While many nonprofit organizations — especially those focused on areas such as racial justice, international development, affordable health care, the environment, and immigration — will shed no tears when President Trump leaves office in January, the election was hardly a clear-cut win for the philanthropic world, and a still-divided government raises questions about when desperately needed federal stimulus funds will get to charities.
President-Elect Joe Biden has vowed to the shift the narrative in the nation’s highest office on issues that many charities care about, including the nation’s leadership role in foreign affairs, curbing climate change, and rooting out systemic racism. Many nonprofit organizations were hoping for a “blue wave” to sweep Democratic control into Washington, paving the way for progressive legislation and for passage of the long-delayed pandemic relief bill.
But with Republicans expected to maintain control of the Senate — and pick up seats in the House — Biden will be limited in what he can achieve through legislation. Even the timing of the relief package, which would provide much-needed funds to state and local governments and filter down to struggling nonprofits, remains in doubt and may not happen until 2021.
Still, charity advocates say there’s plenty that Biden can accomplish through executive orders and regulations, such as rolling back Trump’s policies limiting immigration and rejoining the Paris climate agreement.
“The administration can reverse some very bad executive orders and policies, even though big changes aren’t likely legislatively,” says David Thompson, vice president for public policy at the National Council of Nonprofits. “Instead of grand slams, we can start working for singles and doubles. There’s plenty of room to work.”
Impact on Charitable Missions
For some causes that suffered under Trump, Biden’s win on its own may be enough. Robert Bank, president of the American Jewish World Service, says the Biden presidency will be an opportunity for the country to re-engage with other nations — to help the marginalized, combat global warming, and tackle the international Covid-19 crisis.
“This is a historic turning of the ship,” Bank says. “It’s a major opportunity for a global reset with respect to American diplomacy.”
But in other parts of the nonprofit world, leaders say Biden will have to scale back his agenda as he works with Republicans in Congress. Drew Altman, president of the Henry J. Kaiser Family Foundation, which focuses on national health issues, says Biden proposals like giving everyone a “public option” similar to Medicare and expanding Affordable Care Act subsidies are likely off the table.
“It’s time to lower expectation for the health-care agenda,” he says.
Charitable-Giving Incentives
The divided government isn’t all bad news for nonprofits. Republicans are widely expected to block Biden’s tax plan, which would have raised taxes on the wealthiest Americans and limited their charitable deductions. In the past two decades, the wealthiest Americans have accounted for an increasingly large share of total philanthropic giving.
“If the charitable community was only looking out for its own self-interest, I think it would view the Biden tax plan not passing as a positive,” says Ken Kies, a long-time Washington lobbyist whose clients include nonprofit groups.
A Small Business Administration for Nonprofits
Charity advocates say the Biden administration brings new hope for long-sought changes that may stimulate giving. Independent Sector, the Council on Foundations, and others have sought to extend charitable-giving incentives to people who don’t itemize on their taxes. The Cares Act permits those who don’t itemize a deduction of up to $300 this year, but a bipartisan group in Congress introduced legislation over the summer that would expand the deduction to as much as $8,000 for married couples.
“We saw that as making a material difference at a time when fee-for-service revenue had been drying up, as charities worked their way out of this crisis,” says Dan Cardinali, president of Independent Sector.
Kies says that even though the idea has bipartisan support, it may not go anywhere if Congress can’t agree on a broader tax overhaul. “Let’s be honest — that idea is not going to drive the passage of a tax deal,” Kies says.
Independent Sector also hopes Biden will create a new federal agency that would advocate for nonprofits, not unlike the Small Business Administration.
“Our sector employs 12 million people and has a $1 trillion economic impact,” Cardinali says. “The fact that we don’t have a formal office is really an opportunity cost that the American public is paying. We’ve made very strong overtures to say it’s time.”
He admits that such a proposal has “strong headwinds” but says he’s encouraged that veterans of President Obama’s Office of Social Innovation and Civic Participation will join the Biden team.
“We’re optimistic that there’s an opportunity here to nominally establish a beachfront and perhaps make inroads into something more permanent,” Cardinali says.
Senate Oversight
With Republicans expected to retain control of the Senate, charities are expected to receive less scrutiny from Sen. Charles Grassley, the senator who has arguably demonstrated more interest in nonprofits than any others. As chairman of the Senate Finance Committee, which has jurisdiction over the Internal Revenue Services, the Iowa Republican has at various times called for greater scrutiny of the American Red Cross, the Nature Conservancy, university endowments, and nonprofit hospitals, among others.
Grassley is expected to become chair of the Senate Judiciary Committee, and Sen. Mike Crapo, a Republican from Idaho, is in line to replace Grassley as finance committee chairman.
“We don’t really know him — he’s a cipher at this point,” the National Council of Nonprofits’ Thompson says of Crapo. “Uncertainty breeds concern.”
