Posts Tagged charity

PA’s Economic Climate Challenges Nonprofits


‘Tis the season when many Americans donate to their favorite charity.  While leaders in the nonprofit sector remain firm in their conviction that they are best suited to deal with Pennsylvania’s social and economic challenges they are concerned that public trust in charities is not as high as it should be.  Those are among the findings of the 2016 Pennsylvania Charitable Organizations Survey conducted during the month of November by the Lincoln Institute of Public Opinion Research, Inc. in cooperation with the Pennsylvania Association of Nonprofit Organizations (PANO).

Among the participating nonprofits just ten percent said that public trust in charities is “high,” while 77% rated public trust as “medium.”  Nine percent felt public trust in charities currently is “low.”  Twenty-two percent of the nonprofit executives said the level of public trust in charities has gotten better over the past few years, but 31% said it has gotten worse.

Having said that, the nonprofit leaders feel their sector is best positioned to address Pennsylvania’s social and economic challenges.  Forty-five percent identified their own sector as best suited to address those needs; 22% think state government is most effective; while 6% cite the for-profit sector.  Just three percent said the federal or municipal governments can best handle those challenges.

“Public trust,” said Anne Gingerich, Executive Director of PANO, “is critical to the sustainability of any business – nonprofit, for-profit or government.  When one nonprofit fails to live up to the highest standards it can damage the reputation of all.”  She continued: “Unfortunately these stories overshadow the hundreds of nonprofits who give selflessly to ensure that lives are changed, not just during the holidays, but all year long.”

Like their counterparts in the for-profit world, leaders in Pennsylvania’s nonprofit sector say business conditions in the state have gotten worse over the past year rather than better.  Concerns over potential new federal regulations and the growing likelihood of another extended state budget stalemate feed concerns that the commonwealth’s business climate will continue to deteriorate during the year ahead.

The survey found 15% of the nonprofit executives view business conditions in Penn’s Woods over the past year as having improved, 22% say business conditions have gotten worse.  The majority – 63% – say the state’s economy has remained about the same.  But “about the same” is not good as business confidence, whether for-profit or nonprofit, has been low for the past two years.

By comparison, a September 2016 survey of owners/chief executive officers of for-profit businesses found only five percent saying the state’s economy has improved in recent months while 50% said it had gotten worse.

Looking ahead, a third of the nonprofit leaders expect the state’s business climate to get worse while 22% predict it will get better. Forty-four percent say the Pennsylvania business climate will remain about the same during 2017.

Despite their overall pessimism about the direction of the commonwealth’s economy, employment was up at a quarter of the nonprofits, and down at 16%.  That could be explained in part by some nonprofits stepping up hiring after having cut back staff during the budget stalemate of two years ago.  However, looking ahead 22% say they expect to add employees while 14% predict staffing cuts.

Federal Regulation

Hanging over all sectors of the economy including nonprofits are U.S. Department of Labor (DOL) regulations that would increase the minimum salary requirements for “white collar” workers from $23,600 to $47,476 per year.  The effect would be a significant increase in overtime costs.  This is perhaps more significant for the nonprofit sector in that employees at many smaller nonprofits view their jobs as being community service as much as employment and often put in hours well in excess of those for which there are paid.

The 2016 Pennsylvania Charitable Organizations Survey found that the new regulations would increase payroll costs at 43% of the responding organizations as well as increase the amount of time spent tracking employee hours.  The regulations are now on hold due to a federal court ruling, but should they go into effect 30% of the nonprofits surveyed said they would have to cut staff to pay for the increased costs of complying with the regulations; 11% would have to cut services and another 16% would respond by seeking additional volunteer help.

State Issues

Pennsylvania’s nonprofit organizations were among those most significantly impacted by the lengthy state budget stalemate of two years ago.  In light of that experience, 68% would support putting into place legislation that would incentivize lawmakers to adopt a state budget in a timely manner. Sixty-eight percent (some with board approval) said they would support legislation that would progressively penalize state lawmakers for missing the state budget deadline, with penalties increasing for each day past the June 30th deadline.

