This post was originally published here (Urban Wire)
When President Trump unveiled his preliminary budget proposal two weeks ago, nonprofit leaders were some of the loudest registering alarm.
“California’s nonprofit community…would be devastated by the cuts,” declared the California Association of Nonprofits. Or as one lobbyist for charities recently told the New York Times, “This isn’t a political threat, it’s life and death.”
Not only did the administration announce its intent to get rid of the Corporation for National and Community Service (which houses the AmeriCorps civil society and volunteering program), but the budget also would slash funding to, or abolish, agencies, initiatives, and programs that provide significant financial support to nonprofits across the country, including the Legal Services Corporation, Choice Neighborhoods, and Community Development Block Grants.
Nobody likes to lose funding, but was such apprehension justified? How vulnerable are the nation’s nonprofits in the face of the likely decrease in financial support from a Trump administration?
How much do nonprofits rely on federal funds?
Federal spending has direct and indirect effects on nonprofits. By funding (or cutting funding to) areas in which nonprofits operate, the budget shapes demand for their services. Yet the federal government is also a vital source of direct revenue for many nonprofits, through grants or through contracts or fees for goods and services, so budget cuts can increase demand for nonprofit services while cutting the resources to supply that demand.