Major Issues Facing America's Nonprofit Sector
by Dr. Virginia Hodgkinson and Kathryn E. Nelson
Introduction
At the turn of the twenty-first century, the US nonprofit sector is facing a number of major challenges and opportunities that are and will affect the capacity and structure of this sector in the decades ahead. Among these major challenges and trends are (1) public policy, particularly welfare reform and devolution of responsibility to the states; (2) commercialism, competition, and collaboration among the sectors; (3) the increased potential of giving and volunteering; (4) new forms of philanthropy; and other challenges including recruiting and retaining employees and keeping up with new technology. Each of these major trends affects the U.S. nonprofit sector testing its capacity and its functions and the way it delivers its services and advances causes.
Welfare Reform and Devolution
In 1996 the Congress passed and the President signed into law two pieces of legislation that will have a tremendous impact on the future of America and the nonprofit sector: The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) and The Balanced Budget Act. Both pieces of legislation establish caps on federal domestic expenditures that affect the safety net for low income and poor families, changing the very essence of government welfare programs.
PRWORA replaced the federal entitlement program Aid to Families with Dependent Children (AFDC) with Temporary Assistance for Needy Families (TANF). The carefully worded title of this act and the name of the new program reveal policymakers' perception of who is responsible for supporting families and how income disparity is to be reconciled. Specifically, this legislation mandates a work requirement and imposes time limits on cash support for families.1 The Balanced Budget Act also limits the resources available to states, which would enable them to comply with the measures stipulated under PRWORA. Although these new provisions grant states great leeway in designing their programs and offers increased funding for several programs during the first few years, it ultimately reduces state funding for those that truly rely on welfare: the most low-income families.
A conventional understanding of devolution focuses on the shift in responsibility and/or funding from one level of government to another. While Carol De Vita acknowledges this definition in her essay "Nonprofits and Devolution: What Do We Know?" she contends that "the debate today is less about which level of government should take the lead in setting policy, but rather how to allocate responsibilities between various public and private sector players."2 Her contention is important, in light of the increasing complexity that characterizes the relationship between the various levels of government and the nonprofit sector.
PRWORA devolves authority to the state for welfare programs with the expectation that charitable, religious organizations and the business sector will assist with the movement of welfare recipients toward economic self-sufficiency. For example, President Clinton has encouraged the nation's largest corporations to hire people directly from the welfare rolls. While governmental decentralization enjoys a long history, starting in the 1970s under President Nixon and accelerating in the 1980s under President Reagan, never before has this type of devolution included the elimination or reduction of federal entitlements.
