For many nonprofits that rely on federal money, the bitter budget battle that is now heating up in Washington threatens to bring one of two results: bad news or very, very bad news.
President Obama unveiled a 2012 budget last week that calls for a series of cuts in programs that help low-income people pay their energy bills, provideblock grants to states for social services and community development, and support the arts and humanities.
For nonprofits, though, the budget for next year is not the primary concern.
Just days before Mr. Obama released his budget blueprint for 2012, the Republican-led House Appropriations Committee proposed a spending plan for this year that would make far more radical cuts.
Slicing $100-billion out of the budget that Mr. Obama proposed a year ago, it would wipe out AmeriCorps, the national-service program, and slash budgets for Head Start, child care, community health centers, maternal and child health programs, and family planning.
It would also end federal spending on the Corporation for Public Broadcasting, which provides funds to public radio and television stations, starting in 2013 (money is allocated two years in advance because it takes so long to produce programs). MoveOn.org, the liberal advocacy group, and a coalition of public broadcasters have organized separate advocacy campaigns to rescue the broadcasting agency.
President Obama has vowed to veto the Republican plan, which would govern spending through the end of September. And it would face a tough time in the Democratic-controlled Senate. But nonprofit advocates are bombarding Capitol Hill with urgent pleas to reject the cuts, saying they would hurt vulnerable people and destroy jobs.
New Political Climate
To add to nonprofits’ worries, President Obama renewed his proposal to cap the value of the charitable deduction for wealthy people starting in 2012, a move that some fear could dampen giving.
The budget proposals reflect a new political climate: The economic downturn has cut into federal revenue, politicians of both major parties have pledged to rein in the national debt, and the November elections gave Republicans control of the House—including an influx of members backed by the small-government Tea Party. Hal Rogers, chairman of the appropriations committee, said deep cuts are needed “to show we are serious about returning our nation to a sustainable financial path.” He said lawmakers had made tough choices to weed out “excessive, unnecessary, and wasteful spending.”
Even so, some nonprofit advocates fault President Obama for not doing more to preserve the social safety net, especially in light of the nation’s continuing economic woes.
The news on that front, however, is not all bad for nonprofits that are looking to use federal money to help deliver services to those affected by the poor economy.
The president proposed an increase in the budget for grants to help homeless people find housing from $1.8-billion in 2010 to $2.3-billion next year.
He would also give substantial increases to Head Start and to community health centers, which will get $1.2-billion from the new health-overhaul law, in addition to their normal budget allocation.
Supporters of those two programs who would ordinarily be gleeful, however, have only to look at the 2011 budget proposal from Republicans to temper their outlook.
And since Mr. Obama vowed to freeze much of domestic spending over all for five years, for every dollar he added, he had to find a dollar to cut.
Community-Services Cuts
As a result, nonprofits are facing an assault from officials in both parties.
Few in the nonprofit world were more stung by the president’s proposal than the network of more than 1,000 community-action agencies that manage antipoverty projects with money from the Community Services Block Grant. Mr. Obama proposed slashing the budget for those grants in half, to $350-million, and spending money on only the “highest-performing” groups rather than according to a formula based on the number of poor residents. He said under the current system, the grant winners “are not accountable for outcomes.”
Supporters are bitter that Mr. Obama, who once worked as a nonprofit community organizer in Chicago, signaled the cut in his State of the Union address, giving ammunition to House Republicans, who want to slash spending on the program immediately.
If these cuts go through, it’s going to be really ugly,” says Don Mathis, president of the Community Action Partnership, which represents community-action organizations. “The lives of people will be substantially hurt.”
He says he worries about destabilizing local programs that have earned the trust of their clients and forged longstanding ties with business and community groups.
Some liberal observers, however, say President Obama did the best he could given the political environment.
Robert Greenstein, executive director of the Center on Budget and Policy Priorities, says his budget “strikes a tough but generally sound overall balance.”
However, he criticized a proposal to halve spending on a $5.1-billion program to help low-income people pay their heating and cooling bills on the grounds that energy prices have fallen.
But those prices are expected to rise again next winter, Mr. Greenstein said, and the number of low-income Americans has risen since prices last spiked after the winter of 2008.
Many conservative critics, however, said Mr. Obama’s $3.7-trillion budget, which proposed increased spending in priority areas such as education as well as tax hikes, fell fall short of what is needed to turn the country around. Mitch McConnell, the Senate minority leader, called the effort “unserious” and “irresponsible” on the Senate floor, adding, “This president clearly does not get it yet.”
Shifting Battleground
In some cases, Mr. Obama has not proposed cuts but has had to temper goals he had when he started in office.
For example, it is now clear that AmeriCorps and other national-service programs will not be able to grow at the pace envisaged by the Edward M. Kennedy Serve America Act, a 2009 law that Mr. Obama strongly backed.
Last year, he proposed a budget of $1.4-billion for the Corporation for National and Community Service, saying that would allow AmeriCorps to expand from 85,000 to 105,000 members. But because Congress never adopted a 2011 budget, that never happened.
This year, he proposed spending $1.26-billion in 2012, enough for only 90,000 members.
But as Congress debates how much to spend for the rest of 2011, the battleground has shifted.
Instead of negotiating with Republicans about how fast to allow AmeriCorps to grow, Mr. Obama could be fighting to keep it alive.