PANO’s Gingerich said nonprofit support of legislation penalizing lawmakers for budget stalemates is not surprising.  “Not only clients suffer as a result of the impasse, but nonprofits themselves had to lay off staff and borrow money to continue operations.  As partners with state government in providing mandated services, nonprofits should ask to be at the budget negotiation table.”

Unlike executives in the for-profit sector, nonprofit leaders are open to supporting a wide range of tax hikes.  Thirty-seven percent said they would support an increase in the state’s Personal Income Tax (PIT), while 22% said they would not.  Another 41% offer no opinion on the question.  Likewise 43% would support imposing a new natural gas drilling tax of up to 6.5% specifically to support human services.  Thirteen percent would oppose such a tax, and 43% offered no opinion.  Similar support levels were voiced for the imposition of a new public health tax (ie: sugar tax, soda tax) of 1.5 cents per ounce dedicated to human services.  The highest level of support – 50%  – is for dedicating a portion of taxes generated by Pennsylvania’s gaming industry to support human services.

Organizational Issues

Despite their overall negative assessment of the direction of Pennsylvania’s business climate, more of the nonprofits participating in the 2016 Pennsylvania Charitable Organizations Survey said funding for this calendar year has increased than have seen decreases.  A third of the nonprofits said funding is up, a quarter reporting funding has dropped and 43% said their funding levels have remained about the same.  Looking ahead to 2017 about half of the nonprofits predict funding levels at their organization will remain static; 30% say they expect funding to increase; 20% are braced for funding to decrease.

By a two-to-one margin nonprofits have seen state funding levels decrease over the past five years.  Twenty-one percent said funding from the state had dropped during that period of time while ten percent saw an increase in state funding.  The other half of the organizations said funding from state government has remained about the same.  Likewise there has been a slight drop in federal funding.  Sixteen percent said their organization’s funding from the federal government has dropped over the past five years, 12% said federal funds have increased.  Federal funding remained about the same at the remaining 45% of organizations surveyed.

Property tax exemption challenges remain a concern at some nonprofit organizations.  Seven percent report having had their property tax exemption challenged over the past two years and 13% are concerned their municipal or county government may challenge their exemption next year.

Nonprofit organizations are not participating in lobbying activities in a major way.  Just six percent say they have someone from their organization registered as a lobbyist under the Pennsylvania Lobbying Disclosure Act. Twenty-two percent have lobbied on a public policy issue at some level of government over the past year.  Twenty-seven percent expect to lobby government at some level during the coming year.  Gingerich urged nonprofits to engage in more lobbying activities.  “Nonprofits must understand that not only can they lobby, but they are not doing their jobs if they do not.  Together, the collective voice of the nonprofit sector has powerful, yet untapped power.”

Methodology

The 2016 Pennsylvania Charitable Organizations Survey was electronically conducted during the month of November 2016.  A total of 177 nonprofit organizations responded to the survey invitation.  Complete numeric results are available at http://www.lincolninstitute.org.

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This Week on Lincoln Radio Journal: Chris Nicholas Talks Judicial Elections


Radio Program Schedule for the week of October 31, 2015 – November 6, 2015

This week on Lincoln Radio Journal:

  • Eric Boehm has news headlines from PAIndependent.com
  • Lowman Henry has a Newsmaker interview with Chris Nicholas from the Pennsylvania Business Council on statewide elections for appellate court judges
  • Joe Geiger from the First Nonprofit Foundation has Kori Pennypacker from Bible to School in the Community Benefit Spotlight
  • Beth Anne Mumford has a Lincoln Radio Journal commentary on America’s declining economic freedom

This week on American Radio Journal:

