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February 24, 2021
Election Will Be ‘Hugely Consequential’ for Nonprofits

October 25, 2020 — If next week's election results in the Democrats capturing the White House and U.S. Senate, and holding on to the House of Representatives, nonprofit organizations in Massachusetts and elsewhere can expect to receive more federal funding during the next few years, according to the leader of the Massachusetts Nonprofit Network, the state’s nonprofit trade association.

“This election is hugely consequential for the nonprofit sector,” said Jim Klocke, CEO of the Massachusetts Nonprofit Network (MNN), during a webinar held last week for Massachusetts nonprofits hosted by Enterprise Bank

He added that if a Democratic sweep occurs, there will be “lots of provisions in the next few years in tax bills to help nonprofits. If the Republicans keep the Senate and the Democrats keep the House, the odds of large scale legislation affecting social issues will be much lower.”

If there is no Democratic sweep, increased funding for nonprofits wouild be in question, many observers believe.

Helping to open up debate on numerous issues, should the Democrats win the White House and Senate, is a likely push early in 2021 to eliminate the filibuster, said Klocke. Doing so means only 51 votes would be needed, instead of 60 under filibuster rules, to pass legislation in the Senate.

How much funding would be available to nonprofits in the event of a Democratic sweep is not clear, but, Klocke said, “Hopefully, more federal spending will include more PPP loans,” referring to the Paycheck Protection Program that was a key element of the CARES Act passed by Congress in March in response to the coronavirus pandemic . It offered loans designed to provide an incentive for small businesses, including nonprofits, to keep their workers on the payroll during the pandemic. Loans could be forgiven if all employee retention criteria were met. The PPP program ended in August.

Klocke said while donors “have rallied this year” to help nonprofits, there is concern that extra funding provided in 2020 will come at the expense of contributions originally targeted for 2021. He said the overall health of the economy next year will be a major factor driving charitable contributions.

Complicating the 2021 picture is the growing likelihood that a charitable contribution tax deduction, which was set to take effect in January and made available for all Massachusetts tax filers, will be delayed until 2022. Many, including MNN, hold that allowing taxpayers to deduct charitable contributions from their taxable income, thus lowering their tax bill, encourages charitable giving.

Of major concern to human services nonprofits has been continued state funding. Gov. Charlie Baker earlier this month in his proposed revised FY21 budget called for drawing down $1.35 billion from the state’s so-called rainy day fund to make up for revenue shortfalls resulting from the pandemic.

Baker noted, “This budget also includes $160 million to support Chapter 257 human service provider rate increases, which is a significant investment that reflects the important work done by these providers, especially during this pandemic.”

Massachusetts is in a better position than other states relative to its state budget, Klocke said, due largely to passing “disciplined budgets” over the last 10 to 15 years.

He added, “We know more needs to be done. We need a recovery. We need assistance for nonprofits to keep the lights on and provide services to those who need help.”

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