19 November 2010

Top Ten List: What the Elections Mean for the Nonprofit Sector

Our top ten list of what this month’s elections mean for the nonprofit sector:

1. This year’s freshman class is one of the largest in history.
With at least 13 new senators and over 70 new representatives, there is a big opportunity for nonprofits to get in early and educate members about what we do.

2. Outgoing Ways and Means Chairman Sander Levin (D-MI) and presumed incoming Chairman Dave Camp (R-MI) are both very supportive of the nonprofit community, perhaps because they both hail from Michigan, a state with a rich history of effective nonprofits and foundations.
Rep. Camp was instrumental in adding the IRA Charitable Rollover provision into the Pension Protection Act of 2006, allowing seniors to donate money from their individual retirement accounts to charity without being taxed. He is also pushing to get the provision renewed before the end of 2010. Chairman Levin was very supportive of a provision to allow nonprofits to invest onshore without triggering UBIT taxes.

3. But, potentially rougher waters await the Ways and Means Oversight Subcommittee.
Rep. Charles Boustany Jr. (R-LA) is expected to become chairman of the Subcommittee on Oversight. In July, he spearheaded a hearing on “The Immediate Need for Charitable Assistance in the Gulf Coast Region.” Rep. Boustany has criticized the nonprofit community – and most particularly foundations – for doing a poor job responding to immediate human needs resulting from the Gulf oil spill.

4. Senator Hatch brings a different perspective to Senate Finance Committee Leadership.
Senator Orrin Hatch (R-UT) is due to take over as the senior Republican on the Senate Finance Committee. Senators Hatch and Chairman Max Baucus (D-MT) have a solid working relationship from their years spent toiling on international tax issues.

The soon-to-be former senior Republican on Finance, Senator Charles Grassley (R-IA) has been the Senate’s leading nonprofit watchdog, leading a steady stream of investigations into alleged nonprofit abuses including examining nonprofit hospitals, university endowments, highly-paid charity executives, and churches with lavish expenses. To date, Senator Hatch has shown little appetite for stepping into that role.

5. Expect a backlash against advocacy intended to affect a political campaign by nonprofits.The activities of some national nonprofits during this election season have raised strong questions about the line between legitimate advocacy and disallowed electioneering. The nonprofit sector could face increased scrutiny as it engages in advocacy. And, members of Congress may not see the distinction.

6. Expect Rep. Betty McCollum’s efforts to enact nonprofit legislation to continue.
Rep. McCollum’s (D-MN) bill, Nonprofit Sector and Community Solutions Act (H.R. 5533), would move to integrate the nonprofit sector into the federal policymaking process by establishing formal structures in Congress and federal administrative agencies focused on the success of nonprofits. Expect Rep. McCollum to reintroduce her bill in the 112th Congress.

7. Moderates from both parties were thrown out of office throughout this election cycle.
Anticipate a more polarized House and Senate in the 112th Congress.

8. Moderate Republican members up for re-election in 2012 are looking over their shoulders.
Looking ahead to 2012, the remaining moderate members of Congress may begin moving further toward the political extremes to ensure they can win primary challenges from within their party. This is particularly true for moderate Republicans looking to stave-off challenges from the Tea Party and far right. Senators Olympia Snowe from Maine and Scott Brown from Massachusetts could fall into this camp.

9. Democrats up in 2012 from red states started campaigning as soon as the polls closed last Tuesday.
We expect high anxiety among the 23 Democratic Senators up for re-election in 2012, especially Senators from more Republican states, including: Sen. Kent Conrad (D-ND), Sen. Claire McCaskill (D-MO), Sen. Ben Nelson (D-NE), Sen. Jon Tester (D-MT), and Sen. Jim Webb (D-VA).

10. Issues for 2012:

  • Blurring the lines between for-profit and nonprofit organizations. The healthcare bill highlights this issue because the new health insurance exchanges in that bill will be nonprofit with a for-profit role.
  • Will a new community benefit standard for hospitals bleed over to other nonprofits? How about a public good standard?
  • Expect the pressure on Congress by interest groups to create a hierarchy of charities to grow. Will Congress agree to throw the “SOB’s” (symphonies, operas and ballets) overboard in favor of traditional human services organizations?