  • Lowman Henry talks with Karlyn Bowman of the American Enterprise Institute about the State of the American Worker 2015 report
  • Andy Roth of the Club for Growth has the Real Story behind the congressional budget and debt deal
  • Eric Boehm and Darren McKinney of the American Tort Reform Association have a Watchdog Radio Report on state attorneys general who give legal contracts to campaign contributors
  • Colin Hanna of Let Freedom Ring, USA has an American Radio Journal commentary on the third Republican Presidential debate

Visit the program web sites for more information about air times. There, you can also stream live or listen to past programs!

http://www.lincolnradiojournal.com

http://www.americanradiojournal.com

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This Week on Lincoln Radio Journal: Remembering Tom Smith


Radio Program Schedule for the week of October 24, 2015 – October 30, 2015

This week on Lincoln Radio Journal:

  • Eric Boehm has news headlines from PAIndependent.com
  • David Taylor of the PA Manufacturers Association and Matthew Brouillette of the Commonwealth Foundation pay a Capitol Watch tribute to the late Thomas J. Smith
  • Lowman Henry has a Town Hall Commentary on why congressional Republicans have given rise to “outsiders” leading the GOP presidential race

This week on American Radio Journal:

  • Lowman Henry talks with Jonathan Williams of the American Legislative Exchange Council about a new report on the impact of state taxes on charitable giving
  • Doug Sachtleben of the Club for Growth has the Real Story on Ben Carson’s positions on pro-growth issues
  • Eric Boehm is joined by Johnny Kampis for a Watchdog Radio Report on those fantasy sports web sites
  • Col. Frank Ryan, USMC (ret.) has an American Radio Journal commentary on why the next Speaker of the House must be a better communicator

Visit the program web sites for more information about air times. There, you can also stream live or listen to past programs!

http://www.lincolnradiojournal.com

http://www.americanradiojournal.com

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A Lump of Coal for Charities?–‘Fiscal cliff’ talks threatened Federal charitable tax deduction


The stubbornly sluggish economic recovery has created a perfect storm of bad economic news for the state’s charitable nonprofit sector. During times of economic distress funds dip as individuals and foundations see their fortunes decline. At the same time, the demand for services escalates as unemployment and related social ills soar. State and county governments, also caught in a vice between escalating demand and the inability to increase taxes on financially stressed taxpayers, cut funding to social service and charitable organizations.

And the problem could be about to get worse, much worse. One of the items on the table in the so-called “fiscal cliff” negotiations in Washington, D.C. is the scaling back or elimination of the Federal tax deduction for charitable contributions. While it is true many Americans give out of an innate sense of charity, with the income tax deduction being a secondary consideration, the deductibility of contributions does have an impact on whether or not a charitable contribution is made and how many dollars are given.

The Lincoln Institute of Public Opinion Research in conjunction with the Pennsylvania Association of Nonprofit Organizations (PANO) recently conducted the annual Pennsylvania Charitable Organizations Survey.  Seventy-five percent of the respondents said the loss of the Federal tax deduction for charitable contributions would have a negative effect on their organization – 40% said the effect would be “significant.”   Conversely, just 10% felt the loss of the deduction would have no effect, and 2% predicted a positive effect.

Business Climate

Despite the challenging environment in which they are operating, there was an increase in the number of charitable organizations that report their ability to fulfill their core mission has improved over the past year. Seventeen percent say they have a greater ability to carry out their core mission compared to the 11% who felt that way in 2011. In the current poll, 55% reported their ability to fulfill their core mission has remained about the same as last year, while 26% felt they have less ability to fulfill their core mission. That is down from the 31% who last year reported less ability.

Generally speaking, the nonprofit organizations participating in the Lincoln Institute/PANO poll felt business conditions in Pennsylvania have remained about the same over the past year. That, however, is not good news as the business climate for charities has been challenging in recent years. Despite that, 21% of the respondents said business conditions in the commonwealth have improved over the past year; that is up from just 8% who reported improving business conditions a year ago. Also, 24% said they felt the state’s business climate has gotten worse over the past twelve months; that is down from the 40% reporting a worsening business climate last year.

