Nonprofits Have Much
at Stake in Congress
By Suzanne Perry
When the new Congress
starts work in January, it will
include an influx of new Republican faces brought in by the
midterm elections, and confront
growing pressure to cut spending to bring down the national
debt, which could have a big impact on programs that affect
charities and the people they
Meanwhile, the lame-duck
Congress that will run things
until then has some critical unfinished business to attend to,
including passing the 2011 federal budget and a variety of tax
questions that could affect charitable giving.
Following are key develop-
ments that nonprofit experts
; Understanding of non-profits may be low. Voters
sent 93 new members to the
House of Representatives, the
largest freshman class in many
years. That means nonprofit advocates should start now trying
to educate the newcomers about
; Federal aid. Republicans,
who will control the House and
gain seats in the Senate, will
take a hard line on spending,
especially given pressure from
the small-government Tea Party. That could be bad news for
SCOTT J. FERRELL/CONGRESSIONAL QUARTERLY/
Rep. Dave Camp is likely
to take over the House Ways
and Means Committee.
TOM WILLIAMS/ROLL CALL/GE TT Y IMAGES
Sen. Orrin Hatch is in line
for a more senior role
on the Finance Committee.
Rep. Charles Boustany Jr.
is expected to lead a Ways
and Means subcommittee.
safety-net programs and programs that President Obama
hoped to expand, like AmeriCorps; the Social Innovation
Fund, which provides grants
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for promising nonprofit projects;
and Promise Neighborhoods,
which provides money for antipoverty projects modeled after
Harlem Children’s Zone. House
Republicans have vowed to
cancel any unspent economic-stimulus money, cut the federal
budget to 2008 levels, and hold
weekly votes on spending cuts.
The Senate or White House
could block those efforts, but the
resulting gridlock would make
it hard for nonprofits to plan.
; Scrutiny of nonprofits.
Senator Charles E. Grassley,
the Iowa Republican who has
led a steady stream of investigations into alleged nonprofit
abuses as chairman and then
senior Republican on the Senate Finance Committee, is expected to move to the top Republican post on the Senate Judiciary Committee. Sen. Orrin
Hatch of Utah is in line to assume Senator Grassley’s role on
the Finance Committee. Senator Grassley would presumably
pay less attention to nonprofit
oversight, since he would lack
the budget and the staff that he
has now to oversee tax-exempt
groups. But he will remain an
influential Finance Committee member and could find a
way to pursue matters that interest him from his new perch.
Some observers expect Senator
Hatch to be less interested in
nonprofit investigations. He is
more sympathetic than many
other Republicans to national-service programs, last year co-sponsoring a bill with Sen. Edward Kennedy, the late Massachusetts Democrat, to greatly
; Tax incentives. Rep. Dave
Camp, Republican of Michigan,
is expected to take over leadership of the House Ways and
Means Committee, which oversees nonprofits through its responsibility for tax issues. Mr.
Camp has a history of working
well with the nonprofit world in
his state and was instrumental in getting the Pension Protection Act of 2006 to include a
provision to allow older people
to donate money from their individual retirement accounts to
charity without being taxed.
; Charity oversight. With
control of House oversight com-
mittees, Republicans will be
able to call hearings over con-
troversies involving nonprofit
groups or social programs that
draw their suspicion. Darrell
Issa, of California, in line to
head the House Oversight and
Government Reform Commit-
tee, and Charles Boustany Jr.,
of Louisiana, who is expected
to chair the Ways and Means
oversight subcommittee, last
year called for a hearing on
ing group that came under fire
from Congress after (selective-
ly edited) videos surfaced that
appeared to show staff mem-
bers offering advice on illegal
activities. But Democrats did
not agree. Representative Issa
recently told a television inter-
viewer he is still interested in
investigating Acorn, which has
now declared bankruptcy.
; Government spending.
Congress has not yet adopted
a budget for fiscal year 2011,
which started in October. It
passed legislation to continue
spending at 2010 levels until
December 3—and must adopt
the budget, or another short-term spending bill, to keep the
government open after that. Republican leaders have signaled
that they want to wait until the
new Congress is in place before
adopting a budget, which means
nonprofit groups that depend on
government grants or contracts
could be in limbo for a few more
; Tax breaks for giving.
Congress seems likely to pass
legislation to extend many tax
breaks that expired at the end
of 2009, including a break for
donations from individual retirement accounts. The legislation—adopted by the House and
awaiting action in the Senate—
would also extend tax provisions to encourage donations of
property, food inventory, books
to public schools, and computer equipment for educational
purposes. Action on the estate
tax—which provides an incentive for people to leave charitable bequests—is less certain.
The tax expired this year and,
without Congressional action,
is set to jump to a much higher
rate next year than in 2009.