Policy Peptalk

I am enjoying teaching nonprofit management as part of a political science degree program. And not just because it neatly integrates my education with my profession. But because it makes a lot of sense.

As Leslie Crutchfield and Heather McLeod Grant have aptly explained in Forces for Good, successful nonprofits operate in both spheres of nonprofit activity: advocacy and service. Operating in just one of those spheres seems to limit impact over the long term. I can confirm this from my private practice. In particular when it comes to trying new approaches, service models and practices, I have seen those nonprofits fail that did not align their new service approaches with policy and advocacy activities at the state and/or federal levels.

I think this might be especially true for nonprofits operating in states like New Mexico, where there is not much philanthropic involvement in social innovation. We have to rely on government for paving the road to innovation with funding.

In this week's session of POLS-380, Intro to Nonprofits, we talked about the regulatory and policy environment nonprofits operate in. We came up with a list of developments that are currently influencing the sector:

• Increased regulatory pressure around the public trust (as manifested in new Form 990)
• Trends towards taxing NPOs at state and local levels (property tax and municipal fees)
• Federal tax law related to charitable donations, deductibility, estate tax law, regulations for foundations
• Federal laws related to lobbying
• Federal policy developments and attached funding streams around Social Innovation, replication of successful practices and Capacity Building
• Changes in priorities and funding streams at both state and federal levels for specific fields (such as disabilities, health services, education)
• State fiscal crises
• Larger policy developments and how they affect the sector: Health Care Reform, Recovery Act, Jobs Bill
• Hybrid corporate forms: LC3s (low-profit, limited liability) and B (benefit) corporations
  

Unlike some fellow bloggers, who see these developments as threats and occasion to proclaim the impending demise of the 501(c)(3), I think most of these can be opportunities for the nonprofit sector:

• The new 990 puts more emphasis on the role of boards as keepers of the public trust. With 990s becoming more accessible though Guidestar and nonprofits’ own websites, this move towards transparency and accountability can only be welcomed.
• The much blogged about blurring of the lines between sectors (LC3s etc., which in fact only exist in a handful of states so far) should be seen as an opportunity for nonprofits to point out their special advantage: Rootedness in the community through community-based boards, combined with public accountability controls most for-profit corporations are not subjected to.
• State funding cuts are the one real and dangerous threat to nonprofits at the moment (an excellent analysis of how state fiscal woes affect nonprofits was recently published by the Nonprofit Quarterly). So are, I imagine, declines in philanthropy dollars as experienced by nonprofits in more philanthropy-heavy areas. Not much opportunity to be found in being the bearer of the bad news to vulnerable populations, having to cut them off from services due to state funding cuts. The only opportunity lies in learning to become better advocates for ourselves and the people we serve.
  

As we are teaching this nonprofit class, apart from knowledge, we try to instill sector consciousness and a sense of pride in our future nonprofit leaders. A consciousness based on the ethics of accountability to the community and the public trust that come with being a community-based 501 (c)(3). And we also try to get across that unless you are able to communicate the value and advantage of your nonprofit and/or charitable organization and its work in a variety of policy environments, you will probably not have much impact.