A further ray of optimism was reflected in responses to the question: Looking ahead one year, do you expect business conditions to be better, about the same or worse than they are today? Thirty-four percent said they expect business conditions in the state to improve over the coming year – that is up from the 27% who forecast an improving economic climate last year. Nineteen percent expect the state’s business climate to get worse, down from the 26% who last year predicted declining business conditions.   Forty-seven percent said they expect the state’s business climate to remain about the same over the coming year. Again, “about the same” means continuation of a business climate that is not favorable.

The Lincoln/PANO poll also found employment levels at Pennsylvania Nonprofits have declined over the past year. Fifty-six percent of the nonprofits participating in the survey said employment levels at their entity were about the same as a year ago. But, 26% said they employ fewer people than a year ago, while 18% reported more people on payroll.   Looking ahead, 21% forecast rising employment levels, while 13% expect employment at their nonprofit to drop.

Impact of a Sluggish Economy

The lingering economic downturn has had a negative impact on 82% of the nonprofits participating in the 2012 Pennsylvania Charitable Organizations Survey. Of that number, 25% said the negative impact on them has been “significant.” Twelve percent said the economic downturn has had no impact on them, while 6% said the bad economy has positively affected them.

Economic conditions have caused 26% of the nonprofits surveyed to cut services, while 24% say they have increased services as a result of the poor economy. Exactly half said their level of service has remained about the same over the past year. Thirty-eight percent of the nonprofits say they have cancelled or postponed expansion plans to deal with economic conditions. Thirty-two percent have had to lay-off staff; 29% have reduced employee hours; 27% have had to borrow operating money; 27% have cut or eliminated benefits; and 10% have cut salaries.

Looking ahead over the coming year, 48% participating in the Lincoln Institute/PANO poll said funding for their organization remained about the same in 2012 as it was in 2011. Twenty-six percent of the entities experienced a funding decline this year, while 21% saw an increase in revenue. Forty-two percent of the respondents report state funding has decreased over the past year, 18% said funding they receive from the state has remained about the same, while state funding has increased at just 3% of the nonprofits. Thirty-seven percent said they don’t receive or utilize state funding.

Sector Issues

Sixty-three percent of the poll’s respondents rated public trust in the nonprofit sector as “medium.”   Twenty-one percent rated public trust as “high,” while 11% said public trust levels were low. Looking back over the past couple of years, 45% said public trust was about the same, 28% said trust in such institutions is lower; 22% said trust levels are higher.

Given that many nonprofits receive some part of their funding from government, a number of entities engage in lobbying activities.   Just 6% of the respondents are registered under provisions of the Pennsylvania Lobbying Disclosure Act. But, 28% say they lobbied state government over the past year. Nineteen percent report having lobbied at the federal or county level, and 15% lobbied at the local level during the past twelve months. Looking ahead 29% say they expect to lobby government at some level on a public policy issue over the coming year, 51% do not expect to lobby.

Eighty percent of those participating in the Lincoln/PANO poll said they currently provide health insurance for their employees. Of that number, 48% report that the major portion of premiums is paid by the employer with some employee co-pay. Thirty-two percent reported the entire health care premium is covered by the employer.

The property tax exemption for nonprofits continues to face challenges by county and municipal governments. However, just 8% of those participating in the 2012 Pennsylvania Charitable Organizations Survey say they have had their property tax status challenged over the past two years. But, 20% are concerned that county or municipal government may challenge their status in coming years.

Methodology

The 2012 Pennsylvania Charitable Organizations Survey was conducted by the Lincoln Institute of Public Opinion Research, Inc. in conjunction with the Pennsylvania Association of Nonprofit Organizations (PANO). The poll was conducted electronically between December 3, 2012 and December 17, 2012. A total of 289 nonprofit organizations participated in the survey.   Complete numeric results are available on-line here.

