Editors’ Note: Jeffrey Berry responds to a recent article by Robert Kuttner in the American Prospect, “The Left’s Fragile Foundations,” by arguing that, in many ways, those foundations are more secure than contemporary alarms would suggest.
We live in such a polarized and partisan era, that it is easy to overlook the distinctive political role of nonprofits. It’s difficult to summarize the degree to which the 1.5 million 501(c)3’s engage in political activity as there is no consensus about what political activity is. (We usually mean 501(c)3’s when we talk about nonprofits, though the IRS lists 30 other categories of nonprofits in the tax code.) Perhaps more importantly, there is no consensus as to what their role in politics and government should be.
In a recent article in The American Prospect, Robert Kuttner paints a depressing portrait of the nonprofit sector moving forward. Anticipating a Trump victory in the 2024 election, Kuttner envisions ideologically infused leaders at the IRS using its enforcement powers to go after c3s that challenge the administration. In his mind the IRS could revoke the charitable status that allows c3s to offer donors tax deductibility for their contributions. He also voices concern about 501(c)4’s which have greater latitude in politics as they lack tax deductibility, fearing IRS attacks on organizations with an interconnected c3 and c4. Finally, he is critical of all nonprofits for their lack of activism aimed at reducing social injustices. Where, he asks, are the great social movements to propel a progressive agenda forward?
There is a lot of anxiety along with considerable criticism of the nonprofit sector embedded in Kuttner’s engrossing article. I’m not going to offer a point-by-point rebuttal, but his essay stimulated me to think about where the nonprofit sector stands today. Even if Trump loses the 2024 election, the nation remains evenly divided between Republicans and Democrats. Since Eisenhower was elected in 1952, neither the Republicans nor Democrats have held the White House for more than eight years at a time, with the one exception of George H.W. Bush’s single term following Ronald Reagan’s two terms. Thus, barring a cataclysmic shake-up in American politics, the nonprofit sector will periodically face conservative administrations that are less sympathetic to them than are Democratic ones. Nonprofits in health and human services, many of which depend on governmental grants, may feel especially vulnerable to the wrath of conservatives in power.
The Real Problem. To counter just one of Kuttner’s arguments, the central problem facing liberal c3s in terms of IRS enforcement is not that the IRS will revoke their tax deductibility for their advocacy. Rather, as I show in my book, A Voice for Nonprofits, many c3s misunderstand the law and believe they are barred from advocacy. When my colleagues and I surveyed executives from a random sample of c3s, only about half said nonprofits were allowed to “support or oppose federal legislation under current IRS regulations.” Just a third believed they could lobby if part of their budget came from federal funds. But c3s are legally allowed to lobby, even if they receive federal funds. The major restriction is if lobbying is a “substantial” part of the overall activity of a nonprofit. Yet unless advocacy is all that an organization engaged in, it is easy for a nonprofit to document through its budget that advocacy does not rise to the level of “substantial.” The case law surrounding nonprofits gives them a wide berth in involving themselves in the governmental process.
The broader problem of nonprofits avoiding advocacy is one of political representation. For many nonprofits, their clientele are people who are marginalized in our political system and are not constituents of free-standing interest groups that work on their behalf in the political process.
To what degree should liberal nonprofits worry about conservative presidents using their power to damage them? The track record of presidents who have tried to defund the left, either through the elimination of grants to nonprofits or revocation of 501(c)3 status, is not very good. The Nixon administration made ferocious threats but little came of it. More concerted efforts came during the Reagan years. Administrators and legislators such as Michael Horowitz, Ernest Istook, and David McIntosh, all fashioned new rules designed to restrict government funds awarded to liberal citizen groups. Conservative activist Grover Norquist claimed that “we will hunt [these liberal groups] down one by one and extinguish their funding sources.” But it all came to naught. The essential problem is that laws or agency rules have to apply to all organizations in a class. Thus, a rule applying to the Natural Resources Defense Council also applies to United Cerebral Palsy. The negative reaction by c3s across the country to these Republican plans led President Reagan to order his OMB appointees to rescind proposed rules that would have restricted nonprofit advocacy.
The next two Republican presidents moved at least symbolically in the opposite direction. George H.W. Bush praised volunteer organizations, calling for “1,000 points of light” to enrich American communities. George W. Bush campaigned as a “compassionate conservative” and even if his record belies that, his administration mounted no frontal assault on liberal nonprofits. It is harder to summarize Trump’s record. His tax cut sharply reduced the number of Americans who itemize their donations, thus eliminating an incentive to donate for those who were moved into taking the standard deduction instead. At the same time there was little done to crack down on government grants to liberal nonprofits. Nothing could symbolize the failure of conservatives to defund the left than continuing government funding of Planned Parenthood, an organization loathed by those on the right. Although government funds don’t pay for abortions, Planned Parenthood and its affiliates received close to $600 million a year in the last years of Trump’s term.
