N.C. Nonprofits Survive One Threat But Others Loom

March 3, 2011; Source: Winston Salem Journal | The good news for nonprofits in North Carolina is that a bill that would have made it hard for many to receive public funding was killed this week. The bad news is that the bill's backer says nonprofits are still likely to face reduced support due to budget woes.

State legislator Larry Brown, a Republican, had introduced legislation that would have had a big impact on state-funded nonprofits. Codifying some ludicrous one-size-fits-all standards of nonprofit finance, Brown's bill would have limited nonprofit eligibility for state funds based on two robotic criteria: eligible nonprofits would have to have had at least 35 percent of their funds from private sources, and they would have had to devote less than 15 percent of their funding to administrative costs.

North Carolina nonprofits, including those in Brown's Forsyth County district howled, convincing Brown to relent. Backtracking as fast as he could find a political reverse gear, Brown said he didn't mean to "hurt" nonprofits and might have been clearer in his description of administrative costs. Maybe like King Derwin in Dr. Seuss's "Bartholemew and the Oobleck," he might admit that this idea was completely wrong-headed and say these "simple words": I’m very, very sorry.

But Bert Wood of the Partnership for a Drug-Free North Carolina, though happy that Brown pulled the bill, still has concerns about faulty ideas that were behind the legislation and wants to talk to Brown and other state legislators "about what nonprofits are doing well, and how the work we do is of high value and low cost."

Brown doesn't fully get the sorry principle. He says this proposal was meant to address "some abuse in nonprofits, such as very high salaries, with only a little of the state money going to programs that help citizens." He also used the canard that the bill would have increased transparency and accountability in nonprofits. If that was the intent, the bill was ludicrous.

Despite all of Brown's hemming and hawing, the bill seems to be one of many in states and localities that seem to aim at nonprofit budgets and programs as solutions to the states' budget crises, often motivated by a discernible animus toward nonprofits and their constituents or clients. The advocacy of the North Carolina nonprofit community should be applauded, but the problems go deeper than any one bill.—Rick Cohen