Nonprofits face new threats from Congress

The recession has created a need for food, housing, job training, health care and other services for Kaua‘i families and our local nonprofits have stepped up to help. More than ever, they are looking at ways to serve the needs of their clients and provide benefit to the community.

What you may not know is that the island’s nonprofits are a major contributor to our economy. Together, they account for more than $219 million in annual revenues, according to the National Center for Charitable Statistics. As a comparison, Kaua‘i’s agriculture sector contributes $56 million in revenues annually and the wholesale trade sector contributes $209 million.

Nonprofit revenue comes primarily from government grants and contracts, private foundations, individual and corporation donations and earned income from the provision of services. Nearly all of these organizations have faced declining budgets during the recession, the result of major cuts to many government grant programs and contracts and decreases in individual donations. Evidence of a decrease in donations came from a telephone survey Kaua‘i Planning & Action Alliance commissioned earlier this year. It found that while 84 percent of those interviewed donated to nonprofit groups, down from 92 percent in 2009.

Nonprofits now face new threats as Congress looks for ways to balance the federal budget. A U.S. House committee is considering eliminating nonprofit postage rates which provide a 40 percent discount for mass mailings. Nonprofits that use direct mail to raise funds say such an increase would have devastating effects at a time when already they are reporting that donations are down.

But an even bigger threat is looming. Congress’ Joint Select Committee on Deficit Reduction is reviewing all spending and taxing programs to look for possible savings.

According to Hawai‘i Alliance for Nonprofit Organizations, “Federal tax law currently encourages individuals to support charitable organizations and their missions by providing an itemized income tax deduction. Today, policymakers in Washington are looking for ways to reduce the federal budget deficit through spending cuts, entitlement reforms and changes to the tax code.” Proposals include limiting or removing the value of charitable deductions.

Currently, these deductions provide a charitable giving incentive that supports the work of all charitable nonprofits. Without this valuable incentive, it is very likely that donations would drop substantially, providing additional challenges to nonprofit budgets already stretched to the limit.

The National Council of Nonprofits has mounted a campaign to help protect the charitable giving incentive by having nonprofits sign onto a nonprofit community letter. Go to www.councilofnonprofits.org/ to learn more.

As the year draws to a close, many island nonprofits will send out their annual appeal for donations. Your generous contribution, combined with those from others, will enable Kaua‘i nonprofits to continue providing needed services to individuals, families and the community.

• For more information, contact Diane Zachary at Kaua‘i Planning & Action Alliance, 632-2005 or dzachary@kauainetwork.org.

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