Nonprofit Blues

By Paul C. Light
Special to the Washington Post
Wednesday, November 26, 2008 12:00 AM

President-elect Barack Obama has been very judicious thus far about mobilizing the vast coterie of supporters from his campaign. Generation "O," for Obama, is ready to do its part in putting the country on a more hopeful path.

The question is what Obama should ask of his supporters. Washington already expects four million people on the Mall for Obama's inauguration, but what will he say to activate his supporters?

As a dreary Thanksgiving approaches, one answer is to mobilize Generation O -- everyone from college activists to seniors -- to help the nation's struggling nonprofit sector. Unlike the automobile industry, which ferried its CEOs to Washington last week on private jets, the nonprofit industry has yet to show up at all.

This does not mean the nation's one million other charitable organizations and their 11 million employees are flourishing. There is already plenty of evidence that the sector is suffering. It is often the first to experience recession as households cut back on discretionary contributions, and the last to recover. Of the nearly one million nonprofits currently up and running, 100,000 could fail in the coming year.

Budgets are tight, hiring freezes are already in place, and cutbacks are already taking their toll. Driven by increasing demand for basic services, many nonprofits are shorting their own employees, who are so deeply committed to their missions that they are willing to take pay cuts to help the needy. Americans are generous givers to nonprofit causes, but cannot give what they do not have.

Obama has already made a number of promises that will help nonprofits. He clearly wants to expand the Americorps program to 250,000 members. One million might be a better target for the next few years as part of Obama's economic stimulus package.

Obama also supports national service legislation, which might also become a vehicle for helping nonprofits as they downsize. Under a bipartisan plan currently pending in Congress, the federal government would eventually deploy 250,000 "ServeAmerica Fellows" who, like Americorps members, will be paid at subsistence rates.

At roughly 500,000 new positions total, these two programs will certainly help the nonprofit sector bridge the recession. But with several million nonprofit jobs at risk, the two programs will not go far enough to keep the sector whole. What the sector needs now is an emergency program to bridge the hiring freezes and cuts.

Such a program would involve three initiatives.

First, Obama should ask Congress for a $25 billion federal loan fund to support distressed nonprofits. The fund would be administered by the Corporation for National and Community service, which already has the experience to make tough choices between applicants. With an interest-yielding payback schedule, the loan fund would carry minimal taxpayer risk. Loans would only be given to distressed nonprofits that can prove their worth through clear measures of their effectiveness and financial integrity.

Second, Obama should rally Generation O to a giving and volunteering initiative equal to its campaign activism. This campaign cannot be the run-of-the-mill episodic engagement that increasingly characterizes giving and volunteering in America. Rather, Obama should call upon his supporters to make durable commitments on which nonprofits can rely. He could be particularly effective in helping the nation understand the nonprofit sector's role in a healthy society. One of the reasons the nonprofit sector is not on the rescue list right now is that many Americans simply do not know what it does to help society.

Third, Obama should ask his wife and longtime nonprofit advocate, Michelle Obama, to convene a national summit of philanthropic foundations to discuss emergency measures to increase their giving levels. Foundations are required by law to disburse at least five percent of their assets each year, but should be asked to consider temporary increases to stem the sector's crisis.

When combined with the Americorps expansion and the new ServeAmerica program, these initiatives will help the nonprofit sector grapple with next year's winnowing. Not all nonprofit will survive the crisis, nor should they, but Obama cannot let the winnowing become a random shooting. He should mobilize Generation O to push Congress for quick action on this nonprofit agenda as part of his economic stimulus package.

Paul C. Light is a professor of public service at New York University's Robert F. Wagner School of Public Service and author of A Government Ill Executed.