Nonprofits Scarce in Stimulus Planning

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In early February, the U.S. Senate accepted a revised economic stimulus package, reconciling conflicting House and Senate legislation and overcoming Republican opposition to provisions that would have aided senior citizens and disabled veterans.

One can debate whether the stimulus package will stimulate anything, given the dismal condition of the economy, dragged down by the serial collapse of mammoth subprime mortgage companies and wiping out bank profits, speeding up and deepening what might have been a natural slowdown in the economic cycle.

What cannot be debated is that the nonprofit sector has a vital role to play in the regeneration of the U.S. economy. Unfortunately, nonprofit trade associations are competing over who can best get the presidential candidates like Mike Huckabee to mouth “I (heart) nonprofits” platitudes, but they have not been hugely present in the debate over the content of the economic stimulus package—and the element of stimulus that the nonprofit sector can actually deliver.

You won’t find a nonprofit watermark behind much of the actual bill that staggered through the Senate. That’s too bad, because maybe nonprofits have a role to play, for example, in getting some of the new mortgage revenue bond capacity utilized to refinance subprime mortgages and assist community development corporations and other groups in acquiring and putting properties back on the market. Or, maybe they could find ways of working with the GSEs—Fannie Mae and Freddie Mac—and the Federal Housing Administration (FHA) to take advantage of new financing authority. Environmental nonprofits could get on the hustings to promote and build or rehab energy-efficient homes to take advantage or new or extended tax credits in the bill.

There’s nothing wrong with nonprofits’ capitalizing on any and every provision that they can. But there’s a bigger role for the nonprofit sector in this economy, bigger than advocating for candidates’ platitudes or a nonprofit percentage in federal human service programs. Some suggestions here:

  1. Public policy advocacy and lobbying for the voices of the people most at risk in this economic downturn: For some people, the recession isn’t a statistical debate item among dissenting economists. They’ve been living the recession for a long while already. Just ask the people whose jobs are on the blocks due to plant closings, big and small, in Vincennes and Terre Haute, Indiana, Cedartown, Georgia, Helena, Montana, Ravenna and Garretsville, Ohio, Pittsfield, Maine, Buffalo, New York, and so many other places. The stimulus package extends federal unemployment benefits for as much as 26 weeks in some high unemployment states, critically important elements of economic stimulus, but extended benefits are not the same as jobs. The public policy work of organizations such as the Center for Budget and Policy Priorities is more important than ever when it comes to fashioning responses to economic recession—look at CBPP’s Economic Policy in a Weakening Economy: Principles for Fiscal Stimulus [pdf] as a virtual blueprint of the kind of work that the voice that the nonprofit sector can add to the debate. Add organizations such as OMB Watch, the Center for Responsible Lending, and the Economic Policy Institute [pdf], and you have the package of smart, tough nonprofit advocacy organizations that will hold the feet of our nation’s political leaders to the fire.
  1. Serving on the front lines of generating and providing services to the victims of the economic recession: A January economic report noted that for the first time since March 2003, the U.S. economy had witnessed a contraction in the non-manufacturing sector, that is, the service sector. Our nation’s legislators might have remembered that nonprofits—nonmanufacturing nearly one and all—employ 7.2 percent of the nation’s workforce (). The concept of economic stimulus is to pump money into parts of the economy where it will be spent and used and quickly—unlike the various business tax breaks in the stimulus package that many economists will tell you are unlikely to give more than an infinitesimal short term pick up jolt to the economy. Many people debate whether the nonprofit sector should be looked to for its economic impact or simply for fulfilling its charitable mission. But in a recession, pumping money into the nonprofit sector does both—the hiring of many people, particularly in lower income inner city and rural communities and the delivery of critical services to people vulnerable to a rapidly tanking national economy. Don’t confuse this with the self-serving calls of some nonprofit groups whose economic stimulus positions hinge on extending the IRA charitable rollover and increasing charitable tax incentives for food donations. Federal appropriations, not the indirect incentives of charitable donations, and infusions of money into food stamps, not deductions for food donations, fit the principles of stimulating the economy. Pumping money into the nonprofit sector to deliver the services needed to respond to widespread economic distress, that’s a nonprofit sector role in the economic stimulus.
  1. Rebuilding and strengthening communities: It should have been expected that the tanking economy would push issues of race and ethnicity off the radar screen. But in communities across the nation, the recession is providing cover and camouflage for punitive actions against the racial and ethnic minorities and immigrants. Communities such as Prince William County, Virginia and the small city of Hazleton, Pennsylvania are among many that have singled out immigrants—ostensibly “illegal” immigrants (though apparently illegal simply seems to equate with Latino for the most rabidly anti-immigrant sectors of these communities)—as ineligible for a variety of services and subject to publicly sanctioned immigration enforcement vigilantism. The anti-immigrant attitudes in national opinion polls are nothing short of appalling. On subprime mortgages, the divide between the haves who might get some refinancing assistance and the have-nots whose poverty, low credit scores, and other factors may leave them without options—and without homes in not too long—has a strong racial component as well. In times of economic distress, the nonprofit sector faces the critically important role of taking on the nation’s racial and ethnic rifts and the burgeoning schism in this nation over the treatment of immigrants. This is a function uniquely suited to the nonprofit sector and should be front and center in nonprofit responses to the recession.

So is the nonprofit sector doomed to be missing in action, or just the cleanup crew, in the recession and stimulus discussion? There’s a third alternative, turning to the nonprofit sector for leadership and vision, which we hope will turn out to be the preferred course.