Social Spending Bill Includes Provisions Worth Watching for the Nonprofit Sector

Federal legislation can have a wide-ranging impact on nonprofit organizations and the people they serve. New laws can change the way both your donors and clients interact with you.

At this time, an infrastructure and social spending bill, better known as the Build Back Better Act, is working its way through the legislature. This bill contains a number of items that could affect nonprofit organizations that serve children and families. Passed by the House of Representatives in November 2021, the bill is currently stalled in the Senate and will certainly see some changes before any part of it becomes law. While it’s hard to predict the true implications of that final version, there are a few things nonprofits should keep an eye on.

Child Care

The plan would enable states to expand access to free preschool for more than six million children. Parents could choose from public schools, daycare providers or Head Start settings. If the federal government provides additional child care credit for preschool age children, families may become less reliant on nonprofits for child day care, which could impact the number of children enrolled. While nonprofit daycares are eligible to receive donations and government subsidies, most of their revenue still comes from the tuition families pay for each child enrolled.

Another provision in the bill would help lower the cost of day care for lower- and middle-class families by helping states expand access to affordable childcare to about 20 million children per year. The thought is more parents could enter the workforce, work full-time as opposed to part-time jobs or pursue higher education.

What that means for nonprofits is more parents and guardians will be seeking child care because they can now afford it, rather than staying home with their young children or relying on a family member to care for them while they work. Child care assistance would likely be provided in the form of a financial incentive, vouchers, tax credits or check to registered child care providers.

The bill also would extend the child tax credits included in the American Rescue Plan. Under that plan, families received $300 per month for each child younger than 6 years old and $250 per month for each child 6 to 17 years old. The measure was intended to help families with children cover household expenses. The last of those American Rescue Plan payments went out in December 2021.

Workforce Development

The bill would make an investment in workforce development by expanding access to job training for specific populations. Highlights include youth workforce investment activities ($1.5 billion); grants to support the direct care workforce ($1 billion to eligible entities, which include nonprofit organizations); and adult employment and training activities ($1 billion).

Charitable Giving

Another component of the bill could impact charitable giving. Will increased taxes on higher-income individuals and companies curtail their charitable giving? On the flip side, will limitations on IRA contributions prompt higher-income taxpayers to increase their giving in the form of a charitable rollover?

The bill also could make billions of dollars in grant funding available to nonprofits to increase energy efficiency in their buildings and reduce emissions. Billions more would be allocated to fund nonprofit-led partnerships to increase affordable housing and promote community development.

Though much political negotiating remains to be done on Capitol Hill before any of these provisions would go into effect, this is a bill worth watching for nonprofit organizations across the country.