We are seven months away from what some are calling "taxmageddon" and what others describe as "plunging over the fiscal cliff." And while leaders in the nonprofit sector are narrowly focused on proposed changes to the charitable tax deduction that could reduce charitable donations by about $2 billion a year, the Republican-controlled House of Representatives has already approved cutting trillions of dollars from programs critical to low- and moderate-income people and the charities that serve them. Worse may yet be to come.
Charities and foundations should be geared up to confront immediate and near-term policy battles of extraordinary consequence to them. Instead, they seem to be wearing blinders -- or simply fear controversy, no matter the stakes.
Congressional Republicans want a repeat of last summer's divisive struggle over raising the debt limit and are committed to pursuing new budget cuts. This comes after the House recently approved changes to last year's deficit-cutting sequestration agreement and shifted what was a shared annual burden of $109 billion entirely to domestic programs and actually raised the defense budget instead of cutting it.
House Republicans also are trying to preserve Bush-era income tax cuts for wealthy Americans, an action that if successful will cost an estimated $1 trillion in revenue over ten years -- and that doesn't include the loss of billions from estate tax reductions for millionaires. They have already passed the budget put together by Rep. Paul Ryan (R-WI), a plan that goes well beyond a renewal of the Bush cuts and give millionaires an additional tax break averaging $265,000 a year while cutting over $3 trillion from programs that serve low-income people or fund the charitable programs that help them -- a plan that presidential candidate Mitt Romney called "marvelous."
This is not chump change. To give a sense of the magnitude of the proposed cuts, the shift in sequestration alone is more than the total domestic and international annual giving of all U.S. foundations combined. And the Ryan plan calls for cuts in domestic program over ten years that are about seven times the equivalent projected total of foundation giving -- a shortfall that would result in some two million people losing their access to food stamps and another forty-four million having them reduced. The Ryan plan also would eliminate the social service block grant through which nonprofits now provide services to some twenty-three million people, over half of them children, as well as invalids dependent on Meals on Wheels programs, those in foster care, and those who rely on nonprofit childcare.
And that's just a start. Democrats and Republicans in Congress agree that the interest rate on federal student loans shouldn't be raised, although the former want to pay for keeping the current rates by getting rid of some business tax cuts, while the latter focused on defunding nonprofit preventive care programs related to obesity, cancer, and HIV/AIDS.
It's said that nonprofits used to talk about problems and now the conversation is about branding. And foundations are becoming more technocratic in their approach, focusing on metrics and the promotion of social investment schemes. What's going on here? Have charitable and philanthropic institutions been seduced by the market and forgotten about the public good? Why do they just accord with politicians' actions that benefit private interests?
These days, nonprofits and foundations seem to find it easier to acquiesce to externally-determined realities, to figure out how to do as well as they can in this regressive environment instead of trying to figure out how to change things. Too many seem to go along to get along.
While that might be in the interests of some organizations and institutions, it does not serve society well. And it certainly works against the interests of the increasing numbers of Americans who face harder and harder times, who fall from the middle class or go more deeply into the poverty where they've too long been trapped. The profoundly disturbing increase in economic inequality threatens all of us, even those who see themselves as the one percent winners.
There is much that charities and foundations can do to challenge policy decisions that are destroying the social safety net -- not to mention the social contract in place since the 1930s -- while propelling us toward the cliff. Despite the fact that charitable and philanthropic organizations are prohibited from engaging in electoral politics, there are many other avenues of action open to them.
Everyone knows that Congress is at an all-time low in its approval ratings, but charity and foundation leaders appear to be unwilling to take public positions even with respect to its more destructive actions. The nation desperately needs leaders who will speak to the public interest, who will step up and help Americans understand the direction in which we are being led and what it means for ordinary citizens and the organizations that serve them.
Foundations and nonprofit organizations can fund and build assertive and ambitious voter registration and education efforts. They can help people better understand the critical issues and solutions being debated -- and in some cases avoided -- by elected officials. Charities can propose and advocate for preferred policy options and can urge individuals to promote action on those solutions by communicating with their legislators and administration officials.
The stakes are huge -- for individuals, communities, charities, and foundations. The ways in which Congress and the next president address the fiscal issues confronting us will determine our collective future for years to come. Policy choices made now and in the not-too-distant future could dramatically worsen the quality of life for tens of millions of Americans. And we may soon find both government and the nonprofit sector without the resources to moderate the deteriorating circumstances we face as individuals and as a society.
Most Americans agree that we need comprehensive tax reform that results in the wealthiest among us paying a fairer share, as was the case in and before the Clinton era. We need reforms in entitlement programs that find real long-term savings while protecting those dependent on them. We need infrastructure investments that will stimulate the economy and create jobs. And we need to be sure that the defense budget bears its share of the deficit-reducing burden, especially as the conflict in Afghanistan winds down.
A disastrous future is not inevitable, and the passivity of most charities and foundations is not immutable. Our nation faces very real choices with profound implications. But we do have choices. The question is who will help make them.
We are rapidly approaching a moment of truth and are in need of leaders who are committed to the public good. Nonprofit organizations and philanthropies can maintain their silence and fail America, or they can help lead us in that direction by promoting popular action on behalf of our shared interests. The time to act is running short....
Versions of this piece also appear in The Chronicle of Philanthropy and PhilanTopic.