Somewhat unusual state funding scheme, I think, for adult literacy in New Mexico, assuming this story was reported accurately. I think what is going on here is that the state has decided it wants state adult literacy funds that are not part of their 25%  match under Title II of WIA to be reserved for programs not receiving Title II funding.

It’s very challenging, I think, for coalitions to serve as conduits for state funding and still serve as a broad-based coalition for the field. Even when it works well, the dynamic between coalition members and the leaders of the coalition is different when coalition members rely on the coalition for funding. And of course, program directors that don’t get your funding won’t be happy, and when funding gets tight, disputes like this seem sort of inevitable.

I’m be interested in hearing about other coalition organizations that serve as state funding intermediaries.

Do Nonprofit Advocates Put Too Much Emphasis on the Charitable Deduction?

I was planning to return to the charitable tax deduction issue again at some point—specifically, I wanted to delve again into the the tendency of several high-profile, Washington-based nonprofit umbrella groups to focus more on protecting the charitable deduction than advocating against budget cuts or for new revenue. But Patrick Lester, writing for the Nonprofit Quarterly, has already done a better job with this topic than I would have:

This narrow focus on the charitable deduction drew criticism from some in the nonprofit community, including Aaron Dorfman at NCRP. “Policies that incentivize charitable giving are important,” he wrote, “but nonprofits should be far more concerned about several other elements of the fiscal cliff negotiations. Our number one priority should be to raise tax rates on the wealthy by allowing the Bush tax cuts to expire for Americans earning more than $250,000 per year. We should also seek to prevent cuts to vital programs that serve poor and elderly Americans and to secure strategic investments that stimulate the economy and create jobs.”

Dorfman is right. According to the National Center for Charitable Statistics, public charities that filed annual 990 forms with the IRS in 2010 derived about a third (32.2 percent) of their revenue from government sources, including grants and fees for service from government sources, such as Medicare and Medicaid. By comparison, these same charities drew 13.3 percent of their funding from private contributions. (my emphasis)

Lester also cites a 2010 Urban Institute study of human service nonprofits that found an even higher level of dependence on public funding among these groups—about 65% of total revenues.

Lester writes: “It is clear from these numbers that large swaths of the nonprofit sector are substantially dependent upon government funding.” He goes on to ask why so many mainstream nonprofit organizations have not been advocating on the broader set of federal budget issues, particularly cuts to services for the poor, and offers some interesting explanations. If you are at all interested in this issue, be sure to read the whole piece.

Rep. Griffin Thinks Government Funding for Nonprofits Makes Them Dependent and Lazy

Good coverage in the Chronicle of Philanthropy of last week’s House Ways and Means Committee hearing on the charitable deduction.

It was interesting to read that Rep. Griffin is now employing the “takers vs. makers” rhetoric when describing nonprofit organizations’ relationship to government funding:

Some lawmakers hinted they were itching to explore nonprofit issues beyond the charitable deduction. Rep. Tim Griffin, Republican of Arkansas, said he was shocked to learn that some nonprofits in his district rely on government money for up to 80 percent of their revenue.

He questioned whether it would be more efficient to encourage people to give to them directly, rather than to pay taxes to the federal government, which then trickle down to the nonprofit through the state and county.

They’ve become dependent nonprofits,” he said. “The tools in the philanthropy tool box rust. They don’t have to court big donors, and they love that. They don’t have to have annual dinners, and they love that. They just get that big check from the federal government.(my emphasis)

Analogy of the Day

From the Chronicle of Philanthropy:

Beth Noveck, the former U.S. deputy chief technology officer for open government and a co-author of the Aspen Institute report, likens proposals to create a public database of nonprofit financial information to recent efforts by the U.S. Department of Health and Human Services to make government-collected data on health trends available online.

By making such data publicly available, researchers can, for instance, map the spread of infectious diseases in real time, says Ms. Noveck.

When it comes to nonprofit finances and accountability, if your first thought is “malaria,” then I’m guessing you are not too confident that things are going well.