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Public Policy Forecast and Federal Shutdown

by Jennifer Gray

The following content from the National Council of Nonprofits has been reprinted with permission.

Our 2019 Public Policy Forecast for Nonprofits

For the third consecutive year, the Chronicle of Philanthropy has published our annual public policy forecast for the nonprofit and foundation community: The Effects of 2019 Tax-Policy Decisions Will Linger for Decades. It’s Time to Weigh In. Admittedly, many of us instinctively recoil at the term “tax policy,” just as we would hearing a rattlesnake’s rattle, not from fear but from dread of it being boring and complex. Yet unless your organization has an extra $5,000 – $100,000 sitting around unused, leaders of nonprofits and foundations cannot afford to ignore what is shaping up to be 2019’s biggest policy issues at both the state and federal levels. Decisions on tax policy made this year will influence whether organizations’ missions will be thwarted for the next few decades by additional financial burdens. Even if tax legislation as introduced doesn’t mention nonprofits or foundations, experience repeatedly shows that whenever a legislative body reopens its tax laws, there will be new winners and losers, whether intentional or due to sloppy drafting. Nonprofits should view this year’s big issue of “tax policy” both as a potential threat to their organizations’ missions and an opportunity to advocate for improvements that benefit the community.

Partial Federal Government Shutdown Takes Toll on People, Nonprofits

The longest federal government shutdown in U.S. history continues as President Trump refuses to back off his demand for $5.7 billion to fund a wall on the southern border and congressional Democrats consistently reject the demand. As of this writing, nine cabinet departments are mostly shuttered and 800,000 federal employees are either furloughed or being required to work without pay. Plus, an unknown number of the estimated 3.7 federal contractors are not being paid – and likely will not be paid retroactively for time locked out during the shutdown. The adversely affected departments and selected high-profile programs include Agriculture (payments to farmers), Commerce (census planning, weather service), Homeland Security (border protection, transportation security), Housing and Urban Development (housing vouchers), Interior (national parks), Justice (courts and law enforcement), State, Transportation (safety inspections), and Treasury (IRS). The administration has made announcements about expediting SNAP funding to the states and continuing to process income tax refunds, but its legal authority for these and other actions is in doubt.

The shutdown is estimated to cost the economy more than $1 billion each week that it continues, but the impact on nonprofits and the individuals they serve will have lasting consequences. Nonprofits are finding that furloughed federal employees cannot issue grants or contracts to nonprofits and cannot make payments to reimburse nonprofits for work they already have performed for the government. Some of these organizations are forced to take out lines of credit or layoff staff and reduce or eliminate certain services, costs in economic and human terms that will never be recovered even when government operations return to normal. Equally harmful are the indirect, yet still significant financial and human costs of the shutdown that charitable organizations are experiencing with increasing frequency. For example, furloughed federal employees are joining the already long lines of individuals seeking assistance at food banks and other nonprofit providers. Tragically, nonprofits are reporting the shutdown is playing out in terms of stressing worried couples and parents to the point of forcing some family members to seek protection at domestic violence shelters. The dollars and hours of service diverted from nonprofit missions to address this politician-inflicted crisis will never be recouped and the unnecessary human toll will not be erased in too many instances.

All Three Sectors of the Economy Unite Against the Shutdown

As the machinations of the President and congressional leaders produce no headway, groups representing the three major segments of the U.S. economy are speaking out. Representing the public sector, the bi-partisan National Governors Association urged the leaders to “re-open the government now and, then, reach across the aisle to find a solution that will end the current impasse.” Their letter explains, “Every day, governors must work with our state legislatures, local governments, and stakeholders throughout our states to find common ground, and we believe Congress and the President must do the same.” The U.S. Chamber of Commerce also weighed in strongly, urging “Congress and the administration to resolve this impasse and reopen the government.” The Chamber letter highlights the many adverse consequences of government officials not being allowed to do their jobs, challenges ranging from the lack of safety inspections and delays at airports, to stalled approvals of routine financial and trade transactions, all of which are harming businesses of all sizes and types.

The National Council of Nonprofits, in a letter designed to exert more pressure to reopen the government, stressed, “The government shutdown is no mere negotiating tactic; it is a tragic failure of leadership … that now has very real and lasting consequences for our fellow Americans, our communities, and our organizations.” The letter, shared with all Members of Congress, explained the direct harm to charitable nonprofits, how the shutdown injures nonprofits as collateral damage, and the tragic toll on individuals served by nonprofit food banks, domestic violence shelters, and many others. The letter concludes, “It is our honor and duty on behalf of the nonprofit sector to join with leaders of the public sector and the for-profit business sector in calling on you to immediately reopen the federal government and then negotiate on the issues that divide you.”


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