January 29th, 2009 - With all of the debate concerning what nonprofits might be able to get inserted into the Obama Administration’s economic stimulus package, we found the contents of the draft explanatory report accompanying H.R.1, the American Recovery and Reinvestment Act of 2009 (passed by the House of Representatives 244 to 188, with no Republican “yes” votes and 11 Democrats in the “no” column), useful to see what appropriations and spending made it and what didn’t–though this bill is hardly the end of the game (a Senate bill has to be passed as well). The following provisions of the $825 billion House bill have clear nonprofit uses and users:
Neighborhood Stabilization Program: $4.19 billion: The Housing Act in 2008 allocated $3.92 billion to states and municipalities to tackle the bursting numbers of foreclosed properties due to the subprime mortgage crisis. With millions of homeowners at risk, there will be hundreds of thousands of foreclosures before this crisis is over. That 2008 appropriation looks large until one divides it across all of the entitlement communities dealing with bank-owned foreclosed properties. The stimulus package allocates an additional $4.19 billion, presumably much of which will be used by nonprofit community developers taking on “Real Estate Owned” (REO) properties (bank-owned foreclosures) that even speculators have passed on. However the report also says that “(u)p to $750 million may be used for a competition for nonprofit entities to enhance the funding included under this heading through capitalization of the funds”, which one imagines means something about leverage and scale. The challenge for community-based nonprofits and foundations is to ensure that the appropriate capacity-building investments are made so that nonprofits prove to be effective, competent users of NSP funds and restorers of bank-ravaged communities.
National Endowment for the Arts: $50 million: This is a good example of effective lobbying. The Americans for the Arts coalition has made arts funding a jobs-creation issue, and this increase for the NEA demonstrates that they’ve started to get traction with the idea. Based on the impact of “philanthropic retrenchment” on the arts community, the NEA funding will “allocate lifeline funding quickly to [nonprofit arts organizations] to retain jobs”, 40 percent to be distributed by formula to state and regional arts organizations, 60 percent competitively for “selected” arts projects and activities. Anyone who has read the history of the Great Depression knows that FDR created programs for writers and artists as part of the Works Progress Administration (WPA) that contributed greatly to the artistic development of this nation through the 1930s (WPA artists included the likes of Jackson Pollock, Willem deKooning, Mark Rothko, and Walker Evans, writers such as John Cheever, Richard Wright, Saul Bellow, Zora Neal Hurston, and John Steinbeck). The Arts Coalition isn’t stopping at NEA funding, having issued a call for arts funding in a number of other programs: Community Development Block Grants (CDBG) from HUD; Department of Agriculture; Economic Development Administration; Department of Transportation; Department of Labor Displaced Worker and Youth Programs. In addition, they are supporting the notion of an Artists Corps in the array of Corporation for National and Community Service programs, a modern successor to the WPA.
Smithsonian Institution, Facilities Capital: $150 million: The Wall Street Journal’s apoplectic response to this Christmas tree of goodies (much like the ornaments that got the last stimulus package approved under Bush and Paulson) highlighted among others this provision for the Smithsonian as a questionable job creator. Both the Smithsonian itself and the Government Accountability Office (GAO) have highlighted the multi-billion dollar maintenance and repair backlog at the Smithsonian. Notwithstanding the recent history of profligate spending of the likes of Larry Small and the board of regents, the Smithsonian does need a capital infusion from federal coffers in contrast to the fundraising mode of selling sponsorships and benefits to private corporate donors. Key, however, will be mechanisms to ensure that this money like other appropriations for the Smithsonian get used properly.
Community Services Block Grant: $1 billion: For those who don’t know, in the words of the stimulus report, “(t)he Community Services Block Grant (CSBG) supports employment, food, housing, health, and emergency assistance to low-income families and individuals (including those without children who do not qualify for other types of assistance like Medicaid), the homeless, and the elderly.” This is money distributed by formula through the states to local community action agencies. CSBG has long been targeted for elimination by the Bush Administration as one of a bevy of programs deemed “ineffective”, but it is the funding mainstay of the community action agencies that carry out the legacy of the nation’s 1960s War on Poverty. Worth noting is that a capital infusion into CSBG was one of the stimulus recommendations of Independent Sector, but IS recommended that the funds go through independent “intermediary” organizations bypassing typical state and local CSBG-distributing agencies to ensure that the funds get deployed quickly. A quick navigation of the IS membership listings suggests that the major national community action agency trade associations (the National Community Action Foundation and the Community Action Partnership) aren’t among IS’s 555 remaining members, and there don’t seem to be other CAAs in the list either. One wonders if they would have been on board with IS’s suggestion of turning over the CSBG funds to some other “intermediary” for a new grantmaking mode.
