“Change does not roll in on the wheels of inevitability, but comes through continuous struggle.” The words of Dr. Martin Luther King, Jr. spring to mind as I study the economic and legislative environment facing the nonprofit and philanthropic community in 2011.

We have our work cut out for us.

Today over 15 million individuals in our country are out of work. That’s like filling up each of the 110,000 seats in Michigan stadium (the largest arena in America and my adopted home state) every single day from January 1 through May 15! The Census Bureau reported that 1in 7 people lived below the poverty line of $22,000 a year in 2009, the highest levels since 1965. In response to such conditions, the 112th Congress will face a number of thorny issues over the next 12 months. Chief among them is how to kick start the economic recovery while simultaneously slowing a $12.8 trillion federal deficit that promises to accelerate unless lawmakers introduce policy to control costs, add revenue, or better still both.

In the waning moments of 2010, the 111th Congress enacted and the president signed into law some major initiatives that will directly impact organizations like ours. Chief among them is the broad tax package that includes a two-year extension of all 2001 and 2003 income tax cuts, a two-year adjustment of the estate tax ($5 million per person exemption and 35% rate), and a 13-month extension of unemployment benefits. While the financial relief for those without work is certainly welcome news, the estate tax legislation is deeply troubling. Our analysis of the estate tax returns from the Internal Revenue Service shows that both the percentage of estates worth between $2 million and $20 million that left bequests to charity and the percentage of the total estate value given to charity have declined significantly as the exemption levels rose and the tax rates dropped over the last nine years.

While the estate tax is not up for a vote anytime soon, debate about repeal and the subsequent impact on our community will become more heated in coming months. A 2004 study by the Congressional Budget Office noted that repealing the estate tax could reduce charitable bequests by as much as 16 to 18 percent. A 2009 article by Doug Holtz-Eakin and Cameron Smith cites a slightly lower figure of 12 percent. During a meeting last week of a board on which I serve, another member noted that his father passed away a couple of years ago and had been persuaded by his children to create a foundation rather than allow the money to go to Uncle Sam. My colleague told me that -- without a doubt -- if there was no estate tax, his father would have left the money to his kids who would not have used the funds for charitable purposes.

I expect that high on the Congressional agenda will be reforming and simplifying the tax code, an action that the President has repeatedly encouraged. That could mean not only broadening the tax base, as the University of Chicago’s Richard Thaler explains, but also “minimizing the number of deductions and exclusions from taxable income.” Lawmakers at every level and administration officials will be looking for new funding streams including by more carefully eyeing the tax-exempt community and the revenue ‘lost’ as a result of charitable deductions. Officials in some states have already tried to impose new fees on nonprofits as well as cut certain deductions, a topic I addressed in my October blog. And those who have for some time felt that we ought to take a closer look at who qualifies for exempt status are likely to use this review of the tax code as an opportunity to write the rules differently. This may well be the beginning of a very serious look at our tax exempt status as law makers ask themselves if the tax deduction is worth the benefit it is supposed to generate.

The wheels of change, so poetically named by Dr King, promise to spin rapidly in 2011. Rather than watching from afar, how might we pull the levers, fuel the engine, and guide progress in ways that will help us better serve even more people in the coming year? The answer: our community must articulate its value and impact on society more powerfully and urgently than ever before.

Take Action
Before the year really gets underway, I urge you to meet with lawmakers at all levels. Educate them not only about mission -- how much you’ve curbed drug use among inner-city teens or the exchange program you run in China -- but also about what it takes to accomplish that mission such as the number of people you employ in the community. Carry with you “leave behind” materials that underscore the sector’s economic impact (IS will be developing resources to help you in the coming months) and meet with staff members of public officials, who can become powerful allies. These behind the scenes “shakers and movers” may, through no fault of their own, have little knowledge of our work. Share with them the fact that our sector is a piston powering America: we push to improve quality of life and at the same time we pull the economy along. We employ almost 13 million individuals and work closely with an additional 61.8 million volunteers each year. Though many people are not aware of it, the nonprofit community provides 5 percent of the nation's entire gross domestic product.

At Independent Sector, the staff and I are eager to work with you on communicating the sector’s value. We believe strongly in the power of our collective voice to make a difference. Please share your stories with us so that we might weave your efforts into a wonderful quilt that describes the value this sector adds to our society.

With an eye toward Black History month in February, I end with another great orator, Frederick Douglass. He once said, “It is not light that we need, but fire; it is not the gentle shower, but thunder.” As we think about our work in 2011, now is the time for action that’s equally prudent and bold. Our organizations need to step forward and, shoulder to shoulder, make our case to lawmakers for their continued support on behalf of those who need help the most. Together we have the potential to make this year better than last year for tens of millions of people.