Tuesday, April 27, 2010

Latest Featured Listening Post

Check it out!!

The Listening Post Project is proud to announce our latest Featured Listening Post, The North Carolina Symphony!

Symphony President and CEO, David Chambliss Worters, talked to us about the cutting-edge ways his symphony is coping with rising health care costs amidst the financial challenges of the recession. Highlighting many of the issues addressed in our recent Communiqué on the rising costs of health benefits and pension plans, the symphony's experience and coping strategies makes for a compelling story.

Be sure to check out the interview at our website, and feel free to share any comments below.

Monday, February 15, 2010

Tradeable tax credits: Op-Ed by Lester Salamon

Lester Salamon's Op-Ed, "Solving the Jobs Conundrum: Let’s Borrow an Idea From the Environmentalists," appeared in the February 7 issue of the Chronicle of Philanthropy.  

   The White House’s new proposal to enact a payroll tax credit to encourage hiring is a useful step toward spurring job growth in the American economy. Especially important is the fact that this is the one tax credit that can help not just for-profit companies but also nonprofit organizations, which have been one of the few real engines of job growth during past recessions.
   However, with evidence mounting that nonprofit job growth, too, has stalled and in some crucial fields, such as social services, declined last year, it seems likely that something more robust than forgoing up to $5,000 in payroll taxes for each new employee will be needed.
   But the two other most prominent ideas for job creation in Washington these days—providing grants and other aid to states and offering income-tax credits to small businesses and the “green economy”—both have significant shortcomings.
   Grants can be more focused but have proved to be cumbersome and difficult to translate quickly into “jobs on the ground.” Besides, in the political climate created by the Democratic loss in the Massachusetts Senate last month, a large new spending program will face tough sledding in a deficit-conscious Congress.
   Tax credits like those advanced by the Obama administration typically go down easier politically (they sound like tax cuts to Republicans) but often miss important targets. It is important to note that, except for the payroll tax credits President Obama just proposed last month—which amount to about 6 percent of payroll costs—­such credits offer no relief to nonprofit groups because they do not pay taxes. Similarly, such credits are of minimal value to many green industries, which are years away from earning profits and thus owing taxes.
   Fortunately, there is a way to solve this conundrum, but it requires some imagination. In particular, policy makers could usefully take a page from the cap-and-trade exchanges their colleagues in the environmental field have developed. These exchanges essentially use a market mechanism to transfer pollution credits from firms that can generate them most efficiently to those that do not, thus reducing pollution at the lowest possible cost.
   A similar mechanism could be used to promote job creation where it is most needed and possible. Here is how this might work: Instead of trying to muster support for a big-ticket grant program, the administration and Congress would take the easier route of passing a Work for Americans Tax Credit establishing an equivalent amount of tax relief distributed by formula among states. This credit would provide eligible nonprofit and for-profit employers $30,000 in tax relief for each long-term unemployed person they employ, up to whatever number of employees Congress wanted to cover. Employees would have to remain on the job for a set period for the credit to be collectible.
   Unlike existing tax credits, however, this one would be tradeable. Eligible establishments would receive Social Responsibility Certificates worth $30,000 in federal income-tax credits for each eligible person they hire. If the employer is a for-profit business that earns profits and faces tax liabilities, it could cash in its certificates when it files its taxes (or through estimated tax filings in advance of this).
But if the establishment is a nonprofit organization or a start-up green enterprise with no net profits, it could sell the credits, presumably at a price below $30,000, to a business that has no plans to hire credit-eligible workers but can make good use of the credits. In this way, the market, rather than some government agency, would allocate the available job-creation benefits among businesses and other organizations based entirely on their ability to create jobs.
   For this system to work, of course, some kind of exchange mechanism would be needed to handle the certificate transactions. But such mechanisms already exist in the environmental arena, and these could either be copied or adapted to handle the new social-responsibility certificates. For example, the Chicago Climate Exchange handles billions of dollars of carbon-offset contracts each year and has mechanisms in place that could easily do the job. Similarly, some system will be needed to allocate the authorized quantity of tax credits. But here, too, a model already exists in the system for allocating low-income housing tax credits among states and projects.
   At a minimum, Congress and the administration could usefully consider a $5-billion pilot project to test this approach by focusing on small businesses, nonprofit organizations, and green enterprises in states with especially high unemployment.
   If it works, this tradeable tax-credit mechanism could be used to create market incentives to encourage other worthwhile objectives, such as training and hiring former drug addicts, fostering social innovation, or promoting development in lagging areas. In this way it could help finance a robust surge of social enterprises. Businesses that pay more than the face value for the certificates could even receive charitable-contribution deductions on the extra resources they are channeling into social purposes.
   In short, here is a way to harness Adam Smith’s “hidden hand” to foster social good. And it may be the only way to get a serious jobs program off the ground.

