Area nonprofits keep eyes on fiscal cliffDecember 18, 2012
By ALEXANDRA SONDEEN
Herald Staff Writer
Politicians and residents aren’t the only ones concerned about impending spending cuts and tax increases if the federal government can’t avert the so-called “fiscal cliff.”
The moniker is the shorthand term for the dilemma the government faces at the end of the year when provisions of Budget Control Act of 2011 that ended the debt-ceiling crisis are slated to go into effect. Among the laws that will change are the end of temporary payroll tax cuts that would result in a 2 percent tax increase for workers, the end of some tax breaks for businesses, changes in the alternative minimum tax that limits tax benefits from a variety of deductions, the end of Bush-era tax cuts and the beginning of taxes related to President Barrack Obama’s health care law. Spending cuts agreed upon as part of last year’s debt ceiling deal also will go into effect.
Nonprofit organizations are worried about funding cuts from already shrunken sources coupled with a decrease in private donations if taxes rise and if tax deductions for charitable donations are limited.
“This could be really bad, but nobody knows,” said Joyce Fleck, executive director of Tri-Cap in Jasper. “There are new people asking for our help every day. We’re definitely concerned about how this could impact our clients.”
Tri-Cap, a multicounty community action agency, receives government funding for many of its programs, such as Head Start and energy assistance programs. If funding is cut, it could impact the number of people and families Tri-Cap can help.
“There’s not enough data or information to try to plan for it,” Fleck said. “We don’t know that anything will be immediate. Some of these programs are on a two-year funding cycle, so it could take a bit to catch up. We’re trying to do more fundraising, but just about all we can do is react and it’s a terrible position to be in.”
Crisis Connection in Jasper also receives federal grant funding and private donations. Executive Director Beth Stein said the organization, which provides support for victims of domestic and sexual abuse and educational programs on those topics, has been dealing with declining funds for years.
“That is always looming over us, what funding will be year to year,” she said. “You hope it will at least maintain, but the reality is that doesn’t necessarily happen. You hope the community can step up because it’s what we have to rely on.”
But fundraising also may get even harder. If Bush-era tax breaks aren’t extended, residents may not be able to give as much. And should tax deductions be limited, the incentive to give to charities would be decreased as well.
“Less and less people have discretionary income to donate to other causes,” Fleck said. “They are still trying to recover from the recession. Someone that used to give to three causes a year might only give to one.”
Stein said area nonprofits are forced to compete with each other for donations.
“It’s not going to get any easier, that’s for sure,” she said. “We’re all asking for more donations and people have less to give and have to choose. We can make a dime scream, there’s no doubt.”
At the Dubois County Community Foundation, CEO Brad Ward is less worried about the number of donations.
“Tax deductions do play a role in giving, but I’m not as concerned about the local community because I think they’ll keep doing the right thing,” he said. “Tax deductions aren’t the reason most people make contributions. I do worry, though, to what extent (the fiscal cliff) will affect the level of giving, the timing of giving and the planning we do.”
Ward noted that several donors have accelerated the timing of their annual gifts this year because of the possible changes.
“It is causing people to be timely here at the year’s end,” he said. “There’s a lot of discussion about it right now. If you were going to make a gift in the future, you might consider doing that sooner now because the picture isn’t going to be any better later than it is right now.”
But for those who haven’t already made their contributions, Ward is concerned they may be halting their giving out of caution, at least temporarily.
“From a local level here in Dubois County, the biggest concern I have is, ‘Does this fiscal cliff cause people to just not react?’” he said. “Are they going to wait and see? So I’m worried about a decline from that standpoint and how it might change the mindset of giving later.”
Funding cuts over the last couple of years have nonprofit organizations already scrambling to raise additional money in donations to fill the gap at the same time many people are still struggling to make ends meet and are turning to nonprofits for help.
“We all do everything we can to stretch every dollar as much as possible,” Fleck said. “But it’s making our jobs tougher, for sure. We have learned to kind of expect the worst and we don’t plan on any chunk of funding being there the next time around.”
Contact Alexandra Sondeen at email@example.com.
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