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Tough Times: Nonprofits struggle to deliver as recession lingers


The lingering national recession continues to have a profound negative effect on Pennsylvania nonprofit organizations, causing some to doubt their ability to fulfill their mission amid a growing sense of pessimism about the future. That is the overall picture to emerge from the Lincoln Institute’s 2011 Pennsylvania Charitable Organizations Survey.

Conducted in collaboration with the Pennsylvania Association of Nonprofit Organizations (PANO) the annual poll of nonprofit leaders from across the commonwealth found 89% have been negatively impacted by the recession. This has caused a third of the respondents to report they are less able to fulfill their mission than in past years. But, nonprofits are accustomed to doing more with less; as a result over half say their ability to fulfill their mission remains about the same, while 11% reported a greater ability to fulfill their core mission. “For now nonprofits are able to continue providing essential services,” said Joe Geiger, Executive Director of PANO. “But, they are doing this without the capacity to sustain their operations. Many challenges lie ahead.”

As with their for-profit counterparts, 2011 has been difficult economically for nonprofits. Forty percent said that business conditions in Pennsylvania have gotten worse over the past year; only 12% said the state’s economy has improved while 53% said conditions had remained about the same. Remaining the same, however, is not good in that last year by a four-to-one margin, charities reported business conditions had gotten worse.

Looking ahead, charities are less optimistic that business conditions will improve than they were at this time last year. Twenty-six percent said they expect business conditions to get worse in the coming 12 months, up from the 17% that predicted deteriorating conditions a year ago. Twenty-seven percent said they expect the economy to improve, down from the 38% who last year said they foresaw improving conditions.

One casualty of the ongoing recession is employment. Taken as a sector, nonprofits are a major employer in Pennsylvania. But, 30% said they have cut employment levels over the past year, while 17% have added to their payrolls. Employment remained stable at 53% of the agencies. Nonprofits are less optimistic of changing that course than they were last year. Nineteen percent said they expect employment levels at their business to increase over the coming year, down from 24% who forecast adding employees last year. Those predicting a drop in employment rise from 12% last year to 16% in the current survey.

Despite, or perhaps because, of the down economy 28% report they have increased services over the past year. Funding may be down, but at many organizations demand is up as families and individuals cope with chronic unemployment. Twenty-three percent say they have been forced to cut services, and 49% said their service levels have remained about the same.

To survive during the recession, 36% report they have been forced to discontinue providing some services (some while opting to increase others), while a third say they have cancelled or postponed expansion plans. Twenty-nine percent of the nonprofits have had to lay-off staff, 31% have reduced employee hours, 26% have cut or eliminated benefits and 12% have cut salaries. Twenty-two percent say they have been forced to borrow money to cover operational costs.

Health insurance remains a major cost driver for nonprofit businesses. Seventy-seven percent say they continue to provide health insurance to their employees, 3% have discontinued the benefit. Fifteen percent said they do not offer health care benefits to their employees and have no plans to do so in the future. Another 4% do not currently provide health insurance, but expect to begin doing so. Among those who do provide health insurance, 49% say the cost of coverage is split between employer and employee. At 22% of the organizations the employer covers the full cost of health insurance coverage.

In addition to economic difficulties, the nonprofit sector has struggled in recent years with a number of high profile scandals that have eroded public trust in charities. Respondents to the Lincoln Institute/PANO 2011 Pennsylvania Nonprofit Organizations Survey say the credibility climate has not improved. Forty-five percent said the level of public trust in charities has remained about the same over the past year, but 28% said it has gotten worse while only 21% said trust levels have improved. Asked to rate the current level of public trust in the work of charities, 61% rated it as medium, 16% as high and 16% as low. “Given the many contributions nonprofits make to our communities it is a shame the actions of a few have caused public perceptions to remain so low,” said Geiger.

Government Impact

The recession has negatively impacted individual and corporate contributions, adding to the woes of nonprofits has been declining funding from government. Forty-four percent of those participating in the Lincoln Institute/PANO poll said their level of funding from state government has decreased over the past year. State funding stayed about the same at 17% of the organizations and increased at 1%. Another 37% said they do not receive state funding.

