Home > The Gardner Report > Debt Ceiling Deal Enacted, What Does It Mean For NPOs?

The recent enactment of the debt ceiling expansion and the creation of the “Super Committee” could have a galvanizing impact on NPOs and their roles. It is important to keep informed and to be engaged.

Gardner & Associates recommends that NPOs belong to the Arkansas Coalition for Excellence. ACE and its national partner, the National Council of Nonprofits, are advocates at the state and national level for NPOs. Take a minute to check out www.acenonprofit.org, and then join. It is a sound and timely investment!

A recent NCN newsletter contains the following article:

President Obama and Congressional leaders reached agreement on a $2 trillion deal to raise the federal borrowing limit and cut spending. The legislation, signed by the President on August 2, immediately cuts discretionary spending by $900 billion over ten years, and raises the debt ceiling in two steps, each time allowing Congress to vote to disapprove the increases (but those votes would be subject to presidential vetoes that are unlikely to be overridden). The agreement also creates a 12-member bi-partisan, bi-cameral super-committee to determine the details of an additional $1.2 trillion to $1.5 trillion in deficit reduction (which can be in spending cuts, entitlement reforms, and increased taxes). The plan developed by the super-committee will be subject to House and Senate votes without amendments by December 23. If Congress fails to reduce the deficit by at least $1.2 trillion more, the agreement calls for automatic across-the-board spending cuts: $600 billion from defense programs and $600 billion from domestic programs, with the exception of programs for the poor including Medicaid and Social Security.

Analysis of the Debt Deal

What It Means to Nonprofits

No one can predict with any certainty how the forces unleashed by the deficit reduction deal will impact nonprofits and the people they serve, nor, for that matter, how the deal will impact businesses or state and local governments. Here are a few observations to provide some perspective to the coming debates:

  • Spending cuts: As the New York Times, Washington Post, and the Christian Science Monitor report, governments at the state and local levels already are bracing for significantly reduced funding, which, in turn, limits their ability to work with nonprofits to provide services on behalf of governments in communities throughout the country.

  • Entitlement Reforms: Since policymakers generally assume nonprofits will fill in the gaps the policymakers create, many of the reforms to Medicaid, Medicare, and Social Security are likely to increase demand for services and reduce funding. Proposals on the table range from reducing eligibility and reimbursement rates, to delaying and taxing benefits.

  • Tax Reforms: There is broad agreement that the tax code is too complicated and unfair, but no consensus exists on whether reforms should be designed primarily to simplify the law and reduce tax rates, or to generate increased revenues to reduce the deficit. Lowering the individual tax rates from the current top rate of 36 percent to 25 percent, as discussed in the House, is expected also to lower the incentive for giving, as is the President’s proposal to limit the value of charitable and other itemized deductions.

Tell us what you think: How will the budget deal affect your ability to accomplish the mission of your nonprofit? How will it affect the people you serve?

Recommended websites to visit

Gardner & Associates works with its clients to make sure that their websites are informative and easy to navigate.

Take a few minutes to look at these four websites:

www.gailperry.com is an interesting and informative website on which Gail Perry, a fundraising consultant shares what she and other professionals are seeing as trends. Look at her ideas for annual campaigns and board capacity building. She makes complex issues understandable.

www.foodbanknca.org is a G&A client in Norfork, AR. Jeff Quick, FBNCA Program Director has put together an innovative site that shares the new branding, logo and programs of the Food Bank. Note the prominent “Donate Now” button. Also, note the rotating recognition of sponsors.

www.waltonfamilyfoundation.org is a newly updated website sharing the three focus areas of this foundation. Note the ease of navigation and the clarity of the message and brand.

www.wrfoundation.org is the Winthrop Rockefeller Foundation vehicle for outlining its program and impact. You will learn a great deal about Arkansas issues if you visit this page. Make it a Favorite!

Governance Capacity Building

NPO boards have four critical roles to fulfill. Becoming fully informed about the operation of your NPO, its mission and its impact is essential to grow your capacity to do the best job as a board member.

An NPO board member is responsible for four critical roles:

  • Setting and maintaining the policies of the NPO.
  • Monitoring the NPO’s operation and budget.
  • Serving as an ambassador or community figure for your NPO.
  • Acting in the best interest of the NPO in regard to friend raising, fundraising, and exercising due diligence and duty of care in managing the NPO.