It’s Time to Shut Down Government’s Unfair Treatment of Nonprofits
Reflections from Foundations on the Hill 2024
By: Neill Coleman, Founder and Principal, Mission Magnified Consulting
The clock was ticking – again. As Philanthropy New York staff and members traveled to Washington D.C. to join philanthropy networks from around the country at Foundations on the Hill, another shutdown countdown was underway and government funding threatened to run out in just a few days.
During our visit we met with the offices of a bi-partisan group of members of congress from the New York City metro area (including Westchester and Long Island) and the offices of both New York senators. In our conversations with congressional staff, we consistently heard their frustration with how dysfunctional congress is right now.
Many of us working in philanthropy think of ourselves as problem solvers. But the truth is: congressional dysfunction is not a problem philanthropy can solve. That’s up to voters. Philanthropy can’t plug the trillions of dollar gaps that occur if the federal government shuts down, or there are steep spending cuts. However, it was clear from our conversations with congressional staff, what philanthropy can do is help ensure the billions of federal dollars that are disbursed when the government is open, get to the people who need them most, and in an equitable way.
Non-profit Capacity Building
To start, philanthropy can support more capacity building for the nonprofit sector. One opportunity that came up in a number of conversations was “congressionally directed spending” or “community project funding” – fancy terms for what used to be called earmarks. These are government funds which members of congress direct to particular nonprofits in their districts, perhaps a library, a performing arts center, or children’s mental health services. In fiscal year 2023, Congress designated over $15 billion for about 7,200 local or community projects. Most congressional offices operate some kind of process for nonprofits to apply for these funds but - in a dynamic familiar to philanthropy - it is often the larger and better-resourced nonprofits with development staff who are aware of the opportunity and are able to put together an application. Foundations can help level the playing field by sharing the opportunity of applying for congressionally directed spending with grantees, and providing grants or technical assistance to support smaller and BIPOC led nonprofits in applying.
Contract Reform
Beyond earmarks, nonprofits are often tapped to deliver whole government programs, drawing on their local expertise and community connections. With billions of dollars flowing from recent federal appropriations for climate and infrastructure, nonprofits are well-placed to manage those funds and to help ensure that they reach those most in need. But government must fulfil its side of the bargain by ensuring nonprofits receive timely and complete payments, so they can focus on their vital work, not chasing overdue funds. Elected officials in New York city and state should pass legislation and make system reforms that hold government agencies accountable for registering and paying contracts on time. And the proposed Nonprofit SEAT legislation would reduce these burdens at the federal level, as well as making it easier for nonprofits to advocate for themselves.
Ensuring a Living Wage Standard
Making sure that nonprofits are paid goes hand in hand with ensuring nonprofit workers are paid a living wage that reflects their value. These essential workers tirelessly supported New York communities throughout the COVID-19 pandemic, working on the frontlines at great risk to themselves and their families but they are often paid poverty wages. This is also an equity issue as the nonprofit sector in New York City largely employs women and people of color. The recently announced fifteen percent cost of living increase for New York City human services workers is a significant victory for this movement but wages for human services workers still do not fully reflect the value of this work.
Both timely payments for nonprofits and a living wage for nonprofit workers are key components of Philanthropy New York’s public policy agenda. Funders can step up to support this work by joining with Philanthropy New York peers in activities like Foundations on the Hill, by supporting organizations advocating for these priorities such as Human Services Action , an advocacy organization dedicated to fighting for the needs of New York’s human services sector, (Disclosure: I serve on the board of Human Services Action), or by raising your own foundation’s voice directly with elected officials.
This was my third time participating in Foundations on the Hill and every time I walk the halls of Congress, I am reminded of the tremendous influence philanthropy possesses. It is inspiring to me that this year Philanthropy New York was again deploying that influence, not just for our own interests, but to make the case for the value and needs of the nonprofit sector we fund. By doing so, philanthropy can use its influence to help direct the smarter and more equitable use of billions of government dollars, especially now another shutdown has been averted, at least for now.
Neill Coleman is the founder and principal of Mission Magnified Consulting and is a board member of Philanthropy New York, where he co-chairs the Public Policy Committee.