The tax bill that Congress will send to President Trump for his signature today marks a stinging loss for many nonprofit leaders who are vowing to do a better job in the fights that lie ahead soon over proposed cuts to the social safety net.
The Senate approved the bill 51-48 Wednesday around 1 a.m. On Tuesday, the House voted for the bill 227-203. All Democrats in both chambers and a handful of House Republicans opposed it.
“We had a million lawmakers on both sides of the aisle who consistently voiced support for us, but we came up short on champions,” said Steve Taylor, senior vice president for public policy at United Way Worldwide.
Because of a procedural glitch, the House must vote on the bill again today before President Trump can sign it into law. The outcome is not expected to change.
The bill includes several provisions that nonprofit advocates say will severely curtail charitable giving, including a doubling of both the standard deduction and the estate-tax exemption. (See box.) Patrick Rooney of the Indiana University Lilly School of Philanthropy, for example, forecasts an annual decline of up to nearly 6 percent, or $22 billion.
Now, before an autopsy of the failures of nonprofits’ lobbying effort is even complete, a new test looms. The tax deal forged in December is forecast to increase the federal deficit by $1.5 trillion over 10 years. Republicans hope a growing economy will make up the gap. But they’ve made clear they also want spending cuts regardless.
Congress will target domestic outlays on health, housing, and poverty programs during the months ahead as lawmakers consider federal appropriations bills and the future of long-standing federal entitlement programs such as Medicaid, Medicare, and the federal nutrition program, usually known as food stamps.
“There’s an unbroken line between the goals of the tax cut and the next step of seeking cuts in services,” for low-income Americans, says Deborah Weinstein, executive director of the Coalition on Human Needs.
Reductions in safety-net programs could pose a bigger problem for nonprofits than changes in the tax code, says Nancy Berlin, policy director at the California Association of Nonprofits.
“Many nonprofits have been more focused on when the other shoe drops and the federal budget is slashed,” she says. “That’s core money for many of them — much more than they get from individual contributions.”
New Methods Needed
For charities to make any headway in Congress, Ms. Berlin and other nonprofit advocates believe they will have to rethink traditional methods of influencing lawmakers. Letter-writing campaigns and the occasional visits to Capitol Hill by charity leaders can’t compete with well-financed business lobbying powerhouses.
Nonprofits need to “go back to their roots,” Ms. Berlin says, and build movements from the bottom up. As an example of the right path, she points to the resuscitation late last year of the Poor People’s Campaign, a Civil Rights-era effort to bring stories of poverty into the national consciousness.
Diana Aviv, chief executive of Feeding America, agrees, saying nonprofits must reach well beyond their employees and board members, who tend to fight only for their discrete funding, to beat back sweeping plans to slash federal spending. To get the attention of lawmakers, Ms. Aviv says, nonprofits must look to their legions of volunteers and the businesspeople who participate in projects with them to spread the message.
“We clearly didn’t have the clout” during the tax debate, she said. “We’re going to have to build a different kind of network and movement to succeed.”
Need for Speed
Rachel Kerestes, vice president for external affairs at Lutheran Services in America says, the tax debate starkly illustrated new challenges for mounting a unified national legislative campaign in an era when Congress is racing legislation to the finish line.
“In the old days, you would have a broad-based campaign where you’d try to activate your whole network,” she says. “We figured out very quickly that’s not going to work. Major pieces of legislation are passing at speeds faster than anyone has experienced. There’s not time for that.”
During previous legislative skirmishes, Lutheran Services might identify 10 to 20 members of Congress deemed linchpins to a bill’s success or failure. Now, she says, the group is “hyper-micro-targeting” legislators, maybe four or five seen as key.
Building Relationships
Often charities are overloaded with simply accomplishing their mission. Adding advocacy work and the process of developing relationships with lawmakers can be a lot to ask. As the tax rewrite progressed in Washington, many charity lobbyists found that relationships between lawmakers and local nonprofit leaders had grown stale, Mr. Taylor said.
Tim Delaney, president of the National Council of Nonprofits, says larger lobbying budgets would be great, but it would be for naught if nonprofit leaders fail to make inroads with political leaders.
“This change in advocacy culture has to happen out in the field,” he said. “We need to get people at the base more engaged than just flying in once a year” to visit lawmakers in Washington.
One Victory
As the tax bill neared completion in December, the nonprofit lobby notched one key victory, a defensive action to save what is known as the Johnson Amendment, which prohibits politicking by nonprofits. Many charities, foundations, and religious groups feared that the weakening of the Johnson Amendment — which initially passed the House but not the Senate — would turn nonprofits into political pawns.
Nonprofits went all in. A broad coalition of nonprofit groups, religious organizations, and state charity regulators all pushed against the changes. Their distaste for the proposal stoked some media interest. But even that victory came with an asterisk: The provision was removed from the final bill because it violated arcane Senate procedural rules.
Over all, there was little cause for celebration for most nonprofits. In Republicans’ headlong rush to get something accomplished during President Trump’s first year in office, groups that had a nuanced message were left behind, says Dave Biemesderfer, president of the United Philanthropy Forum, a network of regional and national grant-making associations.
For instance, many lawmakers felt that by keeping the charitable deduction in the bill, they had given nonprofits what they wanted without understanding that doubling the standard deduction — a keystone of the tax plan — made the charitable write-off worth much less to charities.
“That’s a two- or three-part message,” he says. “We didn’t have an easy, direct message to get our point across.”
Not Giving Up
Independent Sector president Dan Cardinali argues against abandoning the advocacy tactics of the past. For example, he has faith that data can still make a difference, even though Republicans largely ignored studies from his group and others about the impact of the tax bill on charities. That research, Mr. Cardinali says, was difficult to convey, given the complex nature of tax policy and how quickly the bill advanced. During the budget process, he predicts, it will be easier to use empirical research on a range of policy proposals to give legislators a clear picture of how spending cuts will affect people in their districts.
But to truly excite nonprofit advocates throughout the country and sway lawmakers, nonprofits need to undertake a longer-term effort into crafting a “new narrative” — one that focuses on the contributions nonprofits provide to a healthy society. Independent Sector is at the beginning stages of developing such a strategy, which could be adopted by nonprofit organizations throughout the country.
“There is vast untapped potential that could have been more effective,” he says. “The good news is the sector is alert and has been awoken. We’ve got some positive momentum moving into what may very likely be a difficult budget fight.”
