Breaking News: Impact Of The Election On Nonprofits

Though Democrats will control the House and Senate for the next two years, nonprofit leaders and those who observe the sector suggest that both chambers will be more moderate than one might expect.     

Key committee chairmanships will change hands during the next session, including the Senate Finance Committee, which has spent the past several years working closely with the nonprofit sector on tax reform and regulation.      

Charles Rangel (D-N.Y.) is expected to become the new chairman of the House Ways and Means Committee, replacing Bill Thomas (R-Calif.), who did not seek re-election. In the Upper House — where control still was unclear days after the election — the Finance Committee likely would not see a major policy shift when the chairmanship swings from Charles Grassley (R-Iowa) to Max Baucus (D-Mont.).       

“We have been in this situation before, and we know there’s a very constructive relationship between Sen. Grassley and Sen. Baucus. They’ve worked together on many issues, including the issues relating to the nonprofit sector. We suspect there will be close collaboration between them,” said Diana Aviv, CEO of Independent Sector (IS).      

What that means for the scores of recommendations from The Panel on the Nonprofit Sector remains to be seen. Most observers said that would become clearer after the new year, once the lame-duck Congress approves needed appropriations bills.       

If the Senate is run by Democrats, it’s possible that Sen. Grassley will try to move it through “but I don’t think it’s going to be an easy sell,” Aviv said.

“The complexion of what the House and Senate can do in the lame duck versus the immense, very clear message of the voters makes it much more difficult to move anything other than what absolutely must pass this year – on all issues including the nonprofit panel,” she said.      

If Baucus gains the chairmanship as is expected, Aviv said his priorities and timing might be different than what Grassley found important. “A lot depends on how important these issues are to Sen. Baucus relative to other issues, so that all remains to be decided,” she said.      

Likewise, Rangel has a different set of priorities than Thomas when it comes to the House Ways and Means Committee. Aviv described Rangel as a “friend of the nonprofit sector,” who “appreciates the value and work” of the nonprofit community.       

“I assume we will have things to talk to him about, to work with him,” she said, adding that Rangel has many nonprofits in his district, “so he will have some sense of those issues.”      

Democrats will not have a substantial majority in the Senate and it remains to be seen whether the party can hold its base, Aviv said, as there are conservative Democrats in the Senate who have voted with the GOP on a range of issues, while moderate Republicans like Rhode Island’s Lincoln Chaffee won’t be there anymore.      

Aviv said there would be plenty of “assessment of what kinds of issues they can get votes on to move the agenda forward. I think it’s too early to speculate what kind of changes there will be and what kind of impact there will be on the nonprofit sector.”      

If Baucus indeed becomes chairman, the committee still would pursue nonprofit-specific reforms, said Perry Wasserman, managing director of 501(c) Strategies, a division of The Vivero Group, which represents some nonprofits in Washington, D.C. “You would see the same focus, less intensity.”     

Baucus is clearly interested in nonprofit reforms and “sees a convergence of lobby reform issues and nonprofit reform issues and he’s done a lot of work on that.”      Though Democrats will be in charge of Congress, Wasserman encouraged muted enthusiasm by nonprofits. “One thing that might be important to remember is that important to have realistic expectations of the next two years.” Democrats have already articulated a clear, in some cases, limited agenda, he said, but “certainly they’re focusing on 2008, so not everything is on the table.”      

Dramatic cuts in domestic spending the past few years, particularly in social service spending, likely could be suspended or even reversed under the Democrats, he said. Some Republicans, including the president, believe fundamentally they can balance the budget by holding the line on domestic spending. Democrats by and large disagree with that idea and instead look to allowing some tax cuts retire. The end result could be more money for things that nonprofits care about: healthcare, education, housing, arts, and the environment. That’s one development that nonprofits can be looking toward.”      

The war in Iraq was clearly important to voters, but two other issues were as well, said Gary Bass, executive director of OMB Watch: the economy and corruption and scandals in government.      

“Given the public’s views that the economy and corruption were the top issues, it is a win for groups like OMB Watch which have been calling for accountability. It opens an opportunity for bipartisan solutions,” he said. “It wasn’t a quirk that progressives and conservatives worked hand-in-hand to get the government spending transparency bill moved into law in a matter of months.      

“It would seem to me that these results should be a wakeup call for nonprofit sector leaders to focus on corruption and economy,” Bass said. He also expects much greater congressional oversight than the past few years, a push in the House to add greater transparency regarding congressional actions, as well as a number of tax and budget changes. The repeal of the estate tax is “all but dead,” he said, “which will put more pressure on all of us to develop an alternative for preserving it beyond 2010.”      

Alan Rosenblatt, executive director of the Internet Advocacy Center, also saw the election as a “major breakthrough” with respect oversight. “One of the biggest issues is Congress basically hasn’t performed its oversight function at all in the administration.”      

Disease organizations potentially could benefit, Rosenblatt said, to the extent that they can reduce medical care costs by negotiating drug prices, they can free more money for research. Faith-based organizations, on the other hand, might have some problems, he added.       

One of the president’s strongest supporters of the faith-based initiative, Sen. Rick Santorum (R-Pa.), lost in his re-election bid to Democrat Bob Casey. Santorum also supported the CARE Act and worked on issues to expand and simplify lobbying laws, according to Elizabeth Heagy, president of the Center for Lobbying in the Public Interest (CLPI). With Democrats in power, it shouldn’t be too difficult to find another advocate in that arena, she said.      

“While Republicans were in power, identifying real champions was more of a challenge,” Heagy said, adding that Connecticut’s Joseph Lieberman, a Democrat-turned-Independent who supported the CARE Act, held on to his seat.       

Heagy said that she expects efforts to curtail lobbying and advocacy rights to subside with Democrats now in control of Congress. “It’s been kind of more stealth efforts to curtail rights and some of that will subside. At the same time, lobbying reform is still going to be a high priority.”      

Rep. Nancy Pelosi (D-Calif.), in line to become the next House speaker, expects to enact rules changes for lobbying, among a number of initiatives within her first 100 hours. “From our perspective, we definitely support lobbying reform as far as it levels the playing field so nonprofits can equally have their voice heard,” Heagy said.       

One item that might be pursued is indexing for inflation the $1 million lobbying expenditures limit in the 1976 Lobby Law, she said. “It’s one issue we felt we would have to wait until a Democratic majority,” which would make it easier for nonprofits about what to report and how. the Council on Foundations.