Reading the January 8, 2020, and November 27, 2019, columns, “Evaluation and Accreditation of Nonprofits,” and “With Growth of Charity Should Come Greater Scrutiny,” one might think that the charitable community is a “wild west” of lawlessness and incompetence.
Perhaps unintentionally, these opinion pieces do a grave disservice to all of the charities operating in New Jersey and throughout the country to further the public good. I believe some important corrections and context are in order.
New Jersey’s charitable nonprofit community benefits all of us. Whether providing education, social services, job training, health care, civil rights protections, disaster relief, education, foreclosure assistance, artistic and cultural enrichment, or preserving our natural resources, nonprofits fulfill a vital public function that would leave a gaping void were they not present.
They are integral to making New Jersey a strong place to live, work, raise a family, and locate a business. Often they are the first, last, or only source of help for people in distress. By virtue of the programs and services they provide, they save the government and taxpayers millions of dollars every year.
The articles suggest, erroneously, that there is no governmental entity overseeing nonprofits or requirements for keeping tax-exempt status. Actually, there are several — starting with the IRS and New Jersey’s Division of Consumer Affairs’ Charities Registration Section, the two main entities charged with ensuring that exempt organizations are upholding the public trust and that funds are not being diverted to private interests.
Collectively, their purview covers charities’ financial reporting, governance, fund raising practices, and much more. A strong case can be made that extra funding is needed for both of these agencies, but to gloss over their existence and role is misleading at best.
Additionally, charities must comply with laws and regulations from the Department of Labor (state and federal), the New Jersey Election Law Enforcement Commission (for charities that lobby), the state Division on Taxation, state Division of Revenue & Enterprise Services, countless industry-specific government departments and agencies, and numerous private trade-focused standard-setting and accreditation entities, only a few of which were identified by the author.
Many of the laws, regulations, and procedures that nonprofits must comply with are inconsistent with each other or adopted on a piecemeal basis, making compliance needlessly expensive and inefficient and diverting scarce resources away from charitable missions.
Unlike many for-profits, charities’ finances and operations are an open book, with financials and other key information publicly available online and from the charity itself. Failure to comply with annual reporting requirements will automatically cost a charity its tax exemption.
The charitable sector has indeed grown dramatically over the past several decades, and a number of factors account for this. First and foremost, as the articles acknowledge, is the government’s own significant pull-back from its responsibility to provide for the well-being of our communities and residents. The widening wealth gap in New Jersey and across the country means that more people are seeking the help that nonprofits provide.
In Mercer County, no doubt the proximity to the state capital also plays a significant role in the high concentration of nonprofits in the region.
The increased burden of providing vital programs and services in the wake of government’s withdrawal is not some future possibility. It’s the reality nonprofits face every day, without the levels of funding necessary or sufficient to meet the skyrocketing demands for their services.
New Jersey is notoriously bad in terms of government contracts that fail to pay the full costs of providing services, with myriad excessive, duplicative, and burdensome application, reporting, and monitoring requirements and late payments common occurrences. The federal tax law, which has put charitable giving incentives out of reach to all but the top 10 percent of donors, has exacerbated what was an already difficult funding climate for nonprofits.
Despite urgent warnings from leaders, researchers, and advocates, nonprofits overall — facing continually escalating demands for their services and growing regulatory and programmatic burdens imposed by government — remain chronically and dangerously under-funded.
The actual and potential consequences of this cannot be overstated:
• Inadequate worker pay and benefits
• Difficulty in hiring and retaining talented staff, particularly emerging leaders and professionals of color, perpetuating disparities in hiring and advancement
• Higher rates of turnover, burnout, and dissatisfaction
• Inability to invest in professional development, technology, planning, evaluation, communications, and other key infrastructure supports to foster efficiency and sustainability
• Difficulty in meeting rising community needs
• If left unaddressed, catastrophic failure or even closure
No one expects for-profit businesses to be able to succeed under these conditions, and we can’t expect this of nonprofits either. The challenges nonprofits face are not going to be solved by the creation of a new accrediting body. If we want nonprofits to be strong for the people and causes they serve, it’s time to change the tide and invest in the people and infrastructure needed for long-term stability and success. The people and communities that rely on nonprofits deserve nothing less.
Linda M. Czipo is president & CEO of the Quakerbridge Road-based Center for Non-Profits, New Jersey’s statewide umbrella organization for the charitable community. Through advocacy, public education, technical assistance, and member services, the Center builds the power of New Jersey’s nonprofit community to improve the quality of life for the people of our state. Visit www.njnonprofits.org.