Rural Community Facilities Program: $200 million, for a total program level of $1.239 billion/Rural Housing Service Rural Housing Insurance Fund Program Account: $500 million for a total program level of $22.129 billion: For some time, rural advocates have been worried about where they fit in the Obama Administration, with worrying signals of how the Obama people were buying into the “MetroNation” concept of channelling investment into 100 metropolitan areas responsible for 80 percent of the nation’s economic activity. In the lead up to the stimulus package, Congressman Ruben Hinojosa, the chair of the Congressional Rural Housing Caucus, was active in pitching the inclusion of $750 million for the Rural Housing Service, which would create 30,000 affordable housing units (both rental and homeownership) and 75,000 jobs according to the Congressman’s sign-on letters. The text of the stimulus package got $500 million for rural homeownership development, although it is described as guaranteed loans and direct USDA loans to home purchasers. Perhaps there is a nonprofit delivery system element there, but it’s not as clear as running the money through specific housing development titles that nonprofit rural developers typically use. The Rural Community Facilities Program, much smaller, will help nonprofits because it provides financing for community facilities in rural areas, including health care facilities, fire, rescue, and public safety buildings, vehicles, and equipment, and other important community needs.
Community Service Employment for Older Americans: $120 million: The Obama campaign pledge for expansion of community service slots through AmeriCorps and other vehicles may be the best known of his commitments to the nonprofit sector. The stimulus package includes $120 million for the Community Service Employment for Older Americans program, which subsidizes part-time community service work for low-income seniors in nonrpofit and public sector organizations. According to the program website, the funds are allocated by formula to 56 units of local or state government (that get 22 percent of the funds) and 18 nonprofit organizations (getting 78 percent). The 18 groups listed on the Senior Community Service Employment Program website are: AARP Foundation, Asociacion Nacional pro Persons Mayores, Easter Seals, Experience Works, Goodwill Industries International, Institute for Indian Development, Mature Services, National Able Network, National Asian Pacific Center on Aging, National Caucus and Center on Black Aged, National Urban League, Quality Career Services, Senior Service America, SER-Jobs for Progress National, Vermont Associates for Training and Development, and The Workplace. The stimulus report says that this will add 24,000 new participants to the program, whose current number according to the SCSEP website is already at 92,000.
Credit Enhancement for Charter Schools Facilities: $25 million: A major area of ideological convergence between liberal Democrats and conservative Republicans is their support for charter schools. While President Obama is unlikely to become an advocate of school vouchers, he and many of his supporters appear quite open to charter schools despite their privatizing influence in public school systems. The inclusion of $25 million in credit enhancement for charter school facility development may not seem like a big-time economic stimulus, but it is a useful marker of the current administration’s openness to alternatives, for better or worse, to standard public education. As is well know, there are several nonprofit and limited profit entities that have emerged across the nation as charter school operators that could benefit from this addition to funding already appropriated in the federal FY2009 budget for charter school facilities.
YouthBuild: $50 million: Presidential candidate Obama highlighted YouthBuild as an integral part of his nonprofit and job creation vision, so it is no surprise to see the Secretary of Labor given $50 million in discretionary funds to expand YouthBuild’s training programs for young people in housing development. The stimulus report says that this will add 3,200 new people to the YouthBuild programs. One can only hope that the housing markets start to pick up so that they will all have housing development projects to work on.
These are only a few of the provisions that will undoubtedly reach nonprofits. Other major areas include education and health program elements, plus the moneys provided to people through transfer payments may stimulate demand (and the ability to pay) for other nonprofit services.
Obey’s report defends these expenditures as effective stimulus items as “high bang for the buck” initiatives, likely to hit the economy rapidly. The Congressional Budget Office surprisingly countered Obey that only $26 billion of the bill’s “new spending” (the bulk of the $825 billion is tax cuts, not spending) would happen in the current fiscal year, FY2009, and only $110 billion is FY2010. President Clinton’s budget director, Alice Rivlin, has suggested dividing the plan to implement immediate stimulus provisions without delay, but to take time with the design and deployment of longer term “transformative spending” to be sure that the programs achieve the transformation they are supposed to. The debate over whether the stimulus is right or wrong will continue for a long time, much like the continuing debatge over what FDR’s New Deal did or did not accomplish toward ending the Great Depression.