Nonprofit Budget Crunch - Charity Week on BTR


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Last month’s dismal jobs report confirmed what nearly 14 million unemployed Americans already know – the recovery that money-clown Tim Geithner assured us was on the way hasn’t reached this country’s most at-risk citizens. Now, as Wall Street’s obscene profits continue to rise to record levels, nonprofits are finding themselves targets for states attempting to balance their budgets.

Tim Delaney, president and CEO of the National Council of Nonprofits, argues that state and local governments are shifting their fiscal burdens onto nonprofits and foundations. States, unlike the federal government, are not allowed to run a deficit, which makes a balanced budget a necessity, not a goal. This means that popular programs like Americorp may face crippling cuts to their funding.

It also means that states, who faced an average decline of 31% in their annual revenue in 2009, are simply not paying some nonprofits. Illinois has stiffed 2,000 nonprofits to the tune of about half a billion dollars; 92.5 percent of the New York’s “contracts with nonprofits were late and the state had delayed paying numerous nonprofits for multiple years.” Both of those examples come from Delaney’s brutal forecast for nonprofits, which I highly recommend reading in full.

Not only are nonprofits not getting paid, they are also coming under increasing calls to be taxed, from which they are usually, by definition, exempt.  Nonprofits often voluntarily give money – Pilots, or payment in lieu of taxes – to municipal and state governments. However, Boston, a city that benefits enormously from the tourism and jobs created by their world-famous universities and hospitals, is considering asking institutions to pay up to a quarter of what they would owe if they paid property taxes. Washington DC mayor Vincent Gray has proposed a “theater tax” modeled after a similar tax in Vermont that would charge 6% sales tax on tickets to live performance, purchases which had previously been exempt.

The picture is no more rosy at the federal level. Earlier this month the GOP-chaired House Appropriations Committee passed the agricultural appropriations bill, which included a 23% cut to The Emergency Food Assistance Program (TEFAP).  Unsurprisingly, those most affected by Washington’s counter-productive austerity panic are the poor.  Gloria McAdam, of the nonprofit Foodshare, writes:

“Congress is now proposing cuts that would eliminate federal food assistance for hundreds of thousands of low-income seniors, women, infants, and children, pushing more people to local charities for food assistance. At the same time, Congress would reduce support for local emergency food providers, like Foodshare. Not only will we be hard pressed to meet the increased demand for food assistance, if these cuts to nutrition programs go through, we will likely have to reduce current levels of support for existing clients.”

Those who are already sacrificing will have to sacrifice more, while the corporate elites who own and control the government are paying historically low taxes. Republicans, and right-leaning Democrats, including Obama, will tell you that America has a spending problem.  What we have is a tax problem.  Take a look at these Center for American Progress charts, and then tell the 50 million people facing food insecurity that they need to tighten their belts.  According to CAP, in 1960 the top marginal tax rate was 90 percent, today it is just 35%.  The richest 400 households in America pay only 17% of their annual income in taxes. US corporations are taxed less than their foreign counterparts.

America now has a permanent underclass, and those in power have stopped even pretending to care about their suffering. Nonprofits already face demand than they can’t possibly meet, and as states push more and more of the burden onto underfunded programs, those who will continue to bear the brunt of the hardship will be the politically powerless. Record profits at the top, record hunger at the bottom, and a political class who couldn’t be more indifferent – that’s what America looks like in 2011.

Article by: John Knefel