State Level Policy: Growing Role for Nonprofit Associations

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Without question, the nonprofit sector is one of our nation’s most valuable assets. Nonprofits’ staff, boards, volunteers and donors allow us to create and sustain our civil society. In many ways, they represent the lifeblood of civil society. Through nonprofits, we unite for a common purpose to improve our communities. Through nonprofits, we care for our neighbors, take action on social problems, and fulfill our deepest aspirations. Despite this value, we are challenged with the impact and implementation of inadequate or poorly designed policies that affect nonprofits in funding, rules, regulations, and program priorities. Nonprofit leaders harbor enormous wisdom that can inform, guide, and move forward more relevant and reasoned policies. The challenge is finding the time to do so and accepting the responsibility to engage more forcefully in the policy arenas that most affect our clients and communities.

Nonprofits have a long history of raising their voices against social and economic injustice and drawing our collective attention to situations of greatest concern to our society. Many of us can remember the rallies and protests of the ’60s for civil rights and against economic injustice and the Vietnam war. In the ’80s and ’90s, we were not as outspoken, but, this mood is changing. For the last year and a half, as I have worked with state nonprofit associations all over the country. Local nonprofits are overwhelmed with the growing demand for services and the growing gap between the poor and the rich aggravated by our country’s unprecedented economic growth. But we are feeling more prepared to garner and use the power inherent in the sector. Important decisions affecting the sector, our work, and the constituents to whom we are responsible are being made without the input, advice, and consultation of those closest to the issues. We often feel powerless in shaping the conditions and working environment that we have to live under. Who has responsibility to change these conditions and serve as the sector’s advocates? Each of us has responsibility—volunteers, staff, boards, donors, and clients.

Many groups within the sector have been effective advocates for their various constituencies and issue areas. But to gain real and sustainable influence, I believe that nonprofits have to speak out from a unified front. How do we do this? The nonprofit sector has begun to unite across service areas (i.e., arts, environment, human services, etc.) to communicate the role and value of the sector and to build a strong state-based infrastructure through nonprofit state associations. The network of 40 state nonprofit associations works to assure that nonprofits have a voice in national, state, and local policy-making and in discussions with the government, business, and philanthropic communities. The more established state associations were formed more that 25 years ago and the national convening organization, National Council of Nonprofit Associations (NCNA), dates back to 1989. These historical thresholds are noteworthy. The infrastructure of exchanging information and networking on sector-wide issues is quite young. The existence of NCNA is a statement of changing times and the growing awareness among local nonprofits that they must strengthen their voice on policy issues and they must do this together.

There is no greater time than now for nonprofit organizations across the country to come together and take their place at the decision making table. NCNA, with its partners Independent Sector (IS) and national foundations, has taken the initiative to put in place the infrastructure and communication skills needed to make our case with decision makers. This three-year pilot initiative will: 1) strengthen the public policy capacity of state associations and local coalitions of nonprofits; 2) develop a comprehensive communications network to link organizations working on federal, state, and local policy issues that affect the nonprofit sector; 3) develop and/or strengthen expertise in state nonprofit associations policy issues; and 4) develop and promote an affirmative, forward-looking public policy agenda for the sector.

NCNA and IS have awarded grants to six state associations of nonprofits in Louisiana, New Jersey, New York, Ohio, South Carolina, and Vermont to help them develop a sustainable public policy presence and to increase their capacity to analyze policy issues that may affect the sector. Each grantee has developed a comprehensive work plan that is designed specifically for their state, identifying the issues and obstacles encountered in earlier attempts to mobilize the nonprofit community. The experience and resulting documentation of the six grantees’ work will be carefully monitored and documented to further develop the state level public policy capacity of the entire NCNA network and nonprofits overall.

The remaining challenge for nonprofit leaders in the next several years is to focus our energies on strengthening the infrastructure of the sector. Our focus on this challenge will result in:

  • Strengthening the position of sector to assure we are at the table to provide much-needed information in policy—formulation, development, implementation and evaluation.
  • Ensuring that our experience of working directly in our communities and constituencies is not lost, but valued and sought out, as we all strive to build stronger communities.
  • Ensuring that the nonprofit sector has the resources it needs to provide services and achieve its missions.
  • To ensure that the sector performs at a high level of standards, ethics and accountability so as to continue to honor the public trust given to nonprofit organizations to care for communities.

In partnership with others, NCNA and its network of state wide associations works to assure an operating environment that supports nonprofits, so that they can thrive and do what they do best—care for communities.

The National Council of Nonprofit Associations recently conducted an informal poll of its state association members to identify policy issues that require strong capacity at the state level. The following are examples of noteworthy efforts.

Nonprofit resource streams can be affected in many ways by state policy. Beyond the process of the straight allocation of resources in the state budget for programs, tax questions and charitable regulatory issues can have a major impact on our revenues. In particular, tax campaigns—which emerge periodically as the flash point between conservative and less conservative political forces—have consumed a lot of defensive time. We may wish to look more consistently in the future at proactive tax campaigns that reflect our priorities.

Tax Cut 2000. Colorado has a history of tax reduction proposals introduced by individuals via the citizen initiative route. This year’s proposal, Tax Cut 2000, would gradually eliminate virtually all sales, income, property and other taxes that residents pay to support essential community services. Although proponents argue that the state will have to replace funding, it’s more likely that nonprofits and individual citizens will be left holding the bag. Nonprofits in this state have tended to down play the role of government support, and as a result, the public is generally unaware of how much tax dollars support community services. The Colorado Association of Nonprofit Organizations (CANPO) plans to take a leadership in correcting this misunderstanding.

