Nonprofits: We Must Start Beating the Drum

Print Share on LinkedIn More

How can the White House Council of Economic Advisers (CEA) totally overlook more than 10% of the American workforce?

A recent CEA report regarding the economic impacts of health care reform on small businesses completely disregards the 15 million people employed by nonprofits (in 2008, according to DHHS [PDF]) and an entire sector that accounts for 11-12% of the nation’s GDP (in 2007, according to GAO [PDF]).

So when participating in a conference call on July 28 to hear the Chair of the CEA present the report’s findings, we were not surprised at her silence about the impact on nonprofit employers. Dr. Christina Romer talked about the importance of small (for-profit) businesses and noted that the Administration’s proposed tax credits for small (for-profit) businesses would help protect those small (for-profit) businesses. But during her presentation she made no reference at all to nonprofits.

During the question portion of the call, Dr. Romer was asked whether the Administration had plans to help not only small for-profit businesses, but also “small employers” including specifically tax-exempt nonprofits, for which tax credits provide absolutely no relief.

We all basically heard her essentially reply to this effect: Excellent question, one we never thought about. We’ll find out whether the Administration has considered addressing the needs of nonprofits as small employers and get back to you.

How could the otherwise brilliant people at the CEA have such a giant blind spot regarding nonprofits, especially given their own deep professional roots in nonprofits? For example, the CEA members earned degrees at Harvard, MIT, and Yale, taught as tenured faculty at Princeton and the University of Chicago, worked for the National Bureau of Economic Research, received Alfred P. Sloan Research Fellowships, Fulbright Scholarship, and John Simon Guggenheim Memorial Foundation Fellowships, and served as officers, fellows, economists, and members of numerous other nonprofits, including the American Academy of Arts and Sciences, the American Bar Foundation, the American Economic Association, and the MacArthur Foundation. Did the CEA overlook nonprofits as small employers because it assumed that all nonprofits are large institutional nonprofits with revenue greater than $10 million a year – that actually comprise less than 1.4% of all nonprofits?

Or is the CEA simply unaware that the vast majority of America’s nonprofits – the 93.3% with income less than $1 million a year – are small community-based nonprofits focused on meeting local needs? The CEA might have ignored small nonprofits, but those community-based nonprofits don’t have the luxury of ignoring how escalating health care costs are eating away at their ability to provide valued benefits to Americans everyday, including:

  • Entering the World: community hospitals, health clinics, home health aides
  • Nurturing the Young: after-school care, youth development programs
  • Lifelong Learning: nonprofit preschools and kindergartens to elementary through post-secondary
  • Feeding the Body: food banks, meals on wheels, soup kitchens
  • Fueling the Mind: arts and culture, public radio, literacy groups, libraries
  • Earning a Living: workforce development, credit counseling, child care
  • Healing the Body: blood banks, clinics, substance abuse centers, disease eradication
  • Protecting the Body: domestic violence centers, elder care, public health campaigns
  • Sheltering the Body: homeless shelters, affordable housing developers, assisted living
  • Exercising the Body: youth sports, summer camps, sports clubs
  • Nurturing the Spirit: places of worship, service organizations, volunteer centers
  • Departing the World: hospices, organ donation organizations

Let’s not pin the blame on the CEA, however. Theirs was just one report. How is it that others in the Administration and on Capitol Hill also have not thought about and left America’s nonprofits out of the equation when forging solutions to the rising costs of health care insurance for small employers—especially when small nonprofits are no less challenged than for-profit businesses in ensuring adequate health care coverage for their employees? Why?

Although it’s tempting to say policymakers just don’t care, or that nonprofits don’t make political contributions, or countless other excuses, in truth they ignored nonprofits because we let them. Nonprofits don’t speak up about policies and issues that clearly impact us and the communities we serve. Our sector tends to be overly polite, wanting policymakers to simply invite us to the policy table because we do good work. And too often we self-censor what needs to be said in fear of retribution for speaking the truth.

Our communities’ needs are too great for us to continue sitting quietly on the sidelines. Nonprofits know that we face the same rising health insurance premiums as for-profit businesses. And we know that the math just doesn’t work: government cannot expect us to continue delivering more services to those in need while we also incur higher operating costs and receive declining revenues in this wicked economy.

But we shouldn’t expect government officials to know through osmosis alone that the economic threats to nonprofits and the communities we serve are real and dire. Such an expectation is unrealistic and will only lead to more situations like the CEA’s myopic take on health care reform: government officials overlooking us, ignoring us, disregarding us, forgetting us, taking us for granted. Moreover, as a recent special report [PDF] by the National Council of Nonprofits warns, such an expectation on our part is both unfair and unsafe to those depending on services we deliver and benefits we provide.

