Strengthening and Supporting Non-Profits, Philanthropic, Faith-Based and Other Community Organizations Working to Grow the Middle Class
The President’s Fiscal Year 2014 Budget demonstrates that we can make critical investments to strengthen the middle class, create jobs, and grow the economy while continuing to cut the deficit in a balanced way.
The President believes we must invest in the true engine of America’s economic growth – a rising and thriving middle class. He is focused on addressing three fundamental questions: How do we attract more jobs to our shores? How do we equip our people with the skills needed to do the jobs of the 21st Century? How do we make sure hard work leads to a decent living? The Budget presents the President’s plan to address each of these questions.
To make America once again a magnet for jobs, the Budget invests in high-tech manufacturing and innovation, clean energy, and infrastructure, while cutting red tape to help businesses grow. To give workers the skills they need to compete in the global economy, it invests in education from pre-school to job training. To ensure hard work is rewarded, it raises the minimum wage to $9 an hour so a hard day’s work pays more.
The Budget does all of these things as part of a comprehensive plan that reduces the deficit and puts the Nation on a sound fiscal course. Every new initiative in the plan is fully paid for, so they do not add a single dime to the deficit. The Budget also incorporates the President’s compromise offer to House Speaker Boehner to achieve another $1.8 trillion in deficit reduction in a balanced way. When combined with the deficit reduction already achieved, this will allow us to exceed the goal of $4 trillion in deficit reduction, while growing the economy and strengthening the middle class. By including this compromise proposal in the Budget, the President is demonstrating his willingness to make tough choices and his seriousness about finding common ground to further reduce the deficit.
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President Obama believes that we must work as a team with the entire community – including nonprofits, philanthropic organizations, and faith-based and other community organizations – to meet the challenges our communities face. These organizations offer a safety net for those most in need. They serve as an economic engine for job creation in communities across America. They also serve as an incubator of innovation and foster solutions to some of our toughest challenges. The 2014 Budget builds on this commitment, focusing on increasing the use of evidence and evaluation to spread innovation and drive better results and encouraging national service and civic participation.
The Budget strengthens nonprofits, philanthropic, faith-based and other community organizations on multiple fronts:
- Preserves funding for many programs that meet critical community needs;
- Encourages investments in program outcomes, not just outputs;
- Facilitates access to capital and other resources to enable nonprofits to support innovation and scale what works;
- Supports important administrative changes to help existing resources go further in transforming lives and communities.
INVESTS IN INNOVATIVE NONPROFITS
Strengthens Financing to Scale Proven Community Solutions. Innovative solutions developed in the nonprofit sector and implemented in local communities cannot be carried out unless capital is available to develop, evaluate, and replicate successful approaches. The Budget invests $49 million in the Social Innovation Fund to continue the Administration’s commitment to support promising new approaches to major challenges, leverage private and philanthropic capital to meet these needs, and grow evidence-based programs that demonstrate measurable outcomes. This funding level includes $4 million for a pilot to improve grantee access to State and federal administrative data. This investment has the potential to reduce the cost and improve the quality of evaluations and performance reporting, and could help break down barriers for all nonprofit organizations looking to demonstrate measurable impact in communities.
Expands Innovation in Education and Workforce Development Continues to build on the success of Investing in Innovation (i3) by providing it with $215 million to grow the evidence base in high-need areas, including identifying and supporting effective teachers and leaders, improving low-performing schools, and encouraging parent engagement. To spur innovation, the Budget also provides $150 million for the Workforce Innovation Fund, which tests new States and regional ideas for better ways of organizing and delivering services focused on training and helping workers find jobs. The Budget also provides a $260 million First in the World fund to spur cutting-edge innovations that decrease college costs and boost graduation rates.
