There is a lot riding on this election. And certainly, nonprofits are not immune to that. So I reached out to Dennis Young, Professor Emeritus at the Andrew Young School of Public Policy Studies, to see what he thinks is at stake for nonprofits this election.
Check out our conversation to gauge how the election may impact you and your nonprofit.
Dolph Goldenburg
So the question on everyone’s mind: What’s at stake for nonprofits in the 2020 election?
Dennis Young
That is not an easy question because the sector is large and complex and diverse. And the relationships that it has with the government are multi-dimensional. The sector has over a million and a half formal organizations and many more informal ones. They employ 10% of the paid workforce in the country and have an equivalent workforce of volunteers. And they offer so many different types of services and activities; the National Taxonomy of Exempt Entities identifies 26 major categories and even more subcategories. How nonprofits are supported is diverse: earned income, philanthropy, government funding, endowments. As a result, the government impacts nonprofits in a variety of ways. So there’s no simple answer.
With that in mind, we need to start with understanding the relationship between nonprofits and the government. The Supplementary Complimentary and Adversarial Framework helps us do that. Supplemental refers to the work that nonprofits do in the public interest that the government does not do. Complementary means the government and nonprofits work together and have some sort of collaborative relationship. Most often, the government hires nonprofits as contractors. Adversarial means two things. First, that nonprofits often try to change what the government is doing. For example, changing policies or starting new services. Then there is the opposite. Meaning the government has the responsibility of overseeing and regulating the nonprofit sector. The result of an election can alter the balance of any of these relationships. So knowing this background is helpful when you’re thinking about what might be at stake in the election.
Dolph Goldenburg
So let’s start with the big picture. What does this framework suggest will happen?
Dennis Young
Our choices for president are two very different people who will lead us in two very different directions at the federal level. And those different directions will result in very different relationships with nonprofits. I view one as a drift toward autocracy and social fragmentation. And the other as rebuilding democracy and addressing critical issues, like social justice and environmental degradation.
History teaches us that autocracy and nonprofits do not mix very well. This is especially true for nonprofits that challenge the government and public policy. Look at countries like Hungary, Turkey, Egypt, Russia, and the Philippines. Many nonprofits in these places are under pressure and are even repressed in some ways. And, unfortunately, the United States seems to be drifting in that direction. If we reelect the current administration, we might see it go quite a bit further. As a result, many nonprofits may end up in a more adversarial position. They will try to protect what we have and hold the government accountable for its assault on public programs, social services, and democracy. And that is something I would fear.
On the other hand, a new administration could lead to a more complementary relationship. In this case, nonprofits could be in a position where they can help build and expand programs like healthcare and immigration policy.
Dolph Goldenburg
So it sounds like, depending on the mission, nonprofits could be impacted very differently.
Dennis Young
Absolutely. It’s important to note that the nonprofit sector is not homogenous. Every possible point of view and constituency group is represented in it. So nonprofits that focus on things like the environment, international relief and human rights will be in a defensive and adversarial position if the current administration is re-elected. But other groups, like right-to-life groups, some churches and even extremist groups, will be perfectly comfortable. So depending on the outcome of the election, some nonprofits will go from adversaries to partners with the government and vice versa.
Dolph Goldenburg
Starting to think about what the election means for some nonprofit subsections, what’s at stake for those that serve people directly? It could be a social service agency, a museum, etc.
Dennis Young
Resources could be affected through government support or changes to the tax system. And some of these organizations serve constituencies that might be impacted by the next administration, like immigrants. So the urgency of their work may increase or decrease.
Dolph Goldenburg
On the note of tax policy, what is your take? Changes in taxation and “tax reform” over the last four years made it more likely for individuals to take the standard deduction. So it removed the incentive for individuals to donate to nonprofits. Do you think there’s going to be other changes in tax policy that could impact nonprofits?
Dennis Young
Well, as you said, we know the Republican position is that the more tax cuts the better, which can have a negative effect on giving. I was looking for some bright sides somewhere; the new Cares Act does allow people who are taking the standard deduction to take a deduction above the standard. So that might bring in more potential donors.
The debate around tax policy usually revolves around lowering the tax burden for certain populations. But the nonprofit sector is often collateral damage. Changes in tax policy don’t intentionally hurt nonprofits. But lowering taxes lowers the incentive to give and higher taxes increase the incentive to give. Higher taxes also increase government revenue that can go toward supporting nonprofits.
There are some areas where collateral damage can be ameliorated. For example, agreements on above the line deductions. But I think a new administration would have more effects on giving than the Trump administration.
Dolph Goldenburg
What about impacts to public service?
Dennis Young
Well, there’s a lot to be done in terms of health care, economic and social inequality, education, affordable housing, and putting the economy back together after the pandemic. A democratic administration, especially if the Senate flips, would be more likely to make major new program investments. Maybe even to degrees we’ve rarely seen in the past.
Lyndon Johnson’s programs greatly increased services in the 1960s but didn’t bloat the size of the government. Lester Salamon referred to this as a third-party government. The government was involved in financing and defining the new programs, but a lot of the services were carried out by nonprofits. So that was a major period of nonprofit expansion. A democratic government might do this for us again. The government is going to need help addressing a lot of issues, and nonprofits are positioned to do a lot of that work.
Dolph Goldenburg
Nonprofits being contracted to do that work is more palatable for the vast majority of Americans over a private entity doing it. Would you see us moving toward that third party government?
Dennis Young
We’ve never really left it. In the United States we have found that to be a comfortable agreement. The government takes responsibility to make sure that the goals are correct and the resources are available. And the nonprofits, which have the local connections and the expertise, are engaged to do the best possible job.
Dolph Goldenburg
So it does sound like there is a lot at stake for the nonprofit sector and for nonprofits. Though, as you point out, it’s not a monolithic sector. On the whole, we have to decide if we want a society that enables nonprofits to thrive or a society that chooses which nonprofits thrive and which ones go away.
Dennis Young
There’s certainly going to be a difference between the two when it comes to certain services. It’s important and productive for the government and nonprofits to be partners to address a lot of issues like health care and education. If those areas are neglected, then nonprofits won’t have the strength or resources to address those problems and thus they won’t be solved.
Dolph Goldenburg
Absolutely. Dennis, I am so grateful we got to talk today. Thank you so much.
Dennis Young
Thank you for the opportunity. It’s been fun.
Dennis Young is the author and editor of several books and journals on nonprofit management, finance and economics. He is also the founder of the Supplementary Complimentary and Adversarial Framework. It has now guided researchers and practitioners for decades.
If you would like to learn more about this issue and others facing the nonprofit sector, then visit the National Center on Nonprofit Enterprise. The NCNE aims to help nonprofits make wise economic decisions. Individual and organizational memberships are available. With one, you will have access to articles that share practical tips to help nonprofits thrive. Some of these are even by Dennis! NCNE also offers training, consultation and the occasional conference.
Also check out the National Policy Forum Journal, which Dennis edits. This journal offers free articles on public policy issues that are critical to the work of nonprofits.
Finally, if you are looking into 2021 and are worried about what the year might look like, then make sure you check out our group and individual coaching services.
Additionally, check out the following Successful Nonprofits® resources if this post was helpful:
Podcast: Create Lasting Change Through Advocacy with Tanya Tassi