I know that some will bristle at the use of the term “partnership” in reference to our relationship with government. Fair enough. Yet, consider the following straightforward facts. First, nearly 30% of all nonprofit revenues come from local, state and federal government sources. In comparison, less than 1% of nonprofit revenues come from institutional foundations. Government is a major funder of essential services that are delivered through nonprofits. Secondly, we are regulated by government everyday in so many ways. This goes for small “main street” nonprofits all the way up to large nonprofits with multi-million dollar government contracts. We all know the demands of reporting and compliance at all levels of government because we feel them every day. Finally, government has the ability, through policies and practices, to spur (or not) charitable giving and private philanthropy through tax incentives and other means. My sense is that we can do much better on this front and that we’re not getting the bang for the buck that we should expect. Given these facts, doesn’t it make sense that we work toward a stronger partnership with government? Aren’t the implications for our communities too great not to do so?
The following developments from the last month suggest that there is much work to do. Consider:
Government contracting practices – Just this month, the Urban Institute and the National Council of Nonprofits released the findings of the first comprehensive research survey of government contracting practices across the country. The picture, to put it mildly, isn’t pretty and points to a fundamentally broken system that hurts everyone. Even Montana, which grades out better than most states on many indicators, is being described as the “least worst” in ongoing discussions about the research results. There is plenty of data that supports the notion that the system is broken. And, in this case, everybody loses – those in need of services, nonprofits with contracts, nonprofits without contracts, policymakers, government agencies, taxpayers, and our communities. Everyone.
Tax exemption issues – If you subscribe to the Nonprofit Quarterly’s daily Nonprofit Newswire, then you know that a day doesn’t go by without a new story of governments proposing and seriously considering new taxes and fees on nonprofits. All of this despite a sound argument that doing so would likely be counterproductive to the delivery of essential services in our communities. We in the nonprofit community haven’t done a good job at all of communicating why tax exemption in the first place. Now, as government budgets are stretched thin and revenues continue to decline, our own inactivity is coming home to roost. Just in the past few months, the City of Missoula debated a new tax district that would have included nonprofits in the community. Fortunately, nonprofit leaders in Missoula were able to convince Missoula officials of the problems with this approach.
Basic data and information – For all the reporting and compliance that we’re required to do, our governments know very little about us, but public policy is still implemented that dramatically impacts our work and our communities. Tim Delaney, CEO of the National Council of Nonprofits, is often quoted as saying the federal government can easily tell us how many heads of lettuce were exported in any given year, but the federal government can’t tell us even basic information about how many citizens work for charitable nonprofits. How can we possibly make good public policy decisions that strengthen nonprofits if this is the case? The short answer is that we simply can’t. Just this last week, hundreds of nonprofits lost their tax exempt status in Montana because they had not filed a Form 990 with the IRS in the past three years. We know that many of these nonprofits were previously exempt from filing and our suspicion is that IRS efforts to reach them fell flat because the IRS itself had old – sometimes decades old – contact information for these nonprofits. That is a travesty.
In summary - government contracting challenges, new tax and fee proposals, and nonprofits that have lost their tax exempt status. All in the last month. All in our own backyard. All under the Big Sky.
I want to conclude by saying this is not an attack on government. Nor is it a call for more or less government funding. This is not a call for this policy or that policy related to charitable giving incentives. It’s not even a call for more or less government regulation. This is a call at long last for a conversation amongst partners and a seat at the table with our government. We simply must improve our relationship with government and we must forge a better partnership for the benefit of the work we do and the communities we serve. In future columns, I’ll be digging deeper into the issues outlined above - as always, feedback is welcome.