In the spring of 2008, Shirley Sagawa wrote an article for the Journal of Democracy outlining how the nonprofit sector needed a Small Business Administration for itself.  In the article, Sagawa states,

“The Internal Revenue Service focuses on tax compliance, and the Corporation for National and Community Service supports volunteer programs. No agency, however, counts nonprofit health or capacity as central to its mission. Nor does the private sector fill this gap. Foundations provide minimal support, and over the last five years almost all of the leading funders have either cut programs or decreased their size significantly. A federal response is the answer; the General Accounting Office has recommended that ‘providing assistance to improve [nonprofit] capacity may be one area where the federal government could employ a more strategic approach.’ What is needed, specifically, is an SBA for nonprofits–a government agency that can provide both funding and guidance to the nonprofit sector.”

When Peter Frosch read the article, he brought the notion to his boss, Congresswoman Betty McCollum, and both engaged in months of research and dialogue on the relationship between the nonprofit sector and government.  When they approached the Congressional Research Service and asked for information regarding the nonprofit sector, the CRS told them that there was none, and so they pushed for a CRS study on the sector, which was completed in late 2009.  Recently, Congresswoman McCollum’s office introduced the Nonprofit Sector and Community Solutions Act.  The bill, entitled H.R. 5533, will:

  1. Create a U.S. Council on the Nonprofit Sector and Community Solutions to advise the President and Congress about how the federal government can work more effectively with nonprofits to “address national and community challenges and maximize community opportunities.”  The Council would study the relationship between nonprofits and government—including government contracting, the role of nonprofits in the U.S. economy, ways to eliminate barriers that inhibit nonprofits from bringing proven solutions to scale, as well as other issues.  The Council would be required to provide an annual report to Congress and the President.
  2. Create an Interagency Working Group on Nonprofits and the Federal Government which would coordinate administrative policies regarding contracting with, supporting, and managing federal relationships with nonprofits.  The working group would include secretaries of each cabinet agency and directors of key agencies that interact with nonprofits such as the IRS Commissioner, the Director of the Census Bureau, and the Chairs of the NEH and the NEA.
  3. Charge the Department of Commerce to gather data from other federal agencies on nonprofit employment, federal funding of nonprofits, nonprofit revenues, clients served by nonprofits, and the financial health of nonprofits.  The Bureau of Economic Analysis at the Department of Commerce would be charged with recommending a set of metrics for measuring the scope, size and economic impact of the nonprofit sector. 
  4. Create a Nonprofit Research Fund to support a broad range of basic and applied research on issues of critical importance to the sector, such as training in nonprofit research and the dissemination of research findings to government officials and nonprofit leaders.

When looking at the three most recent major pieces of legislation passed, having over 3000 pages of legislation written, the nonprofit sector is scarcely mentioned.  The sector was barely consulted when the legislation was drafted.  As McCollum’s H.R. 5533 press release points out, the CRS estimates that nearly 10 percent of the domestic workforce is employed by the nonprofit sector, roughly the same number who works in manufacturing.  Where was the sector when these bills were being drafted and passed?

Nonprofits were probably fighting about SIF announcements and awards, or standing around watching while leaders have federal funds withheld for earning “high salaries” or getting pummeled by state and federal contracting requests while private businesses run without regulation.  While we fight for crumbs, we should look up and realize that there is no seat for us at the table, and we are missing the really important discussions.

H.R. 5533 is a chance for the sector to gain that seat.  McCollum’s legislation is currently being referred to three House committees: oversight and government reform, education and labor, and science technology.  According to OMB Watch, “Congresswoman McCollum should be applauded for taking leadership for this groundbreaking step in recognizing the contribution of the nonprofit sector and to develop systems of collaboration and data collection.”

Let’s put down our gloves, refocus our attention, and realize that we all have a chance to positively change the current relationship between government and the nonprofit sector.  As many of you reading this are activists or former activists, let’s dig in our heels and help move the sector forward by helping pass H.R. 5533.  I will beckon my inner Paul Wellstone and start hitting the pavement hard within the sector.  Count on your doors being knocked on soon.

To help in this effort, visit the National Council of Nonprofits.

Read more stories by John Brothers.