Rick Cohen: In the US, it's also about contracts and campaigning

US charities have avoided restrictions on election-based campaigning for the moment; but like those in the UK, they are grappling with how they finance their programmes, writes our columnist

Rick Cohen says US non-profits are getting accustomed to a new form of federal government initiative
Rick Cohen says US non-profits are getting accustomed to a new form of federal government initiative

On finance, the federal government's Office of Management and Budget is implementing a change in the rules governing how the federal government administers grants and contracts with non-profits. Non-profits have long complained about the insufficient provisions in grants and contracts for their "overhead" or "indirect" costs. The regulations allow non-profit contractors to elect an automatic indirect cost rate of 10 per cent of direct programme costs, or negotiate for an even higher rate.

On politics, charities have, for the moment, avoided counterproductive restrictions on their participation in policy advocacy related to elections. To clarify the limits on political activity by social welfare organisations, the Internal Revenue Service issued draft guidelines that roiled traditional public charities by defining activities such as non-partisan get-out-the-vote programmes and candidate forums as potentially "campaign-related political activity".

In response to 170,000 comments - the most ever on a tax regulation - the IRS has decided to rethink how it reins in the electoral activities of social welfare organisations without depriving public charities of their traditional function of promoting civic engagement.

Meanwhile, US non-profits are getting accustomed to a new form of federal government initiative. Earlier this year, President Obama announced his My Brother's Keeper initiative, aimed at redressing the gaps between black men and boys and their white counterparts in educational attainment, employment and prison incarceration. Last month, the White House, with First Lady Michelle Obama taking the lead, also announced the Joining Forces Impact pledge, focused on the reintegration of veterans of the Iraq and Afghanistan wars into civilian life.

America's non-profits, like those in the UK, are grappling with how they finance their programmes and what they are allowed to do in the political arena.

Both were distinctive for the absence of any commitment of federal government moneys. Rather, the government served as the "bully pulpit" for exhorting public support, but the funding would be from philanthropic foundations - 30 private and corporate foundations committing $174m for US veterans programmes (including $3m from the Royal Foundation of The Duke and Duchess of Cambridge and Prince Harry), and $194m from 11 foundations for programmes aimed at bridging the achievement gap for black men.

Rick Cohen is national correspondent for the Nonprofit Quarterly in Boston, Massachusetts

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