Washington Snapshot - October 11, 2013

Gridlock in Washington

As the government remains shut down and negotiations proceed slowly, philanthropy is stepping in with stopgap offers to protect programs Americans need. These efforts reflect the steadfastness of our philanthropic and charitable communities, as Council Senior Vice President for Public Policy and Legal Affairs, Sue Santa noted in her statement about the shutdown last week. See additional coverage of both the impact of the government closure and the response of our sector below, after our review of the current activity here in Washington.

The President invited House Republican leaders to the White House late Thursday and staff continued discussions throughout the evening. While no deal was reached, both sides said that conversations will continue. Friday morning’s Politico has an interesting synopsis of the tensions that have led to the past 11 days in their article, “The Year the Government Broke.” House Budget Committee Chairman Paul Ryan (R-WI-1) authored a Wall Street Journal op-ed Wednesday calling for a budget agreement that reforms entitlement programs and initiates tax reform. House Republicans have also called for the creation of a bipartisan committee that would negotiate all of these fiscal issues together. However, congressional Democrats and the White House have already come out against this idea.

On the debt ceiling front, The Hill reports that October 31st is the real “drop-dead” date for raising the debt ceiling, subject to changes in revenue flow. Treasury owes $67 billion in Social Security, Medicare, and military and civil service benefits on November 1st, and may not be able to make all those payments unless the debt ceiling is raised. Senate Majority Leader Harry Reid (D-NV) and Senator Max Baucus (D-MT) introduced a bill Wednesday that would raise the debt ceiling by $1 trillion until December 2014, without the Affordable Care Act provisions, tax reform instructions, or spending cuts that many House Republicans want to include. The White House has said that the President could support a short-term debt ceiling fix, an idea that is not popular among congressional Democrats.

At the same time, House Speaker John Boehner (R-OH-8) has publicly stated that the House does not have the votes to pass a debt ceiling bill that doesn’t include some of the other concessions that Republicans seek. Bloomberg reported on Thursday that while some instructions for tax reform may be included in a deal on the debt ceiling, it will most likely not include stating a maximum tax rate of 25%, which has long been the hope of Ways and Means Chairman Dave Camp (R-MI-4). Clint Stretch of Tax Analysts writes in Forbes that “the pending debt ceiling debate has placed tax reform discussions on indefinite furlough.”

The lack of consensus on how to resolve the debt ceiling battle tells us that a deal could still be still far off. As mid-October approaches, some lawmakers are speculating that the government could prioritize some payments over others as a way of avoiding default if Congress fails to raise the debt ceiling. Yet, the Administration and some commetators say Treasury probably can’t legally pick and choose which payments to make.

We will keep you posted as these fiscal negotiations intensify here on Capitol Hill over the coming weeks.

How does the shutdown impact you and your grantees?

Tim Delaney, President and CEO of the National Council of Nonprofits, wrote a compelling op-ed piece for the Foundation Center’s Philanthropy News Digest  on the shutdown’s impact on charitable organizations. Delaney believes that nonprofits are being unfairly asked to subsidize government programs that are shut down. Delaney praises the reliability and resilience of charitable organizations in uncertain times: “What the shutdown crisis serves to highlight is that when government fails the people, people depend on their local charities.”

True to Delaney’s expectation, charitable organizations are stepping in to help those affected by the shutdown. The Fisher House Foundation announced on Wednesday that they would pay death benefits to military families of fallen soldiers. NBC News reported on Tuesday that the Pentagon was unable to pay these benefits due to the government shutdown. The Fisher House Foundation committed to paying the full benefits package, which includes a one-time payment of $100,000, which the Department of Defense would repay the Foundation upon the government reopening. Late Thursday night the President signed into a law a bill that would allow the Pentagon to pay out the death benefits during the shutdown. While the Fisher House Foundation’s generosity will now not be needed for this purpose, this is a wonderful example of the philanthropic sector’s ability to respond quickly to a crisis.

We reported last week that Head Start programs in many states, largely run by nonprofits, would be forced to stop providing services due to the shutdown. This week, Houston philanthropists Laura and John Arnold offered up to $10 million to the National Head Start Association to provide 7,000 children with educational services. The Arnolds’ financial assistance will be repaid, without interest if government funds Head Start for the fiscal year. 