When it comes to providing social services, counties get credit for being the most efficient. Thirty-eight percent said county government was the most efficient level of government in providing social services, 15% cited their local or municipal government; 15% gave state government credit for efficiency, only 5% said the federal government was the most efficient at providing social services.

A major issue impacting community benefit organizations throughout the state is lobbying. A new state law enacted several years ago requires nonprofits to register if they lobby for funding or improved public policy. Thirty-nine percent of those participating in the 2011 Pennsylvania Charitable Organizations Survey said they do not think nonprofits should be required to register under the Lobbyist Disclosure Act. Twenty-nine percent thought registering was a reasonable requirement. Thirty-two percent said they didn’t know or offered no opinion.

A substantial majority, 83%, said they are not registered to lobby, only 7% have registered as lobbyists with the commonwealth. Moreover, almost half said they do not understand what is required under the lobbyist disclosure laws. Despite this, 32% report having lobbied state government on a public policy issue during the past year, 17% have lobbied a local official (county, school district or municipality) and 14% have lobbied the federal government. Thirty-one percent said they plan to lobby over the coming year. “These numbers reflect a very low percentage of nonprofits engaging with government,” PANO’s Geiger explained. “Our sector must do a better job in working with elected officials.”

Financial Matters

A third of the nonprofit organizations surveyed by the Lincoln Institute/PANO said they have seen income to their entity decrease moderately since the beginning of the year, an additional 10% report having experienced a significant loss in income. Another third said income this year has remained about the same. At 20% of the nonprofits income is up moderately, 2% have seen a significant increase in income.

Among those reporting a decrease in funding, the biggest drop came in state funding as 28% report a moderate drop in dollars received from the commonwealth with an additional 21% reporting a significant drop in state funding. The next biggest decrease in income was from grant making foundation funding with 34% reporting a drop in grant dollars. Likewise, a third of the nonprofits say giving was down from individual donors. Those nonprofits reporting an increase in giving cited their biggest increase came from individuals (19%) followed by moderate increases from program fees (13%) and from foundations (8%).

A nugget of good news emerged in that 14% of the nonprofits report they plan to expand their operations in 2012, while just 2% forecast closing their doors.

Operational Issues

More nonprofit organizations are turning to social media as part of their communications plan. Ninety-four percent report they have established a Facebook page, 42% utilize Twitter; 35% communicated via Linked In; 32% are on YouTube, and 18% blog. Social media are not yet a major source of income for nonprofits. Sixty-nine percent say they have not tried to raise money via social media. Of those who have, 3% report having raised over $10,000, another 7% say they have raised over $1,000 and 13% have raised between $100 and $1,000.00.

Nonprofits are coming to terms with new IRS form 990 requirements that have been phased in over recent years. Sixty-four percent report not having any difficulty in dealing with the new forms, but 16% are still struggling to comply.

Despite high unemployment rates, staffing remains a problem at 39% of the nonprofits. Fifty-seven percent report not having difficulty in recruiting and hiring qualified staff. Of those having difficulty attracting qualified employees, 40% cite the lower salaries offered by nonprofits; 10% blame their inability to provide benefits; and 7% said prospective employees are not adequately qualified or prepared for the positions they have to offer.

Finding qualified board members continues to be a problem for many community benefit organizations. Thirty-three percent cited the fact potential board candidates are already committed to other organizations as the main reason for their unavailability; another 31% said potential board members lacked the time to participate on their board. An additional 25% said potential board members are not willing to fundraise.

Methodology

The Lincoln Institute/PANO 2011 Pennsylvania Charitable Organizations Survey was conducted on-line from November 4, 2011 to December 5, 2011. A total of 213 Pennsylvania Charitable Organizations participated in the survey. Complete numeric results are available at www.lincolninstitute.org.

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