The Center for Budget and Policy Priorities’ Bob Greenstein just reported at the Independent Sector’s annual conference that the price of tax cuts (which account for about half the federal deficit) is catching up with charities—they are facing major funding cuts.  The scale of replacement needs is well beyond possible increased revenues from private philanthropy and social ventures.  What to do?

First, the cuts:  President Bush has proposed 12% cuts (through FY 2010) in programs of interest to nonprofits and the Republican Study Committee is pushing for even more, ostensibly to deal with the deficit.  Things will get still much worse for charities if the estate tax repeal passes.  That will cost the Treasury more than we spend on all of Homeland Security—about a trillion dollars over 10 years —and the Congressional Budget Office says nonprofits will lose between $12 and $25 billion a year in decreased contributions if it’s repealed. 

What does all of this mean?  Besides it being critically important for nonprofits to work to phase out most of the tax cuts and resist new ones, the sector is facing a significant shortfall in the 30+ percent of its revenues that comes from the federal government

I think there’s an opportunity here—organizations need to go beyond searching out new ways to finance old programs; they need to look at the way they do work, especially through professionally-provided services, and see if there are cheaper and better ways to work with their “clients.”  In fact, we need to see if different kinds of program strategies might help keep folks from becoming clients in the first place. 

The Alliance for Children & Families is trying one approach (in the interests of transparency—I helped get it started) that aims to help people build their capacity to better take care of themselves and be less reliant on human services.  What makes it unusual is that the Alliance understands that since most social problems are structural, taking care of yourself requires an understanding of shared circumstances and effective democratic participation in policy and political processes.  They also believe that skills in civic life translate to skills in private life. Through such self- and peer-help, the hope is to make services delivery less costly and to address the root causes that create peoples’ needs. 

Are there other creative approaches that you know about?

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