Lester M. Salamon was formerly deputy associate director of the U.S. Office of Management and Budget and now directs the Center for Civil Society Studies at the Johns Hopkins University.

Tuesday, December 22, 2009

LPP year in review

It's been a busy and exciting year for the Listening Post Project.  Thanks to our dedicated partners and Listening Post organizations, we were able to achieve the following:
  • The finding of our Health Benefits Sounding that three out of every four nonprofits offering health benefits have experienced an increase in their total direct health insurance costs during the past year helped convince the Senate to include provisions to assist nonprofits in its healthcare reform bill;
  • Our Pensions Benefits Sounding was used by staff of the Senate Committee on Health, Education, Labor and Pensions (the HELP Committee) to help kick off a set of hearings on pensions;
  • Our Sounding on nonprofit policy priorities led to the Forward Together Declaration endorsed by hundreds of nonprofit leaders across the country and used to help convince Congress to include a new nonprofit capacity-building  program in the Serve America Act;
  • Our shovel-ready nonprofit infrastructure Sounding, which documented $166 billion worth of "shovel-ready" nonprofit projects, has been used by state nonprofit assocations across the country to help nonprofits get access to state decisions on Economic Recovery funding.
The project also:
  • Created a customized report function that enables us to provide each Sounding participant with a quick snapshot of how their organization's responses to key questions compare to the national average and to similar organizations;
  • Added a new intermediary group to our project, the Corporation for National and Community Service; 
  • Redesigned our website and project logo, and started use of social networking technologies such as blogging and Twitter.  Hits on our website are now averaging 50-60,000 per month;
  • Convened a second successful Roundtable on nonprofit advocacy and lobbying.  
We plan on building on this success with an important Sounding on nonprofit innovations and performance measurement in early January.  This survey responds to a request we received from the White House Office of Social Innovation to document innovations being pursued by nonprofits across the country and the metrics being used to assess them.

Without the support of our intermediaries and member organizations, none of our accomplishments this year would have been possible.  We look forward to working with you in 2010 and the years ahead. 

Tuesday, December 15, 2009

We're listening -- give us your thoughts on future Soundings!

The Listening Post Project seeks to “take the pulse” of the nonprofit sector by fielding surveys on timely issues for nonprofits and making sure the findings are broadly disseminated to the sector and beyond.
In the past year, we have covered cutting-edge topics such as what nonprofits want from the new presidential administration and how they are faring in the economic downturn.  Most recently we have gathered extremely valuable data on the state of nonprofit healthcare benefits and pensions, which have been instrumental in helping to get nonprofits on the national policy agenda.  As 2010 approaches, we want to ensure the Listening Post Project remains at the forefront of knowledge-gathering for the nonprofit sector. 
We will be fielding a survey on nonprofit innovations and performance measurement in early January.  What are some topics you would like to see in following Soundings?

Tuesday, December 8, 2009

Entrepreneurship: strategy for nonprofit success?

The Listening Post Project’s survey on the economic downturn’s effects on nonprofits found that more than half of respondents increased their fundraising efforts and decreased their administrative costs in an effort to keep their organizations afloat.  Less than half pursued entrepreneurial strategies such as expanding their marketing and advocacy efforts or starting a for-profit subsidiarity.  However, these respondents were more likely than all organizations to report “successful” or “very successful” financial performance.   The Listening Post Project wants to know:  What are your experiences with entrepreneurial strategies, and do you feel they are more successful than belt-tightening and fundraising efforts?

Monday, November 30, 2009

Retiring Retirement Benefits

Our most recent Sounding found that the majority of retirement benefit programs at nonprofits are under stress at the present time. Nonprofits offering “defined benefit plans” (plans with a guaranteed benefit) have been particularly hard hit, with 76 percent reporting that their plans are currently under stress and 43 percent reporting severe or very severe stress. Even those offering “defined contribution plans” (plans with investments controlled by the employee and no guaranteed benefit) have been affected, however, with 58 percent reporting that their plans are under stress. As a result, organizations have been forced to reduce retirement benefits, scale back employer matches, end future benefit accruals, and deny pension coverage to new employees, or as a last resort, divert resources from program operations. Many smaller organizations have been prevented from offering pension benefits at all.

How do these results compare to your organization’s retirement benefits situation? For organizations that have avoided such stress, how have you done it? For organizations experiencing similar stress, what strategies are you employing to help cope?