Many charitable organizations that receive federal dollars will likely start to feel the impact of the shutdown in the coming weeks. Nonprofit Quarterly reports that the Department of Veterans Affairs’ funds for veterans education and vocational rehab, and transitional and permanent housing programs will start to run out in late October. In D.C., some nonprofits have begun scaling back services and furloughing workers because of revenue loss from the federal and city governments. Meals on Wheels in Ypsilanti, Michigan, which receives a sizeable federal grant each year, believes it can continue to serve the community for about a month before cutting back on its meals. A Philadelphia organization that provides STEM education curriculum to dozens of school districts will scrape by on residual funds as long as it can, but without federal grant money, it will soon have to stop its education programming. In Boston, a heating assistance program for low-income people, funded primarily by the federal Low Income Home Energy Assistance Program, has already laid off some workers and suspended its fuel assistance program. In a Washington Post column, Joe Davidson writes about the Combined Federal Campaign, which “funnels charitable contributions from federal employees to more than 20,000 nonprofit organizations around the world” not being able to function because it is regulated by the Office of Personnel Management. The United Way took to Capitol Hill this week to help educate lawmakers on the impact that the shutdown has on the work they perform in communities across the country.

If you have a story to share on how the shutdown or fiscal uncertainty in Washington is impacting your work, we want to hear from you!

HUD Secretary's Award for Public-Philanthropic Partnerships

Secretary of the U.S. Department of Housing and Urban Development Shaun Donovan and Council President and CEO Vikki Spruill recognized 10 philanthropic funders with the 2013 Secretary’s Award for Public-Philanthropic Partnerships. These organizations were recognized for enhancing the quality of life for low-income and moderate-income families. The projects addressed issues concerning housing and neighborhood improvements, education, health and recreation, transportation, arts and culture, public safety, sustainability and economic development.

We will be sharing with you the award winning projects over the next several weeks. Here are the next two winners.

Rasmuson Foundation - Pre-Development (Pre-D) Program

The Pre-Development (Pre-D) Program is a service provided to nonprofits in Alaska through a partnership initiated by the Rasmuson Foundation. Pre-D’s core purpose is planning sustainable capital projects. Sustainable is defined as projects that contribute to the long-term viability of the organization and the community it serves.

The Pre-D Program is based on the principle that capital projects are more likely to succeed if they are well planned, right-sized, reasonably priced, properly vetted and are affordable to operate over the long term.

The Capital City Weekly and Juneau Empire wrote articles about Rasmuson’s award.

The Raymond John Wean Foundation - Youngstown Community Revitalization

The Raymond John Wean Foundation was established in 1949 as a family foundation and launched a transformational journey toward becoming a community asset in the early 2000s. The Foundation engaged PolicyLink, a national research institute, to undertake a strategic review process in 2006. The resulting recommendations provided the blueprint for the Foundation’s evolution into a place-based grantmaker with a focus on serving economically disadvantaged communities in Trumbull and Mahoning Counties, Ohio.

Once composed primarily of family members, the Foundation’s board evolved into one consisting almost entirely of community members, with the Foundation’s efforts carried out by a staff of five. With assets as of 2012 at approximately $72 million, this private foundation awarded $2.6 million in 2012 in five issue priorities: early childhood development, educational opportunity, economic opportunity, community revitalization, and public and civic leadership.

The Tribune Chronicle wrote an article about the Foundation’s award.

Impact Investing Field Guide Unveiled

At the Council’s 2013 Fall Conference for Community Foundations, the Council and Mission Investors Exchange announced the launch of the Community Foundation Field Guide to Impact Investing: Reflections from the Field and Resources for Moving Forward. The Field Guide is a collaborative effort of Mission Investors Exchange, the Council on Foundations, and many impact investing leaders.

The interactive Field Guide takes community foundations through three main stages of the impact investing journey: Learn, Design, and Activate. At each stage, visitors can click on various topics within that stage to learn more about what the topic entails and how other community foundations have approached place-based investing.

Keep in touch!

Please feel free to reach out to any of us on the public policy team with any comments or concerns, or if you have an issue you’d like to see covered in Snapshot.