Courting the New Congress

Charities express concern and guarded optimism as Democratic majority pledges fiscal discipline

With both houses of Congress now under Democratic control for the first time since 1994, many charities are hoping to persuade

lawmakers to channel more federal money to social programs, health care, the arts, and other domestic issues.

But they should not get their hopes up too high, nonprofit experts warn: The 110th Congress faces many constraints that mean money will continue to be tight. Not only have Democratic leaders vowed to rein in the budget deficit, which will limit their ability to maneuver, but they still must work with President Bush, who favors both tax cuts and spending restraint.

“The bottom line is there may be a little bit of the easing of the budget pressure on nonprofits, but it’s hard to know where this is going to end up because the president is still a major player in all this,” says Alan Abramson, director of the Nonprofit Sector and Philanthropy Program at the Aspen Institute, a think tank in Washington.

The new Congress will affect far more than federal spending: Charities are concerned about how the Democratic majority will treat a range of issues, including regulation of nonprofit groups and their advocacy efforts and tax breaks for donors.

‘Limited Gratification’

By pledging to bring more fiscal discipline to the budget, which last year carried a deficit of about $248-billion, the Democrats seek to deprive Republicans of the chance to label them the party of big taxes and big spending, says Michael Franc, vice president of government relations at the Heritage Foundation, a conservative research institution in Washington.

“This suggests these advocacy groups will be in for an era of limited gratification, deferred gratification, or no gratification,” he says.

In fact, some experts worry that Congress’s efforts could end up hurting charities indirectly. The House decided this month to reinstate a “pay as you go,” or “pay-go,” approach to the budget, requiring all tax cuts and increased spending on programs such as Social Security and Medicare to be offset by spending cuts or tax increases elsewhere.

Nonprofit leaders say that could leave lawmakers less sympathetic to two proposals that charitable organizations are championing: one to offer charity tax breaks to people who do not itemize on their tax returns and another to extend a provision allowing people older than age 70 to channel money from their individual retirement accounts to charity tax free, a benefit that expires at the end of this year.

“The pay-go rules are going to make lawmakers extremely lean and hungry in terms of looking for ways to find scraps of funding that can support their projects,” says Diana Aviv, president of Independent Sector, a coalition of major charities and foundations, in Washington.

The Center on Budget and Policy Priorities released a study in October showing that spending on domestic programs (apart from “entitlement” programs such as Social Security and Medicare, which provide benefits to everyone who qualifies) fell to 3.15 percent of the gross domestic product in the 2006 fiscal year, from 3.36 percent in the 2001 fiscal year.

That is bad news for nonprofit groups, which as a whole rely on government funds for about 30 percent of their revenue. “There is nothing like the federal budget that affects the sector,” says Ms. Aviv.

Spending Measures

Charities are pressing the new Congress to reverse the trend, especially as it considers the fiscal 2007 budget.

The last Congress did not adopt spending bills for the 2007 fiscal year, which started last October, instead passing a series of “continuing resolutions,” or temporary measures that keep the government operating, the latest of which expires on February 15.

The new Democratic leaders announced that they would propose a new continuing resolution to cover the rest of the 2007 fiscal year — one that would give most federal programs the same amount they got in the 2006 budget but provide some wiggle room for cases where that would create severe hardships.

That concerns social-services charities, who say freezing spending at 2006 levels would cut off thousands of people from programs such as Head Start (an education program for young children), subsidized housing, and child care.

“We’re trying to identify from our membership, from all advocates, where there really may be painful problems, to make Congress aware of that, to spare the worst cuts,” says Deborah Weinstein, executive director of the Coalition on Human Needs, in Washington, an alliance of groups that promote policies to help low-income people.

Global-health and antipoverty advocates are also lobbying hard to ensure the budget freeze does not affect planned increases in spending on the international fight against AIDS, tuberculosis, and malaria.

Congress’s 2007 budget plan will also affect the pocketbooks of some nonprofit groups directly, by prohibiting any “earmarks,” or spending that is inserted by a member of Congress for specific groups or projects without public debate or evaluation.

A Chronicle analysis found that charitable organizations won more than $2-billion in earmarks in 2005.

Among the organizations that received earmarks last year was Girl Scouts of the USA, in New York, which received $2.1-million for several juvenile-justice programs, according to the Citizens Against Government Waste, which tracks such spending. And the group was hoping to get additional federal money this year.

