Nonprofit funding should be defended

Alex Belz

In the past few weeks, there’s been a lot in the news about collective bargaining rights, protests and state-level politics. In all the news, one major issue has been mostly under the radar: Gov. Rick Snyder wants to eliminate several tax credits for people who make small donations to nonprofit organizations and publicly funded institutions in Michigan.

In Michigan, the state repays you 50 percent of what you donate, with a maximum of $100 for individual and $200 for joint filers. If you were to donate $400 to a nonprofit organization, the state would repay you with a $200 credit. But now those credits may be gone. Homeless shelters, public broadcasting, soup kitchens and public universities are all at risk to lose donations because of this legislation, which takes away the incentive to donate.

Andy Harmon/NW

Of course, people are still free to donate out of the kindness of their hearts, and in a perfect world, they would. But with tough economic times, many people might find it more difficult to donate if they’re not getting something in return for it.

After many cuts to public university funding over the past few months, once again universities are faced with a threat to their funding. Alumni and other people close to the university donate to NMU through the NMU Foundation. These dollars end up going toward a variety of important university programs which depend in part upon those donations. Without the tax credit incentive, it remains to be seen how many donations may be lost.

With the economy the way it is, more people are buying from places like Salvation Army and Goodwill. Those places may lose donations as well, and who knows, maybe they won’t even be there in years to come. Cutting this funding seems like a quick way to save cash, but these nonprofits need these donations to function. Goodwill vice president of retail Angella Thompson said it best when she told ABC News, “No donations, no Goodwill store. No Goodwill store, no ability to fulfill our mission.”

Furthermore, public broadcasting stations like PBS, NPR and WNMU-TV were already at risk from the new budget proposals at the federal level. The Corporation for Public Broadcasting, a national nonprofit organization which is funded by the U.S. government and then, in turn, gives funding to public broadcasting stations, will lose funding when the proposed cuts go through.

Now they may lose much of their other major source of funding – donations. It’ll be a wonder if these stations stay afloat at all. With both sides of their funding at risk, we may have to say goodbye to “Sesame Street,” “Fresh Air” and even “Public Eye News.”

The fact is that ridding the state of these incentives punishes everyone in the long run. When the private and public sector fail us, nonprofits are there for support. Sure, it isn’t like the government is banning donations to these groups, but a lack of incentive will affect their numbers drastically.

Cutting the tax credits saves the state $45 million, with nearly 550,000 people filing for one of the tax credits a year. But since the state actually pays out half of that number to people who donate, that means $90 million is at stake for a variety of nonprofits across the state.

This new legislation will not only affect everyone statewide, it will continue to affect us for years to come. Consider Medicaid. Though right now it’s fully funded under the executive budget, with the rising age of baby boomers, the amount of people using Medicaid will likely go up and the cost of the program along with it. With the state still in a deficit, there isn’t going to be any money to keep pumping into Medicaid and other social programs, so  people are going to need to turn to nonprofit organizations to help them.

Low-income households, especially those with young children and the elderly may suffer in coming years when the number of people currently using Medicaid in the state of Michigan swells. They’re going to need someone to help them with their needs. When social programs fail, traditionally nonprofits fill the gap. With these cuts, will they be able to be there for these people in the future?

The state is bleeding money, that’s a fact. But if we’re not careful to preserve nonprofits, who will be there when we bleed?