By David L. Thompson, Vice President of Public Policy for the National Council of Nonprofits
A few months ago, a nationally prominent nonprofit leader said this to an audience of people from public charities and private foundations: “Nonprofits have a duty to advocate on behalf of the people who have no voice, to demand social justice.” Many in the audience nodded in agreement; others waited politely for him to get past his warm-up comments to get to something they hadn’t heard before. One audience member was heard muttering under her breath, “yeah, but who has the time?”
To many of us, the “nonprofits ought to advocate” message, as delivered by the above leader and many others, is a mantra without meaning. Everyone says it – preaches it, actually – but very few embrace advocacy as core to advancing their missions. The ought-to-advocate message is akin to hearing that you need to learn a new language. There are plenty of good reasons: cultural appreciation, enhanced communications, reduced demographic tensions. But most of us have other priorities and those reasons don’t push language learning to the top of the to-do list.
This is an article about nonprofit advocacy, but not of the “ought-to” variety. Instead, it relies on two bedrock principles to make the case for “every day advocacy,” which virtually all of us are already doing.
The first principle is that we in the nonprofit community are driven by our mission, our values, and our impact. Stated simply, mission is our motivation.
The second fundamental truth about us is that we typically see ourselves as problem solvers, as solutions-oriented people, as optimists. We haven’t ended hunger and homelessness yet, but we keep at it, and we keep trying new ideas to get to the solutions that work. We know that a live performance of a classical work, or of a brand-new piece, will not only change a life, but also the world; we believe in the transformative power of art. And faith, and education, and community engagement, and more.
Based on those principles, the answer to the question “who has the time” is … each of us. That is partly because bad policies are forcing us to divert time away from our missions. And it is partly because we are already advocating for our missions every day.
Recently released data from the Urban Institute in Washington, DC bring these points home. Responses to a nationwide survey of nonprofits with government contracts and grants indicate that Nevada is in the bottom third of states in which governments impose needlessly complex and time-consuming reporting requirements. This means that the time and aggravation that Nevada nonprofit employees spend on monitoring, reporting, and dealing with audits is greater than many other places in the Unites States.
To this problem, the question is less who has the time to advocate, but how much time could we save by working with governments to prevent duplicative audits, overlapping and inconsistent compliance procedures, retroactive imposition of reporting requirements, incompatible and inconsistent data collection, and a lack of standardization that inject vagaries into an already complex process.
Continuing with the Urban Institute data, governments in Nevada also change the terms of contracts and grants after services commence, causing problems for nearly half (48 percent) of Nevada nonprofits participating in the survey. Mid-stream changes to contracts that governments previously signed and agreed to honor is most vexing, in part because it often imposes costs on nonprofits that are then not paid. Such changes take many forms, including cuts to agreed-upon payments, redefined eligibility for payments, nonprofits instructed to perform additional or increased levels of service, and new reporting and compliance requirements with no additional reimbursement for these added costs. The time spent adjusting, re-doing, and fundraising as a result of mid-stream changes is time away from mission.
Is it effective to demand this time of nonprofit employees? Most of us think it is not, and many are working to fix this recurring problem.
One more data point from the Urban Institute survey is worth noting. More than half (55 percent) of Nevada nonprofits responding to the Urban survey reported that governments impose arbitrary caps on program administrative and overhead costs. Of those, three out of four (76 percent) report receiving reimbursements of ten percent or less for these necessary expenses.
Studies reveal that the usual range of overhead rates for for-profit companies and nonprofit organizations alike is approximately 25 percent to 35 percent. Yet, governments have historically treated nonprofit organizations differently, imposing arbitrary restrictions on reimbursement rates that undercut the ability of their partners to succeed on behalf of taxpayers.
Why? The most obvious answer is because nonprofits haven’t effectively advocated for fairness.
Unrealistic limits on reimbursement of a nonprofit’s legitimate costs undermine its efficiency, effectiveness, and ability to perform vital services on behalf of the governments. Worse, current policies on indirect costs force nonprofit employees to spend time raising funds to fill the gaps. So to the question, who has the time to advocate, another question is: why are nonprofits and their funders subsidizing governments? And importantly, how much time must we divert from our missions to fundraise for government?
Thanks to the ongoing advocacy efforts of the Alliance of Nevada Nonprofits and many other organizations, there is the promise of relief for some of the time- and money-wasting problems that are plaguing nonprofits in the state. Those of you who participated in the ANN webinar this summer will recall that last December the federal Office of Management and Budget published new Uniform Guidance (sometimes called the “Super Circular”) that will require pass-through entities (typically states and local governments receiving federal funding) and all federal agencies to reimburse nonprofits for their indirect costs. If the nonprofit already has a federally negotiated indirect cost rate, that is what the states and localities are going to have to pay. Nonprofits that have never had such a negotiated rate will be entitled to elect an indirect cost rate equal to ten percent of their modified total direct costs rate. In all cases, nonprofits will have the opportunity to negotiate and get paid a rate based on the federal guidelines.
Here is what the National Council of Nonprofits said about the OMB Uniform Guidance when it came out: “The new guidance from the federal government means that nonprofits should be able to focus more on their missions and should be under less pressure to raise additional funds to essentially subsidize governments.” The benefits are not limited just to nonprofits that provide services on behalf of governments: “In turn, charities with no government contracts or grants could see less competition for scarce philanthropic dollars.”
The OMB Uniform Guidance is a major success story demonstrating the value of nonprofit advocacy. But it would never have happened if nonprofit leaders focused solely on getting the duplicate forms filed and resubmitted, and spent any leftover time planning and engaging in fundraising activities. Many leaders over many conversations told their stories to colleagues, who recognized shared problems and did what nonprofit people do best – came up with solutions. That is the kind of every-day advocacy that is transforming nonprofits and their communities.
David L. Thompson is Vice President of Public Policy for the National Council of Nonprofits in Washington, DC. The Council of Nonprofits’ recent special report, Toward Common Sense Contracting: What Taxpayers Deserve, highlights ready-made solutions to problems Nevada nonprofits are facing.