Nonprofit-Government Partnership

New National Council Special Report: State Budgets Threaten Nonprofits

As state governments across the country grapple with severe budget deficits, many are placing extraordinary burdens on nonprofits. On March 16, the National Council of Nonprofits released a special report, State Budget Crises: Ripping the Safety Net Held by Nonprofits, documenting how states are delaying contract payments to their nonprofit partners, slashing funds for essential programs, and imposing new fees and taxes on 501(c)(3) organizations. The report encourages leaders of governments, foundations, and nonprofits to work together to address challenges posed by state budget crises.

More Information

The National Governors Association issued a report in February analyzing the impact of the recession on the states. It chronicles the steps taken by governments to balance their budgets and identifies structural changes that will be implemented in the future. The report’s conclusion is a call to action to all impacted by government budget and spending priorities:

Governors, legislators, and citizens all need to be engaged in these efforts to redesign state government. It is a topic that will dominate agendas of states for the next several years, and likely lead to some profound changes in how state government operates and what services it provides.

Nonprofit organizations have a major stake in the outcome of this debate, which will be heard in virtually every state Legislature and City Council. Nonprofits must claim their seats at the tables where the decisions are made. Governments and nonprofits serve the same constituents in the same communities, so more concentrated efforts should be expended to enhance mutual understanding and collaboration.

Nonprofits also have a tradition and cultural commitment to joining with government to address vital concerns. “From earliest times, [nonprofit organizations] have functioned as agents of change, incubators of innovation, and crucibles for some of our boldest experiments and highest ideals.” That is the collective opinion of several leaders of the nonprofit community, expressed in the statement, “Forward Together: Empowering America’s Citizen Sector for the Change We Need.” In making their call to action, the leaders continue:

Today as well they function as partners in public service sheltering the homeless, training the unemployed, educating our youth, building affordable housing, counseling families, delivering health care, giving voice to the powerless, lifting our spirits with arts and culture, and serving uniquely as vehicles for citizen initiative in support of the common good.

All nonprofits should answer this call to strengthen the public-private partnership by engaging at the local level.

What Nonprofits Can Do

• Find your state association and get involved to address these and other developing issues in your state. Individual nonprofit organizations can amplify their voices by working together through their state nonprofit associations.
• Share Your Story of Success! Although the budget situations are dire in many states and localities, nonprofits are working with elected and appointed government officials to develop meaningful solutions that help nonprofits serve local constituents and communities better. Let us know how your engagement with government is making a difference.