Nonprofits need a federal partner

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Over the past two years, as communities across America faced tremendous challenges and heartache, a vital sector of our economy answered the call for help unerringly: the non-profit sector. Whether providing health care, food and shelter, job training and education, connection through art or music, or any number of essential community services, nonprofits have responded to the COVID-19 pandemic as an integral and irreplaceable partner of federal, state, and local governments. . The nonprofit sector was there when Americans needed it, and it’s still there for us.

Across the country, the not-for-profit sector is made up of 12 million employees, 20 million board members and 63 million volunteers. It is a vital sector of the US economy driven by service and community impact rather than financial profit. Yet nonprofits themselves have needed help over the past two years. They have been squeezed by lost revenue, labor shortages, halted operations and increased demand.

When the federal government developed the Paycheck Protection Program (PPP) to help businesses stay afloat during the worst of the pandemic, we worked in Congress to make sure nonprofits were eligible. Few things could be more counterproductive in times of need than laying off those best placed to help in our communities.

When the Small Business Administration (SBA) opened the PPP in April 2020, nonprofits and for-profit entities rushed to complete the application process as news reports warned of rapidly dwindling funding. As nonprofits tried to grab this lifeline, many were puzzled by a section of the application form requiring information about their property. Their property? No one owns a non-profit organization. They belong to their community and to all of us. That’s part of why they’re so effective and so important. Was a nonprofit supposed to list its board members, its CEO, or anyone at all? Experts had varied advice and time was ticking.

The SBA’s dedicated staff did heroic work in setting up the PPP, but they had little experience working with nonprofit organizations. This lack of nonprofit expertise was more than just a paperwork headache: the researchers estimate that PPPs protected fewer nonprofit jobs than expected, with smaller nonprofits being disproportionately absent. Despite relying on the nonprofit sector to help implement programs and serve those in need, the federal government’s response to the pandemic has left many nonprofits behind.

It is time for the federal government to formally recognize the importance of the not-for-profit sector. Our landmark bipartisan legislation, the Nonprofit Sector Strength and Partnership Act of 2022, formally establishes a partnership between the federal government and the nonprofit sector. Our legislation gives nonprofits a seat at the table when federal policy is created — instead of being asked impossible questions when they ask for help. Specifically, our bill will create a three-part structure:

  • Office of the White House: Nonprofits have a powerful voice in our communities, but they need an official voice within the federal government, the same way the Small Business Administration provides critical information and a support for small businesses. With nonprofits around the table, policies can be designed to maximize benefits for our communities.
  • Interagency Council: Each federal agency works with the nonprofit sector to some extent, but the agencies lack a streamlined coordination mechanism. The council will build on these relationships to produce regular reports on how not-for-profit organizations can help the government use taxpayers’ money more effectively.
  • Federal Advisory Council: Congress and the President need the expertise of the nonprofit sector, and this council will ensure that a diverse set of community and national nonprofit leaders are ready to provide consultation.

Our bill also takes important steps that will strengthen the nonprofit sector: adequate data on nonprofit jobs, simplified registration of fundraisers, expanded access to national service, fairer federal grantmaking processes, and more.

We have all seen the power of nonprofit sector partnership in our own states as well. The groundbreaking work of the Minnesota Council of Nonprofits has been a leading voice and partner for more than a decade in the search for a formal federal partnership. And in Michigan, the success of the Governor’s Office of Foundation Liaison clearly shows that this concept can deliver results for nonprofits, government, and the people we serve.

Nonprofits have always represented the best that America can be because they put people’s well-being and the greater good at the center of their missions. The pandemic era has been a powerful reminder of the impact of nonprofits and the importance of their partnership with the federal government. Now is the time for Congress, the White House, and all of our federal agencies to formalize this relationship and be a true partner.

Betty McCollum, a Democrat, represents Minnesota’s Fourth Congressional District and Fred Upton, a Republican, represents Michigan’s Sixth Congressional District in the United States House.

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