Nonprofits Hope for a Piece of Ecomonic Stimulus Package

As Congress digs in to negotiate President Obama’s $825 billion economic stimulus package, advocates for groups on the front lines of the economic crisis hope that the nonprofit sector gets a piece of the stimulus pie, the Christian Science Monitor reports.

The sector, which employs 10 percent of the workforce — more than the auto and steel industries combined — has seen its revenues plummet as foundations, corporations, and state and local governments cut back on their funding for nonprofits. Nonprofit advocates argue that aid for the sector not only would preserve jobs and shore up a crucial part of the service-delivery network, but would also help spur an economic recovery. Unfortunately, policy makers tend to overlook the economic contributions of nonprofits, said Lester Salamon, director of the Center for Civil Society at Johns Hopkins University and a former deputy associate director of the White House Office of Management and Budget. Salamon pointed to the hundreds of low-income housing organizations and community-development credit unions across the country with billions of dollars invested in mortgages that are performing well as proof that the sector could help contribute to a resolution of “the mortgage mess.”

The American Recovery and Reinvestment Act of 2009, as the bill is called, targets tax cuts, infrastructure, and state aid. While some of the monies would trickle down to nonprofits through state and local government contracts, critics claim the process is likely to be slow and cumbersome. For instance, the legislation would give billions to states for Medicaid and “block grants,” but “that’s not a substitute for doing something to more directly and more speedily move money to the nonprofit sector,” said Isabel Sawhill, senior fellow in economics at the Brookings Institution.

Proposals floated in recent weeks to help the sector navigate the economic downturn include setting up a short-term, $15 billion bridge loan fund targeting human service providers; using the Emergency Food and Shelter Program to get federal dollars flowing quickly to community services; and investing 10 percent of the stimulus, about $80 billion, directly into nonprofits. Regarding the latter proposal, Sawhill suggests distributing the temporary funds broadly across the sector in proportion to the revenue each organization reported to the IRS in the prior year, with a cap on what a group could receive.

“We can take advantage,” said Sawhill, “of a huge network of institutions that work hard…to improve the welfare of communities and individuals, that will spend the money quickly, that have the capacity to spread the dollars widely, and that in the absence of such help will need to shrink and thus become another drag on the economy.”

Source: Philanthropy New Digest