The Girl Scouts said in a statement that the money was used to pay for programs such as a visitation program for daughters whose mothers are in prison and a program to encourage Hispanic girls in math and science, a “beneficial and effective use of tax dollars.”

Despite the loss of the earmarks, says Marion F. Swan, a spokeswoman for the group, “we’re confident at the local and national level that the Girl Scouts will figure out how to do their best to continue these programs.”

The House and Senate have agreed to reinstate earmarks in the 2008 budget, but to require lawmakers to disclose the projects that they plan to insert in spending bills. “Whichever direction you look, earmarks are likely to decrease,” says Scott Lilly, a former Democratic House Appropriations Committee staff member who is now a senior fellow at the Center for American Progress, a liberal think tank in Washington. “The Republicans have gotten religion and they’re going to be complaining if the opposition does much.”

Briefing Lawmakers

Many charity leaders are moving quickly to try to influence the budget process. Catholic Charities USA, in Alexandria, Va., brought in representatives of the charity from around the country this month to brief Congressional staff members about its Campaign to Reduce Poverty in America.

The campaign calls for measures such as more low-cost housing, universal health-insurance coverage, and improved access to child care to help the 37 million Americans who live below the official federal poverty level.

“There are issues that for sure are going to stand a better chance with the Democratic leadership,” says the Rev. Larry Snyder, the group’s president, noting that the House has already adopted one of the charity’s priorities — an increase in the minimum wage. But he says he knows the attempt to wring money from the budget will be tough and that he expects much of the leadership on antipoverty issues to come from outside of Washington.

“The real work of this campaign is going to be done on a local level,” he says. “Change like this is not going to come from Washington. Politicians, I don’t think, are convinced it’s part of the American will to do this.”

Arts and Culture

Despite the obstacles, some nonprofit groups are heartened by the new faces leading Congress.

Robert L. Lynch, president of Americans for the Arts, in Washington, runs down the list of Democrats who won “A” grades from the group’s political-action committee for their pro-arts votes in the 109th Congress — and are now in positions of power. They include Nancy Pelosi of California, the new Speaker of the House; David Obey of Wisconsin, chairman of the powerful House Appropriations Committee; and Norman Dicks of Washington, head of that committee’s Interior subcommittee, which allocates money for the National Endowment for the Arts.

“When I look at the overall grades of the committee chairmen coming in, they seem to be substantially better than those that were there before,” Mr. Lynch says.

Yet he knows that any bids for increased spending on the arts will face fierce competition — so he is marshaling data showing that museums, theaters, and art galleries generate economic growth and that federal money prompts more private donors to give money to the arts.

Congress slashed the budget of the National Endowment for the Arts so much during the 1990s that Mr. Taylor’s group aims simply to return spending, which was about $124-million in 2006, to the amount awarded in 1994 — $170-million.

Environment, Foreign Aid

Other groups also count more friends in Congress, but that does not necessarily mean they will be able to advance their agendas. Melinda Pierce, director of national campaigns for the Sierra Club, in Washington, is encouraged that Barbara Boxer, a California Democrat, is the new chairwoman of the Senate Environment and Public Works Committee — and has already announced she will hold hearings on global warming.

Ms. Boxer’s predecessor, Republican Sen. James Inhofe of Oklahoma, declared global warming a “hoax.”

“The elections did in fact result in a Congress which is a deeper shade of green,” Ms. Pierce says. However, because President Bush would probably veto any major effort to curtail global warming, such as hard targets for cutting carbon emissions, “I don’t truly believe that bold policy changes are going to come out in the next two years,” she says. “We’re looking at it more in the long haul.”

In addition to the budget complications, Congress is preoccupied with the war in Iraq, which could make it harder for other issues that concern international relief groups to get a hearing. For example, InterAction, an umbrella group of humanitarian charities, would like Congress to examine the State Department’s new approach to foreign aid, which it believes gives too much priority to military and diplomatic goals and too little to the fight against poverty.

The House Foreign Affairs Committee (formerly called the International Relations Committee) had planned to hold a hearing on the question in November, but canceled it. The committee is now holding hearings on Iraq, as well as on North Korea’s potential nuclear threat.

“Clearly the most pressing foreign-affairs problem of the United States is Iraq and that is going to suck a lot of the energy out of other foreign-affairs issues,” says Bill O’Keefe, senior director of advocacy for Catholic Relief Services, an international relief organization in Baltimore.

Elizabeth Schwinn contributed to this article.