On the Nonprofit Sector and Community Solutions Act of 2010

As I pointed out in my last piece for the Huffington Post, the lack of economic-impact information on arts nonprofits in New York State is complicating the process by which the sector applies funding arguments to maximum political effect.

I had asked a relatively simple question: How many jobs would be lost if appropriations for the New York State Council on the Arts wind up cut as deeply as Gov. David Paterson has proposed? And the truth is, no one really knows. In fact, a lot of nonprofit statistics are spotty. There’s a lot of effort being made out there, and I don’t mean to be cast aspersions. But the gaps, too, are worrisome.

In my view, every dollar in giving, public or private, should have a statistic attached to it that justifies and validates it. Anything less should be unsatisfactory to arts advocates. Anything less should worry nonprofit advocates in general.

With respect to the arts and New York specifically, it is true that the redoubtable Randall Bourscheidt, president of Alliance for the Arts, puts a great deal of faith in the Cultural Data Project, which New York, along with Pennsylvania, Maryland, California, Illinois, Massachusetts, Ohio and Michigan, is participating in, and which promises to make it far easier to fashion such basic statistics. This is not something to dismiss — it is a smart project and forward-thinking.

As I noted on the HuffPo, the project, operated by the Pew Charitable Trusts,

enables “arts and cultural organizations to enter financial, programmatic and operational data into a standardized online form.” Results can then be devised on various topics — including, perhaps, sector employment. Officially, the stated aim of the Cultural Data Project is to help grant-making organizations reach funding decisions. Clearly, though, any up-to-the-minute arts data has the potential to be used as a policy and political tool.

But what, I wonder, if you’re not one of those participating states? What if we wish to look beyond arts and culture? What if we wish to consider the fiscal impact of all areas of the nonprofit sector and their individual and/or collective impact on America’s overall economy? If we’re stuck with nonprofit as an economic model, what is necessary in order to protect and sustain it?

Rep. Betty McCollum (D-MD) has introduced HR 5533, the Nonprofit Sector and Community Solutions Act of 2010, as one way to tackle the question. It may not be the only way. But it is worth some examination.

Yesterday, I received a press release about the bill, which has been praised by Maryland Nonprofits and the National Council of Nonprofits. Much of the press release happen to be focused on how HR 5533 will benefit Maryland; I had to read the press release twice as McCollum, in fact, represents Minnesota. Still, we’ll worry about that some other time.

What caught my eye was this paragraph:

“Congresswoman McCollum recognizes the vital role nonprofits play in communities across America and the essential need to strengthen the partnership between government and nonprofits in order to deliver vital services, build capacity, enhance accountability, and save taxpayers money,” said Tim Delaney, President & CEO of the National Council of Nonprofits. “This landmark legislation removes the cloak of invisibility that the federal government seems to have draped over the nonprofit sector.”

And also this paragraph:

The U.S. collects and reports current economic performance indicators for nearly every other industry, but does not know basic facts about the nonprofit sector such as how many individuals work for charitable nonprofit organizations, how many federal dollars flow to nonprofits through state and local governments, or even how much public support is given each year to distinct charitable activities. This legislation will finally provide a way for Maryland to have access to that data and help both nonprofits and policy makers establish better partnerships to serve local communities.

The language of the bill, of course, is locked up in legalese, but in addition to a breakdown of all the areas of nonprofit work (health and human services, religion, faith and spirituality; arts and culture, etc.), it offers the following findings:

• Nonprofit organizations are a significant and highly diverse sector of the economy of the United States that includes 1,500,000 organizations, according to the Internal Revenue Service, and that accounted for as much as 5 percent of the Gross Domestic Product of the United States in 2008, according to the Government Accountability Office.
• While no Federal agency regularly collects systematic employment data on the nonprofit sector, the Congressional Research Service estimates that nearly 10 percent of the workforce of the United States is employed in the nonprofit sector as a whole and more than 7 percent are employed by 501(c)(3) public charities.
  
• Most nonprofit organizations are small employers focused on delivering vital services and creating opportunities in communities and among groups of people and, according to the National Center for Charitable Statistics, 93.3 percent of the nonprofit organizations in the United States have an annual budget of less than $1,000,000.
• Federal agencies, as well as State and local governments, rely on nonprofit organizations to implement government-funded initiatives at the community level to accomplish public policy goals.
• The Federal Government provides significant support to for-profit businesses through the Small Business Administration and other agencies and programs that are not accessible to or intended for nonprofit organizations.
• Despite the importance of the nonprofit sector to the United States economy and to the success of many Federal, State, and local policy initiatives, no Federal agency has responsibility for evaluating, building, or maintaining the capacity of the nonprofit sector and no congressional committee has jurisdiction over the sector as a whole.

The bill also calls for the creation of a US Council on Nonprofit Organizations and Community Solutions (terrible name) and various other actions and/or bodies that the radical right will surely oppose. After all, we can’t use “community” and “solutions” in a political atmosphere as toxic as this one without generating Sharron Angle-like hosannahs for the misuse of the Second Amendment.

But if we could strip away politics for a moment, the idea here is right on. We need comprehensive numbers and we need them now.

Section 303 of the bill, for instance, would call on the Director of the Office of Management and Budget to “ensure accurate and timely data on direct and indirect funding provided to nonprofit organizations by the Federal Government, including through contracts and grants.” That’s one way to track the effectiveness of the federal purse.

And Section 404 would instruct the Secretary of Labor to “take steps to ensure that employment data provided by the Bureau of Labor Statistics includes nonprofit organizations as a distinct category of employer.”

The question is how long the bill will linger in the House. My guess: 2012 or beyond. I hope I’m wrong.