News and analysis
February 15, 2012

Nonprofit Leaders See Flat Spending for Charities in 2013 Federal Budget as Good News

Derek Lieu

President Obama proposed spending $100-million on the Promise Neighborhoods program in 2013, which is more than the current budget of $60-million, but less than the $150-million sought for 2012.

For nonprofits that have become accustomed to austere federal spending plans, the 2013 budget that President Obama unveiled this week offers no big surprises.

With a few exceptions, the $3.8-trillion blueprint proposes no drastic cuts to social programs. But it proposes few big increases either, despite what nonprofit leaders say is a growing need for services to help people recover from the economic downturn.

In a sign of how the political and economic climate has changed, some nonprofit leaders welcomed proposals that would simply preserve current spending levels as good news.

“These are challenging times and level funding is quite frankly okay,” says Chris Krehmeyer, president of Beyond Housing, a group that helps low-income families in St. Louis rent or buy housing.

President Obama proposed flat budgets for two programs that benefit Mr. Krehmeyer’s group—Community Development Block Grants (about $3-billion) and the HOME Investments Partnership Program ($1-billion), both of which provide money to states and cities for housing projects.

But he says those programs faced steep cuts in the 2012 budget, so “holding the line” was an improvement.

James Horney, vice president for federal fiscal policy at the Center on Budget and Policy Priorities, a liberal think tank, holds a similar view about Mr. Obama’s proposals to preserve the safety net.

His center believes programs like Medicaid, rental subsidies, and Temporary Assistance for Needy Families need to be strengthened, especially given rising poverty levels, in ways that Mr. Obama did not propose.

But, he says, “The reality is, given the fiscal and political situation, that’s not realistic.”

That “reality” comes in the form of House Republicans, who have pushed for deep spending cuts, and the Republican presidential candidates, who have all vowed to sharply reduce the size of government.

Republicans and conservative advocacy groups have blasted Mr. Obama’s budget, which calls for cuts in some areas but new spending in others, including education and transportation, while seeking higher taxes on the wealthy—an approach they said would add to the country’s budget deficit and dampen investment.

Rep. Hal Rogers of Kentucky, chairman of the House Appropriations Committee, complained that Mr. Obama made no “substantive” effort to rein in the costs of entitlement programs like Social Security or Medicare.

He said his committee would scrutinize the proposal to root out “unnecessary, ineffectual, and problematic spending.”

'Placeholder’ Budget

In some ways, however, Mr. Obama’s budget is a placeholder: Congress is unlikely to move seriously on it until after the November elections, when voters will weigh in on which deficit-cutting approach they prefer.

At that point, however, Congress will be nearing a deadline that scares some nonprofit leaders—January 2013, when mandatory across-the-board spending cuts are scheduled to take effect because the bipartisan Congressional “supercommittee” failed to agree on a deficit-reduction plan.

In the meantime, nonprofit groups that are worried about the future of government programs are gearing up for their usual advocacy campaigns.

Voices for National Service, a coalition of groups that promotes national-service programs, says Mr. Obama’s proposal to increase the Corporation for National and Community Service’s budget by 1.3 percent, to $1.06-billion, and to keep the number of AmeriCorps members at the current level of 82,500, falls far short of the demand for people who can help “communities in need.”

Scaled-Back Ambitions

Mr. Obama’s AmeriCorps proposal is just one example of how he has had to scale back his ambitious early goals. He strongly supported 2009 legislation to expand AmeriCorps each year, to reaching 250,000 members by 2017, ­but has been unable to put that plan it into place.

He has also cut back his aspirations for the Promise Neighborhoods program, which provides grants to projects that offer an array of “cradle to college” services to children and families in troubled communities.

He proposed spending $100-million in 2013, which is more than the current budget of $60-million, but less than the $210-million he proposed for 2011 and the $150-million sought for 2012, numbers he could not sell to Congress.

Among the losers in Mr. Obama’s plan: the nationwide network of more than 1,000 “community- action agencies” that get money for antipoverty projects from the Community Services Block Grant program.

Mr. Obama proposed slashing those grants from $677-million to $350-million. He proposed a similar cut last year, but the program’s supporters waged a vigorous lobbying campaign that helped persuade Congress to preserve most of its budget.

Don Mathis, president of the Community Action Partnership, which represents local groups, says the advocates are ready to do it again this year.

Among the winners: arts and culture groups. Mr. Obama proposed increasing the budgets for the National Endowment for the Arts and the National Endowment for the Humanities to $154.3-million each, up from $146-millionmilion this year. Some of that money will go to help the agencies move out of a historic government building in WashingtonWashigton that is set to be redeveloped into a luxury hotel.

But the NEA said the proposal would allow it to increase its grants to state arts agencies, regional arts organizations, and nonprofits by $6.7-million, to $124.2-million.

Among Mr. Obama’s other spending proposals:

Child-Care and Development Block Grants. $2.6-billion, up from $2.3-billion, for grants to states to help pay for child care for low-income parents.

Community Health Centers. $3.1-billion, up from $2.8-billion, for the nonprofit centers that provide primary health care to low-income people. That includes a $1.5-billion injection from the new health-care law.

Head Start and Early Head Start. $8.05-billion, an increase of $85-million for the early-learning programs.

Housing. $2.2-billion for homeless assistance grants for the homeless, up from $1.9-billion; $150-million for the Choice Neighborhoods Program, which provides grants to nonprofits and other groups to revitalize high-poverty neighborhoods, up from $120-million; and $55-million for housing counseling services, including those offered by nonprofits, up from $45-million.

Low-Income Home Energy Assistance Program. $3.02-billion, down from $3.4-billion, for the program to help low-income families pay their heating and cooling bills. President Obama tried to cut the program even more last year, to $2.6-billion, but says he increased the number this year because of the rising cost of fuel oil.

Social-Services Block Grants. $1.8-billion, the same as this year for this program, which provides grants to states to help pay for social services.