Now is the time for nonprofits to remind government that we exist, and we exist at a scale that should not and cannot be ignored any longer. To be effective in leveraging the full resources of the community to solve the social ills we work on, nonprofits must speak up and insert ourselves in public policy deliberations.

Pick up a drum and start beating it loudly so policymakers recognize America’s hidden-in-plain-sight nonprofit sector. Importantly, we shouldn’t beat the drum just in frustration that we’ve been ignored. Instead, we must beat it for a purpose, to tell a story. Tell the story about how nonprofits add real value to local communities and individual lives.

Let government officials know that nonprofits deserve recognition and respect. And then pull up your seat to the policymaking table. You have a constitutional right and a moral duty to be heard.

Let the drumbeat begin.

  • Patrick McWhortor

    Tim’s experience with the CEA inside the Beltway sheds light on the dire situation here in the Desert Southwest. Arizona nonprofits are reeling from a perfect storm of financial stresses: 80% face rising demand for services due to the recession; most are experiencing an average 20% drop in revenues from foundations, corporations and individual donors; a major shoe about to drop is the most drastic cut in Arizona state government funding in modern times, undermining the very sustainability of major nonprofits in our state; and all of this while health care insurance costs continue to climb faster than inflation every year.

    So, try this on for size: you are asked to provide more services for more people, while your most flexible dollars – donations – are dropping and you face the prospect of deep cuts, if not outright elimination, of your state contract. And then your insurance broker tells you that you need to cough up another 20% increase for health insurance. So you’re telling me that nonprofits don’t need relief in the health care reform package? Come on into our nonprofits and do the math for yourself.

    Let’s not forget that nonprofits, one of the fastest growing parts of the workforce in recent years (we employ more than 130,000 paid workers in Arizona), are being asked to shoulder more and more of the work of the public sector. We are seen as a “private sector model” for meeting community goals. And yet we are more limited than any other industry in how we can spend our dollars. We are given grants and contracts from government with strict limitations on how we spend the dollars. So when our health insurance costs go up, it is unlikely that our funders are giving us extra dollars to cover the increase.

    For many nonprofits in Arizona, these conditions are becoming the proverbial straws able to break backs. We cannot continue asking these organizations to shoulder the noble burden they accept to serve communities, maintain a commitment to supporting the health of their employees (according to local health benefit experts here in Phoenix, a higher proportion of nonprofits offer health insurance than other employers), while imposing ever-tighter restrictions on the use of their funds. Let’s get real about the economic significance of these community based organizations and the need for public officials and community leaders to support their capacity to serve people most in need.

    That is why the Administration and Congress should guarantee that the challenges of nonprofit employers are justly treated in any health care reform package. Don’t leave out some of the most dedicated community stewards in our midsts. Don’t leave out passionate people who want to work for nonprofits. And to the Administration, I say, do not leave out some of your stalwart allies.

    We need real health care reform now and we need it to support the vital work of nonprofits in healing our communities, maintaining essential community infrastructure and continuing to be cornerstones of American democracy.

  • Putnam Barber

    This [i]is[/i] weird.

    Thank you, Tim Delaney, for making it clear that controlling the costs of health insurance while leaving out nonprofit employees would be a huge mistake.

    Keep beating that drum!

  • Sandy Gill

    Recognizing nonprofits as employers is a significant, but simple gesture. It reflects the value of the work nonprofits provide to their communities and their contributions to the local economy.

    During Lobby Day in July, our Washington state delegation met with the staff of our policy makers in DC. They seemed supportive to the need to include nonprofits as employers. Now is the time to assure that solutions in the proposals provide for all employers including those who are nonprofits.

  • David Heinen

    Tim is absolutely right that we have an obligation to sound the drumbeat for the vital role of the nonprofit sector. We need to spread the message that the nonprofit sector is a major industry in our society – in addition to our role of providing essential services enriching lives.

    In North Carolina, for example, nonprofits provide more than 400,000 jobs and contribute $29 billion annually to our state’s economy. North Carolina’s nonprofit sector is a bigger employer than the construction, finance, insurance, or information industries.

    Most of North Carolina’s 10,000 nonprofits have fewer than 50 employees and share the challenges of other small businesses in providing health coverage for their staffs. Until our government leaders are cured of their “giant blind spot regarding nonprofits,” our sector won’t be treated as the major industry that it is.

  • Linda Czipo

    We in New Jersey can attest to the devastating problems that the economy, rising demand, shrinking funding polls and skyrocketing health premiums are causing our state’s nonprofit community.