What a second Trump administration would mean for the nonprofit sector is more than a little muddy. Should he win conservative activists are surely better organized to hit the ground running come inauguration day. In this regard the Heritage Foundation’s Project 2025 has badly frightened liberals. Nonprofit Quarterly warned its readers that conservatives have precise plans in place to install true MAGA believers across the Executive Branch. These zealots would be armed with well-thought-out initiatives to sharply curtail government spending on domestic programs. As aggressive as their plan is, Heritage itself is an example of why it would be so difficult to use the IRS to crack down on liberal groups. The Heritage Foundation is a c3 while its partner, Heritage Action, is a c4. It seems unlikely that either part of the organization would be interested in rules that would restrict the broader organization’s fundraising.
Almost All Politics is Local. Conservative ire at nonprofits is usually directed at national organizations with a strong Washington presence. This includes environmental, consumer, women’s, racial and ethnic, and LGBTQ+ organizations that advocate for progressive causes. These nonprofits are far outnumbered in Washington by business trade associations and offices of individual corporations but, nevertheless, are typically in the mix of interest group lobbying Congress and federal agencies. Despite the disadvantage in numbers of organizations, these liberal nonprofits punch above their weight in terms of influence.
Nonprofits at the community and neighborhood level represent the greatest density of c3s involved in the governmental process. The most distinctive contrast between nonprofits and the federal government in Washington, and local nonprofits and city government, is that city politics offers a distinctively low barrier to entry for nonprofits wishing to become involved in policymaking. There are several reasons for this but most importantly cities depend on nonprofits to help them govern. In contrast, the federal government does not generally partner with nonprofits, though individual legislators or agencies may solicit the political support of particular nonprofits who share their goals.
Much of what interest groups do in Washington, which is overrun with lobbies, is to try to get someone in government to pay attention to them. Not every nonprofit in a city has the ear of someone in government but access to city officials is considerably easier. Because cities don’t significantly regulate in many business sectors, there simply isn’t the density of business interest groups in urban and suburban politics. In a survey of 50 large American cities I conducted with Kent Portney, we asked leaders of all types of advocacy organizations how frequently their phone calls were answered or returned by the city official they were calling. Nonprofit leaders responded “always” or “usually” as often as business respondents did.[i] Nonprofit groups are also aided by citizen participation requirements that give them the opportunity to challenge proposals. Neighborhood groups have used such rules to take on developers and city hall, using delay as leverage to force builders to scale back or even abandon projects.
A critical distinction between local and national nonprofits is that local nonprofits administer health and social services to area residents. This results in a deep dependency of urban governments on their service providers, organizations that cannot be replaced unless taxes are raised to support the new city personnel that would then be required. Grants and various forms of payments from the state, the federal government, and philanthropies cover much of the costs of services but while some of this is fungible money that could be redirected, not all can.
When consumer and environmental advocacy surged in the late 1960s, business responded by ramping up its own lobbying efforts.[ii] At the national level new ideologically conservative nonprofits focused on campaign funding and advocacy, expanding in number to contest liberal counterparts. But local politics remains different. There is much less organization in cities by conservative nonprofits and the expansive array of liberal nonprofits, especially health and social service providers, form an installed base that far outnumbers them. The real constraints on liberal nonprofit advocacy in cities comes not from ideologically conservative groups but instead from budgetary limits and public opinion.
Looking toward the future, the liberal nonprofit sector will continue to flourish for reasons beyond its role in service delivery. Although the number of individuals giving to charity has trended downwards, for nonprofits this is partially offset by the extraordinary giving by large contributors. And this philanthropy is decidedly liberal in orientation. Among the mega-givers there is no conservative cohort comparable to the money donated to nonprofits working in public health, human services, poverty, and other liberal causes by donors such as MacKenzie Scott, Michael Bloomberg, George Soros, Warren Buffet, Bill Gates, Melinda French Gates, and many others. Nonprofit entrepreneurs continue to proliferate, producing an enormous variety of new and imaginative organizations addressing the problems of the world. For nonprofits, despite the recent alarms, the future is bright.
-Jeffrey M. Berry
Jeffrey M. Berry is Skuse Professor of Political Science Emeritus at Tufts University. His books include A Voice for Nonprofits (with David Arons; Brookings, 2005) and The Interest Group Society (Little, Brown, 1984).
[i] Jeffrey M. Berry and Kent E. Portney, “The Group Basis of City Politics,” in Robert J. Pekkanen, Steven Rathgeb Smith, and Yutaka Tsujinaka, Nonprofits and Advocacy (Baltimore: Johns Hopkins University Press, 2014).
[ii] David Vogel, Fluctuating Fortunes (New York: Basic Books, 1989).
HistPhil 