Agencies brace for fiscal cliff fallout
By Angela Ward firstname.lastname@example.org
Dec. 9, 2012 at 10 p.m.
The New Year may not hold a lot of promise for nonprofit organizations threatened by a looming fiscal cliff.
Should sequestration become reality, it would have a profound effect on all nonprofit organizations. That's not only because it would limit or eliminate deductions for charitable giving, but it is also expected to cut or eliminate federal funding for nonprofits.
Aliceson Howell, executive director of the Greater Longview United Way, said there has been significant discussion in recent days about possible limitations on itemized deductions, including the charitable deduction, at her agency.
"The fact of the matter is, fewer charitable dollars and government cutbacks are a double hit to those who need help the most," Howell said. "We have seen an increase each year for resources needed locally through InfoLine calls, as well as our partner agency program reports, and it will exponentially increase if charitable deductions are compromised."
United Way is working with its board, volunteers, staff and the community to identify new and different funding alternatives, as well as protect and grow current assets, she said.
"We recruit people and organizations from all across the community who bring the passion, expertise, and resources needed to navigate these changes and get things done," Howell said. "The ever changing political climate is always a consideration in how we plan for the future, and we have been fortunate over the years to have the greater Longview area individuals, small businesses, and large corporations supporting our efforts, regardless of any state or federal changes."
Only a very small percentage of the Greater Longview United Way's revenues come from federal grants or funds, she said.
"Our support comes, overwhelmingly, from local donations," Howell said.
Generally speaking, the local chapters of national charities expressed greater concerned about the fiscal cliff's effects than charities that are solely based in East Texas - like Longview Community Ministries.
Executive Director Donna Sharp said her board has not discussed the effects sequestration might have on that agency.
"We have a very consistent and reliable donor base," Sharp said. "We don't usually see tremendous fluctuations in the funds we receive from the community, no matter what the national economic situation is."
However, Sharp said that cuts in federal funding could have a negative impact on some of the agency's programs.
Tammy Prater, executive director of the East Texas Piney Woods Chapter of the American Red Cross, said that although she hasn't been involved in any discussions regarding the fiscal cliff, it's something she's concerned about.
"Obviously, any negative impact on charities hurts both our agency and the communities we serve," Prater said. "However, most people give from the heart; it's not usually about a tax deduction for most of our donors."
Corporate gifts to the national organization could take a hit based on the federal tax policies and general uncertainty about the economy, she said.
"Major gifts are usually made at the end of the year, so we won't know for a few weeks yet what effect this is having on our fundraising," Prater said. "However, if people aren't sure of the tax implications of their donations, it can make them uneasy and more cautious about giving."
Judy Varner, bookkeeper with the Longview branch of the Salvation Army, said that there haven't been a lot of local level discussions of the coming fiscal cliff, but she's noticed more hesitation on the part of some donors.
"We've had some of our regular donors request that we remove them from our lists of people who donate on a monthly or quarterly basis," Varner said. "They've told us they'll still donate when they can, but don't want us basing our budget on specific contributions from them, because they're not sure whether they'll be able to make those donations on a regular basis if the tax codes change."
Major Ernest Lozano, director of the local Salvation Army, said his agency does not receive any direct funding grants from the federal government.
"We do sometimes get reimbursed for some of our spending on disaster assistance, but that's only after the fact and if the area we serve meets certain criteria," Lozano said. "Right now, exactly zero percent of our operating budget comes from federal funds."