A Defining Moment

Wednesday, February 6, 2013

2013 is shaping up to be a defining year for the nonprofit sector, both locally and nationally.  The question for us all to consider is: are we going to define ourselves or be defined by elected officials as part of some grand bargain? Wrapped up in Congress’ fight to find a politically acceptable balance between revenue and spending are complex urgent issues, including tax reform and our tax exempt status, that go to the core of our identity.  And this is on top of the unresolved questions Congress averted as part of the post-election fiscal cliff showdown.

As I was listening to the President’s inaugural address, which shared his vision of a democracy defined by mutual obligations to each other, I was struck by the irony of how nonprofits’ work undergirded nearly every aspect of his vision---and yet we have been absent from much of the public discourse and political rhetoric surrounding fiscal cliff negotiations and upcoming sequestration, despite the massive impact these decisions will have on nonprofits and those they serve.

IMG_5272_1Locally, nonprofits in Illinois have endured the double punch of doing business in a state that leads the country in lateness of payments, and is near the bottom when it comes to  paying the full cost of services provided to the state.  At the federal level, nonprofits are likely to absorb the impact of $42.6 billion in across the board cuts from almost every major federally funded domestic program if a full, or partial, sequester takes place on March 1.  At the state level, Illinois could lose as much as 8.5% of its total budget due to significant losses of federal revenue for many critical programs providing food to families with children and shelter to the homeless.  And the outlook for 2013 at the state level is no better. Unless Illinois Democrats and Republicans can agree on how to fix the state pension mess, all other solutions, like a debt restructuring bill to pay back unpaid bills to providers, are being pushed aside.

There’s a lot more at stake for our sector than the survival of the charitable deduction. We need to do a better job conveying our real value. We run the risk of appearing narrowly self interested when our conversations with lawmakers, and messages to the media, focus narrowly on the revenue stream nonprofits stand to lose.

What's at stake is larger than revenue. It’s poverty and homelessness, access to healthcare and domestic violence counseling, educating our youth, and feeding our children – all of which are fundamental services that help buffer the ever widening socioeconomic gap in this country and ultimately contribute to the stability of our communities. This is the message we need to communicate with lawmakers.  

Nonprofits are vital buffers for communities across Illinois, whose residents are experiencing increased unemployment and homelessness and hunger. In Illinois, according to the most recent report from the Commission on Poverty, our income disparity gap has increased 40% since the recession hit in 2008.   What’s confounding is the disconnect in our public discourse where lawmakers don’t understand a consequence of further cutting funding and other revenue sources for nonprofits, will be the disappearance of these buffers.

To be clear, increased revenues is a cause we all must continue to fight for, and “increased” is a relative term when you consider that in Illinois the funding streams for programs that pay nonprofits to deliver vital services have been slashed 25% over the past decade. The sector needs to continually remind policymakers who slash our budgets that we are a vital economic engine for local and state economies, in the same way that businesses are, contributing jobs and revenue to local economies. In Illinois we are the fourth largest employment sector, with nearly 10% of the workforce. Seventy five percent of the businesses that provide social services in the state are private employers—it’s been estimated that these cuts over the past decade in Illinois have led to a loss of over 18,000 jobs and $2.14 billion in economic activity.

And we need for our leaders to demonstrate they understand that nonprofits are necessary partners to fulfill the intention set by President Obama in  to be a nation that “care[s] for the most vulnerable and protect[s] its people from hazards.” 


~Laurel O'Sullivan, Vice President, Public Policy, Donors Forum