The Very Survival of Nonprofits Is Being Threatened

Whew. The Great Recession failed to destroy the strong fabric of nonprofit organizations in America. We buckled but did not break. But now our own government is threatening to do what even the disastrous economy couldn't: undermine the financial viability of nonprofits in America.

Hyperbole? I wish.

Lest you think this is a one-sided critique of heartless Republicans or socialistic Democrats, it's not. This time there's plenty of blame to spread around.

At the time of this writing, Congressman Darrell Issa (R-Calif.) has proposed phasing out preferential nonprofit postal rates. It's not that he's trying to hurt nonprofits. He's trying to prevent the collapse of the U.S. Postal Service, brought on by competition from the more efficient private sector (e.g., FedEx), the Internet (mail volume is down 22 percent in five years) and decades of mismanagement of the USPS, including the capitulation to outlandish union demands that bring to mind similar mistakes made by U.S. auto manufacturers.

So the problems are real. But only in the through-the-looking-glass world of big government do people suggest that the solution to reduced sales is to actually raise prices!

Issa is right. Mostly. The USPS has to dramatically cut costs and will likely do so through the elimination of Saturday delivery, a reduction in the number of bulk-mail centers, and even the closing or relocating of thousands of neighborhood post offices. It needs to revamp the salary structure and pension benefits of postal workers. (There is no reason our tax dollars should afford them such largesse while workers in the private sector struggle for every dime.)

But the idea of phasing out nonprofit postal rates is wrong. First, it would place an undue financial burden on the nonprofit sector — which employs 13 million people and helps tens of millions of Americans. Second, if nonprofits no longer can afford to raise money cost-effectively (we all love digital, but mail still accounts for 78 percent of revenue to nonprofits), they no longer will be able to provide the services society relies on. Food banks will not be able to feed as many people. Hospitals will be forced to turn patients away.

Do any of us want government picking up the slack? Historically (think of veterans' health care), government is neither as efficient nor effective at providing services as the private sector. So why would Issa consider such a move?

And on the other side

Now to the other side of the aisle and the other end of Pennsylvania Ave. President Obama has called for the reduction in tax deductibility of charitable gifts for people in higher income brackets. He wants to penalize people for being successful? And demotivate our best donors?

I know not all donations are given for tax purposes. But our country has always recognized that charitable donations should be encouraged, not discouraged. And those who contribute the most to charity should not be 
disincentivized.

Estimates are that this scheme could cost nonprofits billions of dollars a year in contributions. Specifically, nonprofits would be faced with a significant loss of major-gift income (the most cost-efficient kind of revenue) and forced to cut employment and reduce the services they offer to help our nation's neediest.

So whether you're concerned that this will push more burden to the inefficient and broke government or that this will unravel the already frayed safety net in our society provided by nonprofits, you should act.

May I encourage 
you to do two things?

First, today, right now, before you forget, write a letter to President Obama and your representatives asking them to protect the tax deductibility of nonprofit donations for all Americans — especially the most generous. (If you want help with language, go to DMAAction.org.) If you have the energy and a couple of extra stamps, write another letter asking them not to phase out the nonprofit postal 
rate.

Second, if you're not already a member, join the DMA Nonprofit Federation. It's doing amazing work to defend the nonprofit sector. It needs your voice, your involvement and your membership. Or, as my friend Steve Froehlich from ASPCA said, "If you can't afford a multimillion-dollar lobbyist in D.C. to defend your interests, you'd better join DMANF."

By the time you read this, organizations like the DMA Nonprofit Federation and the Association of Direct Response Fundraising Counsel might already have successfully beaten back the forces that want to phase out nonprofit postal rates. But there's always something. The point is, all of us need to stand together now more than ever to defend nonprofits and the life-saving and life-changing work they do. So keep abreast of the ever-changing issues, and lend your voice to support what you believe. FS

Tom Harrison is CEO of Russ Reid. Reach him at tharrison@russreid.com