Uploaded byLaurel O'Sullivan
State and Federal Fiscal Policies: Threats and Opportunities for the Nonprofit Sector
The document discusses the fiscal challenges faced by the nonprofit sector in Illinois, highlighting threats from both state and federal levels that affect funding and sustainability. It emphasizes the significant economic role of nonprofits, including substantial payroll taxes and assets, while detailing specific service cuts that impact communities. The document advocates for a policy agenda aimed at protecting nonprofit interests and fostering collaboration between nonprofits and government.
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State and Federal Fiscal Policies: Threats and Opportunities for the Nonprofit Sector
- 1. State and FederalFiscal Challenges: threats and opportunities for the nonprofit sector Laurel O’Sullivan Vice President, Public Policy
- 2. Donors Forum A nonprofitmembership association that advocates for a strong nonprofit sector in Illinois.
- 3. What We’ll TalkAbout • What’s at stake – The sustainability of the nonprofit sector – The nonprofit-government partnership • Challenges – state – federal • Opportunities: the advocacy imperative
- 4. The IL NonprofitEconomic Engine $1.5 billion payroll taxes paid by IL nonprofits $121.5 billion net assets of IL nonprofits $66 billion revenue of IL nonprofits
- 5. Nonprofit Assets in Illinoisare Significant 5 Non-profit organizations cover the state Source: Rob Paral Associates
- 6.
- 7. Nonprofits are gettingsqueezed Lack of revenue
- 8. Disinvestment Source: Ctr. TaxBudget Accountability
- 9. Key Regulatory Threats Failure to Honor Contracts Encroaching on Tax Exempt Status Threatening Autonomy Offloading Programs Depleting Philanthropic Resources
- 10.
- 11. Depleting Philanthropic Resources CappingDeductions 28% for charity $200k (i) $250k (j) Simplify Excise Tax 1.35% $54M/ decade Other issues Extenders (no) Estate Tax (yes)
- 12.
- 13. Specific Cuts forIllinoisans $24.7 million lost for services to children with disabilities. $1.4 million eliminated for job search assistance, referral and placement. $6.4 million lost to ensure clean air and water protections. $968,00 in funds to respond to public health threats $764,000 in funds for senior meals.
- 14. Towards Mutuality…a NonprofitPolicy Agenda Protecting Beneficial and fair tax policies Public funding/ budget-making Public trust Promoting Advocacy rights Nonprofit health Partnering Improving collaborations Innovative models
- 15. A changing contextrequires fiscal and system reform
- 16. 16 Working Across Silos Promoting the value ofthe sector Contracting reform Budgeting for Results Illinois System Challenges
- 17.
- 18. Join us atthe Illinois Nonprofit Summit! Loyola Presentation 18 Mid November 2013 Nonprofit & Foundation Leaders Strategizing a nonprofit policy agenda for the 2014 Gubernatorial Election
- 19. LAUREL O’SULLIVAN, V.P. PUBLICPOLICY Questions? losullivan@donorsforum.org @lkosullivan (twitter) www.linkedin.com/in/laurelosullivan
Editor's Notes
- #2 By a show of hands: How many of you work in the nP sector? For 0-5 years, 5-10, 10 or more?Did you know, that the NP Sector is the 4th largest sector in Illinois behind local gov’t, retail and manufacturing. Employs 9% of the workforce or 517,000 employees. That would seem to suggest an economic might that would be taken seriously the same way manufacturing and other corporate interests are in IL. They receive tax breaks and incentives to stay put because their value is understood.Our challenge is we don’t talk about our value in tangible terms, we often act more like supplicants than partners in building communities and we ask for payments but to many lawmakers, the whole value of the transaction and the services delivered is poorly understood. The result is thatfiscal policies and decisions at the state and local level are often made with little to no input from nonprofits, nor with full understanding of the real value nonprofits deliver for the residents of Illiinois.In this way, many of the fiscal policies are a result of policymakers not understanding the value of the sector, and under our control.When is the last time you heard of a nonprofit receiving an incentive to stay put?At our state budget forum Prof. Merriman’s colleagues, Professor Dick Dye said, “Somebody’s ax is going to be gored” I would argue in Illinois, it’s the NP sector’s ax that is repeatedly getting gored,
- #6 The non-profit sector has substantial representation across the state.Illinois is home to 32 counties or over half where non-profit organizations have assets exceeding $100 million.
- #12 THE FINAL TREND IS DRAINING THE POOL OF PHILANTHROPIC DOLLARS . Right now in DC nonprofits have become caught in the partisan debate over the much hyped Fiscal Clif. AT THE SAME TIME, THAT GOV’T HAS BEEN OFF LOADING MORE RESPONSIBLIIES ONTO CHARITABLE NONPROFITS, THEY HAVE BEEN TRING TO TAKE AWAY FUNDS AVAILABLE BY PROPSING AND ENACTING WAYS TO REDUCE CHARTIABLE GIVING INCENTIVES AT THE FEDERAL LEVEL. MOST OF THE MEDIA COVERAGE OVER THE FEDERAL BUDGET NEGOTIATIONS HAVE FOCUSED ON THE IMPACT TO THE WEALTHIEST, RATHER THAN THE COMMUNITY LEVEL IMPACT THAT OCCURS WHEN THOSE MOST IN NEED OF RECEIVING SERVICES ARE FORCED TO GO WITHOUT. (SIDENOTE: At the State Level, the ENDOW IL BILL PASSED SENATE, REPRESENTS PROGRESS---WOULD BE STATE’S FIRST EVER CHARITABLEG IVING INCENTIVE). Among its specific provisions, the President's budget:proposes capping itemized deductions, including the charitable deduction, at 28 percent on income above $200,000 for individuals and $250,000 for joint-filersimplements the so-called Buffett Rule, which phases in a minimum 30 percent effective tax rate on those earning $1 million or more annually (under the Buffett Rule, the charitable deduction would be the only itemized deduction available to affected taxpayers) assumes a permanent extension of the federal estate tax at 2009 levels of a $3.5 million individual exemption and a 45% top ratedoes not specifically mention the package of annual tax provisions known as "extenders," which includes charitable provisions such as the IRA Charitable Rollover and enhanced deductions for donations of food inventory and conservation easements includes a provision calling for a single, 1.35% excise tax rate on investment income of private foundations at an estimated cost of $54 million over 10 years proposes $1.06 billion in total funding for the Corporation for National and Community Service, including the:$49 million for the Social Innovation Fund, to provide seed money and scale up innovative programs that leverage private and foundation capital to meet major social challenges ($4 million of this is to improve nonprofit evaluation capacity by facilitating access to State and Federal Administrative data) $10 million for the George H. W. Bush Volunteer Generation Fund to provide grants to States and nonprofit organizations to recruit and manage volunteers. Having already passed competing budget resolutions in both chambers, lawmakers are unlikely to take up individual measures presented in the President’s blueprint. The proposal may instead be used as a groundwork for upcoming negotiations between the White House and Congress over extending the debt limit this summer and for finding common ground during tax reform legislation.
- #13 This is the most significant outcome of the fiscal cliffThe President’s $3.77 trillion budget plan includes a mixture of revenue increases and spending cuts, as well as investments in education, job creation, and infrastructure. The budget would replace the $1.2 trillion in automatic sequestration spending cuts enacted March 1 with $1.8 trillion in alternative deficit reduction, reducing annual deficits to 1.7 percent of GDP within ten years.