Steve Taylor urges local nonprofit leaders in Republican districts to let their representatives know about the supposed dangers of proposed nonprofit tax-law reforms. With the moral authority of the nonprofit sector now so diminished, policymakers may ask some reasonable questions of them.
For nonprofit and foundation CEO’s exhausted by battling the Trump administration’s storm of executive orders, philanthropy consultant Steve Taylor has bad news: the battle is only beginning, as Congress scurries to renew the 2017 Tax Cuts and Jobs Act before it expires later this year. In a Chronicle of Philanthropy op-ed last week, “‘Five Alarm Fire’: How New Tax Law Could Decimate Nonprofits—and What Can Be Done,” Taylor surveys a range of proposals under consideration by Republicans in Congress that could, as he puts it, “permanently shrink and sharply reshape the nonprofit sector.”
In order to pay for extending the 2017 tax cuts as well as eliminating taxes on tips and Social Security benefits, Taylor notes, Congress is looking at raising the excise tax on university endowments from 1.4% to 14%; eliminating nonprofit status for hospitals; moving more nonprofit income from tax-exempt “related” to taxable “unrelated” business income; and even taxing all nonprofit net income at the 21% corporate tax rate.
Congress is even considering limiting tax exemption strictly to “nonprofits such as churches and basic needs organizations that fit a narrow Dickensian view of charity—using donated dollars to aid the poor.”
Taylor’s “what can be done” answer to this five-alarm fire is captured in the op-ed’s subhead: “Local nonprofit leaders in Republican districts need to speak out against proposed changes and ensure lawmakers understand the consequences.”
Taylor observes that lawmakers “can dismiss hired lobbyists or representatives from national organizations.” But “if approached by a beloved local charitable organization, lawmakers will listen and act to protect it from harm.” After all, most of the “people who get elected to Congress … grew up going to nonprofit camps, community centers, religious organizations, and youth programs.”
This approach, of course, is hardly new. For philanthropy, it’s the feature of every annual “Foundations on the Hill” event. The sponsors bring small donors from Everytown USA—who fund camps, community centers, religious organizations, and youth programs—to Capitol Hill; arm them with talking points about how the latest Congressional proposal will wreak havoc upon them; and enjoy the spectacle of elected officials beating a hasty retreat.
The main problem with this approach is that it’s based on a lie. It paints a picture of the nonprofit sector completely at odds with its own proud self-image, as depicted in its promotional literature, grant proposals, annual conferences, and academic journals. There, the nonprofit sector is not just sending kids to camp; it’s seeking to empower youth by challenging the social structures that have marginalized them. It’s not training people for jobs; its questioning the neoliberal economic order that has made employment so problematic. It’s not feeding the hungry; it’s getting at the root causes of food insecurity, which will entail significant entitlement reform.
In short, when nonprofits aren’t busy persuading lawmakers that they’re just tiny, hand-to-mouth volunteer civic groups struggling to meet the immediate needs of the poor and marginalized, they are in fact fiercely determined ideological activists promoting a sweeping partisan agenda. And that agenda is not the one embraced by the Republicans whom they’re lobbying.
Taylor inadvertently highlights the tension between the nonprofit sector’s prideful self-image and its humble public face in his depiction of the proposal to limit the charitable deduction to basic-needs-serving organizations. He dismisses merely “using donated dollars to aid the poor” as a “narrow Dickensian view of charity”—without acknowledging that this is more or less the view he urges nonprofits to emphasize when they’re courting conservative legislators.
All of this went unnoticed for decades, with nonprofits and foundations able to present an aw-shucks, down-home façade to lawmakers, while amongst themselves promoting a larger agenda hostile to the legislators’ own. But the new populism on the right has made that far more problematic. As has been the case with universities, corporations, Hollywood, and the media, the nonprofit sector is now seen to be yet another instance of progressivism’s long march through our leading national institutions. Many voters have come to see nonprofits and foundations as merely flimsily disguised activist groups determined to pursue a far-left agenda, while insisting upon financial support and tax advantages from increasingly resentful citizens.
One can imagine how this growing awareness might play out in a visit by a down-home nonprofit to a newly enlightened Congressional office. While expressing deep appreciation for its work on specific problems back in the district, the legislator might glance at his own set of talking points.
They would include the nonprofit website’s descriptions of its state-of-the-art programs, with all their references to “changing the world” in the name of social justice, garnished with screen-grabs of now-scrubbed references to extensive diversity, equity, and inclusion initiatives. Among the talking points would be the nonprofit’s description of the larger systemic injustices the nonprofit is determined to redress through public-policy advocacy, along with its boasts about lobbying for legislation appropriating millions of federal dollars for its preferred cause. Appended to the talking points might be a list of major progressive national foundations supporting the local nonprofit, along with summaries of their even-more-sharply defined political agendas.
The legislator’s response to the nonprofit might reasonably go like this: You’ve talked a lot today about the concrete help you provide to the poor and helpless, and we’re grateful for what you do. You haven’t said much, though, about your larger aspirations to right systemic wrongs and dismantle unjust structures. However worthy, they can only be described as political, even partisan. Now, you’re free to pursue them with private funding, of course. But why should we ask everyday taxpayers back home to support, with various tax advantages, your particular political agenda—especially when it typically calls for the expenditure of yet more taxpayer dollars?
In past visits to legislative offices, nonprofits could always count on a veneer of moral authority to protect them from tough questioning like this. As with most other major institutions of American life, though, they’ve sacrificed that authority through years of deception and subterfuge. They’re going to have to find other ways to put out the five-alarm fire.
