Implications for Nonprofits in Federal Spending Cuts

There will be tough choices, no doubt about it. There will also be compromises. There are a few issues at play related to nonprofits and federal spending cuts:

• Nonprofits receive a not-insignifiant amount of money from government spending.
• The public benefit theory of nonprofits goes something like this: more healthy nonprofits, taken as a whole, are a good thing because of the pluralism principle. A vibrant, robust NP sector facilitates social change (think women's suffrage). The NP sector is essentially subsidized by direct funding and through tax exempt status. One side argues that NPs should only be tax exempt if they are performing services that government would normally provide (education, health care, etc.), and another side argues that we should be encouraging pluralism of interests and organizations because they enrich society as a whole.
• The theory also states that many diverse NPs create independent power centers outside government. Contrast the US (where anyone can create their own 501(c) organization) to France, where NPs must have a political figure on their board. In France, the power is largely concentrated in hands of government (and religious organizations, too), with less power flowing to the NP sector. I would argue that a robust NP sector allows citizens to voice opinions, and be empowered, in a peaceful channel. E.g. pro-choice and anti-abortion groups are empowered through nonprofit advocacy. The alternative?
• One final point from the Chronicle of Philanthropy. 2012 Obama Plan: $451M for Corporation for Public Broadcasting, $770M for AmeriCorps. 2011 Republican plan: $0 for CPB, $0 for AmeriCorps. Yes, we must make cuts. We must make sacrifices, and there will be compromises. Yet the argument of "private money will step in where government steps out" rings hollow in many instances. Foundations give only $45B per year in the US, a very, very small fraction of federal government spending. Personally, I have trouble reconciling these issues. I fundamentally believe that less government is good government, but to a point. It is naive to think that such dramatic cuts to CPB and AmeriCorps would be fully compensated for by private funding, nor can we make a compelling argument (in my opinion) that programs like these are "excessive, unnecessary, and wasteful spending," as Hal Rogers (chair of appropriations committee) says. It's going to be interesting to see how all of this budget wrangling plays out.