Pennsylvania Nonprofits Look in the Mirror

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good good morning! / Caroline

December 7, 2016;

The Commonwealth of Pennsylvania is the nation’s 33rd-largest and sixth-most populous state. According to GuideStar, there are 71,226 501(c)(3) public charities (plus 4,767 religious organizations) operating in the state. The sector employs 727,200 people (13.3 percent of the state’s workforce) generating $109.8 billion in annual revenues. Hospitals (35 percent), educational services (19 percent) and nursing and residential care (16 percent) lead in the share of nonprofit employees. Social assistance is next at just nine percent. Pennsylvania foundations give approximately $1.6 billion dollars annually, compared to Pennsylvanians giving $6 billion annually.

The Lincoln Institute for Public Policy Research in cooperation with the Pennsylvania Association of Nonprofit Organizations (PANO) just completed their 2016 Pennsylvania Charitable Organizations Survey in November. The survey was conducted electronically with a total of 177 nonprofit organizations responding.

While expressing confidence in the sector to accomplish its collective mission, only 10 percent of the respondents believe that public trust in the nonprofit sector is “high,” with 31 percent of the respondents saying that the level of trust had worsened.

Respondents are concerned about the state’s deteriorating business conditions and about the new overtime regulations presently halted by a federal court ruling. Survey respondents estimate the new overtime rules would increase payroll costs by 43 percent, add costs associated with tracking employee hours, and 30 percent of the respondents would be forced to cut staff.

By a two-to-one margin nonprofits have seen state funding levels decrease over the past five years. Twenty-one percent said funding from the state had dropped during that period of time while ten percent saw an increase in state funding. The other half of the organizations said funding from state government has remained about the same.

Likewise there has been a slight drop in federal funding. Sixteen percent said their organization’s funding from the federal government has dropped over the past five years, 12 percent said federal funds have increased. Federal funding remained about the same at the remaining 45 percent of organizations surveyed.

Other concerns include property tax exemption challenges: “Seven percent report having had their property tax exemption challenged over the past two years and 13 percent are concerned their municipal or county government may challenge their exemption next year.”

Perhaps the most intractable challenge is the state’s recurring budget battles that too often careen into a lengthy impasse. NPQ sees this happening elsewhere as well, especially Illinois. When the state government cannot pass a budget through the General Assembly, the Commonwealth cannot pay its bills or meet its payrolls. The budget stalemates threaten more than schools. Counties, which rely on the state for as much as 40 percent of their budgets, have scrambled to deal with the revenue loss. Sixty-eight percent of the survey respondents would favor new legislation that would fine legislators for missing sate budget deadlines, “with penalties increasing for each day past the June 30th deadline.” The 2016–17 state budget ($31.5 billion) was passed in June 2016. There were seven consecutive budget impasses in Pennsylvania between 2003 and 2009 and again in 2015. As NPQ reported in December 2015:

Nonprofits are stanching the bleeding with loans, cutting staff and hours, and drawing down on financial reserves. Anne Gingerich, executive director of the Harrisburg-based Pennsylvania Association of Nonprofit Organizations, said, “Organizations are getting to the point where they are about to shut off the lights. They are increasingly willing to speak out and poke the bear.”

The Lincoln Institute, founded in 1992, looks to the future by saying, “Perhaps someday there won’t be a need for ‘taking the pulse of Pennsylvania’ or, as Thomas Jefferson observed keeping ‘eternal vigilance’ over the affairs of government. In the meantime, we’ll be there.” Given the circumstances revealed by the recent annual survey of the Commonwealth’s nonprofit landscape, they will need to be there for some to come.—James Schaffer