(WASHINGTON, February 2, 2009) -- Diana Aviv, president and CEO of Independent Sector, today issued a statement regarding the American Recovery and Reinvestment Bill passed by the House of Representatives last week.

Statement:

By passing the American Recovery and Reinvestment Bill last week, the House of Representatives took a strong first step toward alleviating some of the growing hardship faced by millions of Americans. This bill will help more people across the country receive services supported by Medicaid funding, emergency food and shelter programs, and community services and community development block grants, among other needed remedies. The bill also provides scholarships and essential support for our educational institutions and arts programs, enabling young people to better pursue the knowledge and personal growth vital to their own and our nation's future.

Yet without further action, many vulnerable Americans will remain at great risk. The nonprofit organizations that have long been a major partner to government in delivering services to our communities are now facing severe challenges that threaten their ability to meet the growing demand for those services. Diminishing private contributions, significantly longer delays in receiving reimbursement from government for contracted services, and the tight credit market are threatening vital programs offered by nonprofits.

As the Senate debates action on its economic recovery bill, we encourage its members to act swiftly on the measures passed by the House that will provide continued access to countless programs delivered largely through nonprofit organizations. We also call upon the Senate to include the following measures that will help lift our communities out of this crisis by encouraging more charitable giving, making credit available to nonprofits, and increasing the ability of volunteers to use their own vehicles to deliver services to those in need.

I. Encouraging Giving

Even as their own wealth has diminished, many individuals and private foundations are still looking for ways to help out those around them who are enduring even greater loss. Congress should be encouraging them do so by stimulating private giving in three critical ways:

• Eliminate the Disincentive on Increased Foundation Giving: Although many foundations are looking to sustain or increase their giving to charitable organizations during this crisis, current tax law discourages them from doing so. The two-tiered excise tax on foundation investment income penalizes foundations that expand their giving substantially in any given year, since such increases raise the rolling five-year average on which their tax rate is determined. Congress should instead encourage greater giving by eliminating, for the next two years, the excise tax on foundations that contribute more than the required 5 percent of their assets. This temporary change will enable more resources to flow into communities when they need them most.

• Remove Caps that Discourage Giving: Many individuals, too, are seeking ways to give back to their communities. For the next two years, Congress should encourage this generosity by raising the ceilings on the amount of tax-deductible contributions individuals can claim on their tax returns and remove the limits on how much individuals can contribute tax-free to charitable nonprofits through their Individual Retirement Accounts.

• Treat Volunteers Fairly: Besides giving money, many Americans donate their time and use their own vehicles to deliver services to people in need. To facilitate volunteers' efforts to bring much-needed relief to their communities, Congress should increase permanently the volunteer mileage deduction rate, which is currently set by statute at 14 cents per mile, and exempt from taxable income mileage reimbursements up to the business mileage rate.

II. Making Credit Available to Bridge Funding Gaps Resulting from State Reimbursement Delays

Charities coping with rapidly rising demand for their services have encountered another major obstacle: delayed reimbursements from state and local governments. As gap funding from private giving shrinks and lines of credit freeze up, nonprofits increasingly find themselves with few options to bridge the delay between incurring costs and receiving reimbursements for services under contract to state governments. Without bridge loans, many charities that serve our most vulnerable citizenry and that are critical to the recovery effort will be forced to cut staff and programs, making it even more difficult for those in need to receive assistance.

• To ensure that organizations can continue helping the most vulnerable communities, Congress and the administration should provide temporary credit to the groups on the front lines of the crisis. An essentially deficit-neutral revolving loan fund, combined with incentives to states that reimburse on time those nonprofits with which they have contracts, will offer immediate relief to these organizations, enabling them to maintain the staff necessary to provide critically needed services.

Strengthening Our Partnership

Government and the nonprofit community share a common goal: making life better for the millions of Americans who need it most. This vital partnership needs to be even stronger today to address the challenges facing our nation. The American Recovery and Reinvestment Bill is a good first step in strengthening the work we do together -- but it is only a first step. Congress and the administration should support more measures that enable nonprofits to better play their crucial role in rebuilding and revitalizing our struggling communities.

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Independent Sector is a nonprofit, nonpartisan coalition of approximately 550 charities, foundations, and corporate giving programs, collectively representing tens of thousands of charitable groups in every state across the nation. Its mission is to advance the common good by leading, strengthening, and mobilizing the nonprofit and philanthropic community.