State Income Tax Deduction for Non-itemizers. The Minnesota Council of Nonprofits (MCN) was instrumental in passing the first state non-itemizer tax deduction. This 1999 act provides non-itemizers in Minnesota with a 50 percent deduction for all charitable donations after the first $500 in contributions. MCN initially proposed this measure in 1998 and worked to build support for the measure. Legislation has been drafted to increase the deduction to 100 percent; it will be introduced in the 2001 Minnesota Legislature.

Effective in 2001, Colorado state legislature passed a state income tax deduction for residents who contribute over $500 and don’t itemize their donations. The Colorado Association of Nonprofit Organizations drafted this legislation and mobilized its members to ensure passage.

Government contracting requirements have an enormous effect on the way in which many nonprofit organizations function. Regulations governing program budgets allowed for administrative overhead, bidding procedures, payment procedures, and even the amount permitted in annual fund balances from year to year are all issues that surface repeatedly at the state level. With privatization and devolution and the entrance of for-profit entities bidding for what have traditionally nonprofit contracts, there is a lot to stay abreast of in this area.

Task Force on Government Contracting. The Louisiana Association of Nonprofit Organizations (LANO) worked with a key legislator to form a task force to study the current state contracting protocols. The task force—which includes members of the senate, the house of representatives, the auditor’s office, the division of administration, and nonprofit organizations—is currently researching and thinking about ways to improve the contracting processes. One strategy would unify the financial and cost reporting requirements across all state departments—currently every department has a unique reporting process. The task force is promoting a clearinghouse for state RFPs on the web as well as filing audits with the Legislative Auditor in an electronic format, rather than sending copies to every level in a state department. The task force is beginning its work by focusing on administrative solutions to make the process efficient and effective. The task force will generate suggested improvements to the Joint Legislative Committee on the Budget in February 2001.

Besides providing leadership in improving administrative relationships, LANO is also working to promote the nonprofit sector as the contractor of choice for state agencies which are down-sizing and outsourcing services. They are currently systematically developing relationships within each state department to better inform them about the quality of work nonprofit organizations offer, raise the visibility of nonprofits, and foster stronger working relationships that will lead to more contracts with nonprofits.

Shifting Administrations. In 1999 newly elected Minnesota Governor Jesse Ventura proposed cutting $60 million in grants and contracts, primarily to nonprofits, that would have affected over 325 organizations. The Minnesota Council of Nonprofits provided research, convened briefings and advocacy training sessions for nonprofits, coordinated a media advocacy strategy, and mobilized nonprofits in a session-long campaign that led to the restoration of over 95 percent of the grants and contracts. Over 400 representatives of nonprofit organizations participated in some aspect of this effort to sustain grants and contracts for vital human services and crime prevention programs.

This issue is never ending and seems to be omnipresent. There are, as always, attempts to restrict the right of nonprofits to advocate at both the state and local level through efforts to increase the scrutiny, reporting, and registration of nonprofit advocacy activities.

Action on Restrictive Legislation. In the process of working with the legislature to review a portion of the law that deals with the contracting between nonprofits and the state, the Georgia Center for Nonprofits and other advocates of the nonprofit sector faced two threats to nonprofit advocacy rights—an existing law but unknown to nonprofits and another proposed amendment to Georgia Senate Bill 474. Much to their dismay, advocates discovered that the current law prohibits any nonprofit which receives state dollars from spending any public or private money on advocacy around ballot referendum issues. Most of the nonprofit community did not know this law existed and clearly needed amending. The proposed amendment would have made the law even-more restrictive, prohibiting any and all forms of lobbying activities by nonprofit organizations that receive state funds.

With only a few days left in the legislative session, the Georgia Center for Nonprofits worked successfully with others to strike the proposed amendment. They then gathered a plaintiff group and filed suit against the state with regard to the existing law—claiming their rights under the first and fourteenth amendments are being violated. They were successful in gaining an injunction. As an immediate result, the Brain Association of Georgia was able to promote the creation of a spinal injury trust fund—through a ballot referendum. The fund will generate funds from penalties paid by DUI offenders to go towards medical expenses of victims.

Several state nonprofit associations are thinking long-term and concentrating their efforts on institutionalizing a more constant political presence in state government.

State Liaison. Four years ago, the North Carolina Center for Nonprofits and Governor Hunt helped to craft a system that would ensure nonprofit liaisons in every state agency. Now more than approximately 70 liaisons exist. To create more continuity between administrations, Governor Hunt has just created the position of director of state government and nonprofit relations, a civil servant position that will over-see the function across all agencies. North Carolina nonprofits have found these liaisons to be helpful in strengthening communication between nonprofits and state agencies, and enhancing the nonprofit sectors’ role as a partner in the development of policy, programs, budgets, and regulations.

The California Association of Nonprofits (CAN) provides another interesting example. Bob Hertzberg, speaker of the assembly, has recently decided to add a new position—nonprofit liaison—in his office. CAN has worked closely with the legislator to develop the position and each believes the liaison will allow for deeper mutual understanding and communication between the sectors as well as for more effective problem-solving. CAN is also proposing to create a higher profile presence on behalf of the entire nonprofit sector by opening an office in the state capital at Sacramento.