Faculty Scholarly Dissemination Grants

Preparing the Nonprofit Sector for Change: The Budget Control Act of 2011

Department

School of Public, Nonprofit & Health Administration

College

College of Community and Public Service

Date Range

2012-2013

Disciplines

Business

Abstract

This paper explores the consequences on the nonprofit sector with the passage of the Budget Control Act of 2011. With this bill, Congress has proposed a drastic reduction in the overall size of the budget deficit and forces cuts of 1.2 trillion from the federal budget over the course of 10 years in exchange for increasing the federal budget debt ceiling limit to $900 billion (Associated Press, 2010). The size and scope of the nonprofit sector and the impact of devolution on the growing responsibilities of nonprofits in providing social, health and welfare and education services at the state and local level make the passage of this bill particularly perilous for cash strapped states. It is unknown at the present time how these drastic cuts will affect the nonprofit sector, thus an exploration of the patterns of collaboration between foundations, nonprofits, state and local governments and the funding provided by the federal government is necessary. In 2006, the nonprofit sector received about 60% of all revenue from the federal government (Garrow, 2006), therefore cuts the overall federal budget as sure to trickle down to nonprofit organizations, and state and local governments alike. Thus the question of providing public services under these dramatic constraints should be posed to the academic community as well as to practitioners. Using Michigan as a case study, this paper discusses the implications of these budget cuts on the nonprofit sector, taking into account the influx of foundation giving as a temporary stopgap measure. Finally, the paper proceeds to suggest steps that states, nonprofit organizations and foundations can take to stave off the dramatic losses in funding predicted by the Budget Control Act.

Conference Name

Urban Affairs Annual Meetings

Conference Location

San Francisco, CA

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