Friday, November 7, 2008

More Thoughts on What an Obama Presidency (and Strengthened Democratic Congress) Might Mean for Nonprofits

The Chronicle of Philanthropy predicts that the new administration and Congress will bring both greater incentives for giving by the rich and continuing scrutiny of charity finances and activities.  The greater incentives will come in the form of the Obama-promised tax increases for the rich - those earning more than $250,000 annually - that will strengthen the incentives for making deductible charitable contributions.  The timing for those increases is uncertain, however, as Roberton Williams of the Urban Institute and Brookings is cited in the article as predicting that the new administration will hold off on them until the economy improves. 

At the same time, the budget pressures on the federal government will lead Congress to continue to scrutinize the significant tax benefits enjoyed by charities.  The article reports that Senators Max Baucus and Charles Grassley, Chairman and Ranking Member of the Senate Finance Committee, respectively, plan to review a variety of charity-related issues.  They expect to not only continue examining issues they have raised in the past, such as the accumulation of endowments by charities, but also to hold hearings in early 2009 on all of the tax laws relating to charities.  I also expect that the budget pressures faced by many state and local jurisdictions will have them conducting similar reviews, particularly in places with new elected officials who may feel they have a mandate to take dramatic steps to relieve these pressures.

It may also be that nonprofits, like many parts of the for-profit sector, will be coming to Washington looking for financial help to weather the declining donations and increased demand for services resulting from the current economic troubles.  Professor Paul Light raised this point during a recent panel at the Urban Institute, according to another Chronicle of Philanthropy article.  While President-Elect Obama promised to provide some support for the nonprofit sector, as we blogged about earlier this week, it is far from clear how much help will actually be forthcoming given the hard choices Congress and the new administration will face in the coming months.

LHM

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