    Your article clearly underscores the consequences when nonprofits DON’T make advocacy, education and ongoing communications with policy makers a regular priority. We can’t possibly expect our elected officials to understand our situation if WE don’t tell them, forcefully and frequently.

  • Brian Magee

    Tim – Thank you for the post – and I concur.

    I’ll just add that we’ve been down this road before in Montana during a previous attempt to expand health insurance coverage for small businesses through the Insure Montana program. Although the program has been successful in many ways, nonprofits are not eligible for key aspects of the program that use tax credits as the relief mechanism. These don’t apply. Despite assurances at the time that it would work itself out in administrative rules, it didn’t happen.

    We have responsibility here. The missing piece was a clear and organized voice from the nonprofit community. As you suggest, we must beat the drum.

  • Amy Silver OLeary

    What about allowing nonprofits to sell their tax credits, or to pass them through to staff? It might be one way to retain the tax-credit model while allowing all small employers to benefit from it.

  • Pamela Davis

    Thank you for this important message! Has any one raised the idea of a health insurance cooperative for nonprofits? Seems like many in Congress are supportive of the idea of cooperatives and they want to see something done nationwide. What better group than community based nonprofits to benefit from such a pool?

  • Michael Clark

    Thanks, Tim, for reminding your readers that nonprofits are a huge part of what makes America work (maybe best thought of as our Fifth Estate). An intrinsic part of our society from the very beginning (even before the IRS!), nonprofit organizations enrich every American life and community. They are a key means whereby state and local governments do the people’s business. Nonprofits and their employees deserve reapectful consideration in such an important national discussion as health care reform.

  • Brenda Peluso

    You are right! “We shouldn

  • Deborah Barfield Williamson

    Tim Delaney much more descriptively conveys the “cradle to grave” impact that VANNO has been articulating for some time. Every person in the Commonwealth of Virginia is impacted by a nonprofit’s services at some point in his or her life. Yet many of us take for granted these vital organizations’ existence. Leveraging over 100,000 volunteers, VA nonprofits employ over 200,000 people. And nonprofit employment outpaces that of for-profit and government employment in our state. Yet nonprofit employers have not been considered in the national debate regarding affordable insurance for small businesses.

  • Claudia Damon

    Thank you for pointing out the need for the nonprofit sector to step up to the plate and advocate.

    In NH, nonprofits are essential to the economy and quality of life in the state. Nonprofits need to be included in employer incentives for health insurance just like small businesses are included, except that nonprofits cannot benefit from tax credits so some other way needs to be found

  • Monica Reiss

    One place to beat the drum in a public forum is to attend a town hall meeting near you. I am going to my first one tonight and intend to do just that. Each of these meetings can serve to educate not only the Congressperson who calls the meeting, but also the constituents in the room.

    And a gentle reminder…there are many of us nonprofit professionals who choose to be independent consultants — either because we are between full-time positions (me) or we prefer that option. Independent consultants have to buy their own health insurance and are actually individual “small businesses.” Add the number of independent consultants to those employed full-time by a nonprofit and the numbers will be substantially increased.

    Is there any effort afoot in the nonprofit community to lobby Congresspeople as a group? If so, please let me know.

  • Melinda Lewis

    The voices of nonprofits are critical not just on health care, of course, but on nearly every public policy issue at the local, state, regional, and federal government levels–not just in representing nonprofits’ needs as a sector but, for nonprofits that serve vulnerable populations/communities, in working alongside those constituents to shape the policy agenda. You use a dramatic but not surprising example to highlight the importance of this priority, and it looks from the comments that there is a growing activism within the sector. Thank you for this article!

  • Srilatha Lakkaraju

    Thank you to Tim for writing such a powerful piece. It is a serious error to overlook the nonprofit and philanthropic sector, particularly as we continue to strive to provide adequate healthcare services in the absence of government programs.

    In Illinois, the nonprofit and philanthropic sector employs one in every 12 workers; this accounts for 427,000 individuals. This is far greater than the number employed in all the financial service industries in the state, including banks and insurance and real estate companies. The state of Illinois is not unique in providing critical services to its residents. The nonprofit sector across the country is rich with services for Americans, many of which address individual health needs.

    We must build awareness for the sector and make clear that the overarching healthcare debate should take us into consideration for the health of the nation.

  • Erin Hardwick

    Tim, thank you for your insightful comments. The nonprofit sector has been overlooked in many important policy discussions at both the federal and state levels. It’s disappointing and frustrating, but as you observed, we are partly to blame.

    I am glad that the National Council of Nonprofits exists to help galvanize the small NPO sector into action. There is tremendous latent power that must and can be tapped. There’s much work to do and NCN is the org to help do it!