ENGAGES NONPROFITS IN COMMUNITY-BASED SOLUTIONS
Partners with Communities to Help Them Rebuild. The Budget includes investments in three key programs that support Promise Zones that will promote partnerships across the public, private, and nonprofit sectors. The Promise Zones initiative will revitalize high-poverty communities across the country by attracting private investment, improving affordable housing, expanding educational opportunities, providing tax incentives for hiring workers and investing in the Zones, reducing violence, and assisting community leaders in navigating Federal programs and cutting through red tape. To align Federal investments with these hardest-hit communities, the Budget invests $300 million in combining effective cradle-to-career services with comprehensive school reforms through Promise Neighborhoods; $400 million in Choice Neighborhoods to revitalize affordable housing and surrounding neighborhoods; and $35 million in Byrne Criminal Justice Innovation Grants to combat serious crime and violence using proven public safety strategies.
Increases Funding for Homeless Assistance Grants. The Budget provides $2.4 billion -- $480 million above the FY 2012 enacted level -- for Homeless Assistance Grants. The request allows HUD to renew all existing assistance, as well as provide $60 million for new targeted rapid re-housing and $40 million for new permanent supportive housing, serving an additional 30,000 people. This $100 million funding increase will primarily be administered by nonprofits, and helps make progress toward ending homelessness by supporting the goals of Opening Doors: The Federal Strategic Plan to Prevent and End Homelessness.
INCREASES USE OF EVIDENCE IN SOCIAL SERVICES
Expands Pay for Success to Drive Results. To ensure taxpayers get the best possible return on their investment in social programs while simultaneously increasing access to capital for the social sector , the Administration significantly is expanding the Pay for Success program model started in 2012. Pay for Success leverages philanthropic and private dollars to fund preventive services provided by nonprofits and other non-governmental entities up front, with the Government paying back investors only after the interventions generate results that save taxpayer money. At a time when public dollars are scarce, this model provides funding for service providers to test new and proven innovations at low risk to the taxpayer. In 2014, the Administration will broaden its support for Pay for Success, reserving up to $185 million in the areas of job training, education, criminal justice, housing, and disability services. The Administration is also proposing a new $300 million Pay for Success Incentive Fund at the Department of Treasury to help State and local Governments implement Pay for Success programs with philanthropies, nonprofits, and other nongovernmental organizations. The fund will provide credit enhancements for philanthropic investments and outcome payments for successful, money-saving services. The Administration will also make available up to 5 percent of proceeds from the sale of excess Federal property under the proposed Civilian Property Realignment Act (CPRA) for innovative homeless programs, including Pay for Success projects that save taxpayer money by reducing homelessness.
Creates Performance Partnerships That Provide Flexibility While Demanding Results. Inconsistent and overlapping Federal program requirements sometimes prevent States and communities from effectively coordinating services or using funding to support strategies that are likely to achieve the best outcomes. In 2014, the Administration proposes establishing a limited number of Performance Partnership pilots designed to improve outcomes for disconnected youth, including young adults who have dropped out of school and are not employed. Approved performance partnerships designed at the State or community level could blend discretionary funds for youth-serving programs across agencies, many of which work directly with nonprofits, in exchange for greater accountability for results. Performance indicators, such as education and employment outcomes, would be used to gauge progress, and evaluations would study what locally designed strategies work best. The Administration will work with community and nonprofit leaders – both secular and religious -- to explore the potential for similar performance partnerships in other areas, like revitalizing distressed communities and reducing youth violence.
STRENGTHENS NATIONAL SERVICE OPPORTUNITIES
Supports National Service. The Budget funds approximately 82,000 AmeriCorps members through the Corporation for National and Community Service (CNCS) core programs. This will enable members to serve and support the efforts of religious and secular nonprofit organizations working across the country to address a wide range of critical community challenges, from hurricanes to homelessness to failing schools. It focuses national service resources in those areas where service can achieve the greatest results for communities.
Leverages Service as a Solution. The Budget enables interagency partnerships to leverage AmeriCorps and use national service as a strategy to tackle some of our most important challenges. The Budget continues support for FEMA Corps, an innovative new partnership between the Federal Emergency Management Administration and CNCS that brings young people interested in careers in emergency management into public service while improving the resilience of local communities. This partnership will support an additional 1,600 AmeriCorps members in 2014. The Budget also continues support for School Turnaround AmeriCorps, a new partnership between the Department of Education and CNCS that places AmeriCorps members in the nation’s lowest-performing schools to help improve student performance. This innovative approach will both expand opportunities for national service and supply struggling schools with talented AmeriCorps members who can support the implementation of comprehensive school turnaround plans.
SUPPORTS LOCAL VOLUNTEERISM
Increases Capacity of Nonprofits to Support Volunteers. With the number of Americans engaged in volunteering having reached its highest point in five years, many nonprofits could benefit from management practices to handle this influx of talent. The Budget proposes to support nonprofits’ ability to recruit, retain, and manage this talent through a reactivated Volunteer Generation Fund. In order to help secular and religious nonprofits leverage volunteers in support of national priorities, the Budget provides $10 million for the reactivated fund, more than double the 2012 level. By reactivating the program as the George H.W. Bush Volunteer Generation fund, we also honor the legacy of service of the 41st president of the United States, who helped to elevate volunteerism and pioneered important work in civic participation both during and after his time in office.
Strengthens Programs That Engage Seniors. Many older Americans are eager to serve our Nation and have a wide range of skills and knowledge to give back to their communities. For decades, the Senior Corps program has been an important conduit for connecting seniors to local volunteer opportunities. The Budget proposes to reinvigorate the program by using competition to allocate funds to those organizations that have the biggest impact in their communities, creating a more dynamic and results-oriented Senior Corps.
IMPROVES REPORTING REQUIREMENTS FOR NONPROFITS
Expands E-Filing to All Tax-Exempt Organizations. Currently, the IRS publishes all Form 990 series tax information, the tax form filed by tax-exempt organizations, in a static image format that impedes transparency and analysis of this information. The Administration proposes to phase in a requirement that all tax-exempt organizations file their tax returns electronically and requires the IRS to release those data in a machine-readable format in a timely manner. If enacted by Congress, the accessibility of machine-readable data would enable donors and foundations to access tax-exempt organization data more easily and make it easier to perform robust analyses that could facilitate improved capital flows to the sector. This is an important step forward for transparency and is expected to generate entrepreneurial opportunities as new products and services are created that use these data. The proposal would generally be effective for taxable years beginning after the date of enactment.
Ensures Recipients of Federal Awards are Appropriately Reimbursed. Nonprofits and other entities that receive Federal funds may negotiate a level of reimbursement for their indirect costs, i.e., overhead. But some nonprofits may not have the opportunity or capacity for that type of negotiation process. Therefore, to ensure that all nonprofits and other entities who receive Federal funds are appropriately reimbursed for the allowable indirect costs, OMB has proposed new guidance that adds a minimum reimbursement rate of 10 percent of direct costs, available for up to four years of the grant. This ensures that nonprofits receive a minimum reimbursement while they develop the capacity to engage in full negotiations. OMB is seeking input through early June on this and other proposed guidance that seek to reduce administrative burden for nonprofits and other grant recipients.
IMPROVES USE OF EVALUATION
Learns and Shares What Works. The Budget supports new evaluations across the Government to demonstrate and analyze program impacts in areas ranging from health care to housing, from education to employment, and from international development to community development. Increasingly, the Administration is investing in helping nonprofits demonstrate the impact not just by funding evaluations, but also by helping nonprofits build their internal evaluation and performance management capacity. The Administration will also help interested organizations access strong evidence by continuing to expand “what works” clearinghouses for proven practices, such as the Department of Justice’s CrimeSolutions.gov, the Department of Education’s What Works Clearinghouse, the Substance Abuse and Mental Health Services Administration’s (SAMHSA) National Registry of Evidence-based Programs and Practices (NREPP), and the Department of Labor’s new Clearinghouse of Labor Evaluation and Research (CLEAR).