Bush Puts Focus On Nonprofits.

America's Promise is not losing a general but is gaining a secretary of state with founder Colin Powell's nomination to the cabinet of President-elect George W. Bush. And, nonprofits may gain a seat at the table, as in a cabinet-level position, in the new administration.

Powell, who has kept America's Promise in the national limelight during the past three years, said he wants to maintain ties to the youth advocacy organization, despite the demands of his new job.

"I'm not leaving it," Powell said after his appointment last month. "I'm going to find a way to continue to play an important role in the work of America's Promise, and the president-elect has encouraged me to do just that."

In President-elect Bush, Powell has a ready-made ally who signed onto the Alexandria, Va.-based America's Promise mission last July as governor of Texas. Bush's father, the elder President Bush, also played a major role in developing the Points of Light Foundation and now serves as honorary chairman.

While the second President Bush will technically have a Republican Congress -- an advantage his father did not enjoy -- the majority is so slim that political stalemates could be the order of the day. Republicans own a mere nine-vote edge in the House, and the Senate is split 50-50, with the vice president -- Dick Cheney when he takes the oath of office -- holding the decisive vote as presiding officer.

With several critical issues coming before the 107th Congress, nonprofits are uncertain whether such extraordinary political balance poses a problem or an opportunity.

"Either there's going to be such partisan rancor that there will be an effective stalemate in virtually every major area of government or the winning candidates and the parties will see a message from the American people that there is a desire for a moderate approach to our biggest issues," said Robert Goodwin, chief executive of the Points of Light Foundation in Washington, D.C.

"Charities do represent a nonpartisan agenda," said OMB Watch Executive Director Gary Bass. "In a narrowly divided Congress, we believe there is a chance for forward progress and not just acting defensively."

Still, the virtual deadlock reflects striking divisions in the United States by geography, race, sex and socioeconomic status, according to Bass.

"It suggests that for nonprofits, we need to understand where those differences are and figure out how to bridge them," Bass said. "It also suggests that we need to share with the public how government can help to resolve issues. We can play a very powerful role in educating the public about issues such as how to use the surplus to invest in our future."

Despite recommendations from charities across the nation, Bush is expected to further blur the division between church and state. During his campaign, Bush promised to mobilize "Armies of Compassion" that would include Christian soldiers armed with federal funds. Calling charitable community efforts "the next bold step of welfare reform," Bush vowed to enlist churches and religious organizations as well as secular agencies in the campaign.

In the midst of his transition, Bush met with black ministers to discuss ways of using their religious organizations to deal with social problems. He also planned to create an "office of faith-based action" in the White House that could rise to cabinet-level status. Among the top contenders to head the post was Indianapolis Mayor Stephen Goldsmith.

Bass said OMB Watch and other 501 (c)(3) organizations oppose the use of federal tax revenue for religious purposes, especially while the constitutionality of the practice is in doubt. Under federal legislation called Charitable Choice, passed in 1996, faith-based programs can be federally funded as long as they do not use the money for religious purposes.

Bush, who was a major advocate of Charitable Choice, sought to remove regulations that dilute the "faith factor" as governor of Texas.

"Bush sees charities almost as a substitute for government action," Bass said. "The (Al) Gore position was slightly different. He saw the charities as more of a supplement rather than a substitute for government action."

When it comes to critical tax issues, President-elect Bush appears to be a mixed bag, supporting some nonprofit-backed measures while opposing others. As part of his tax-cut plan, Bush seeks repeal of the estate tax that nonprofits see as a strong inducement to charitable giving. Only President Clinton's veto late last year prevented elimination of the so-called "death tax" on the wealthiest estates.

Republican House Speaker Dennis Hastert has said repeal could be the first tax issue taken up in the House of Representatives. But this time, nonprofits expect to mobilize their lobbying forces after sitting on the sidelines of the last debate.

Repeal would decrease charitable giving through bequests by $3 billion per year, according to a study by accounting firm Price Waterhouse-Coopers. That represents nearly one-fifth of the $15 billion donated to charities and foundations through bequests in 1999.

On the other hand, Bush favors the Charitable Giving Tax Relief Act that would allow non-itemizers to deduct charitable contributions more than $500. Independent Sector in Washington, D.C., estimated that passage would boost giving by more than $18.5 billion during the next five years. Bush's plan would also create a $500 per person tax credit for contributions to charities that work with the poor.

Bass called the trade-off on tax issues "an attempt to freeze the charitable community' and I can tell you that at OMB Watch, we will strongly oppose that."

One volatile issue that could affect the fortunes of charitable nonprofits is campaign finance reform, a measure that died in the 106th Congress. While 501(c)(3) organizations such as OMB Watch favor reform, they were alarmed at provisions that threatened to limit their ability to speak out on issues. House Republicans also considered requiring charities involved in public policy issues to reveal their donors' names." What would have had to happen is every charity would have had to certify that they're not using the contribution for public policy use Bass said.

In its proposed agenda, Independent Sector sought the support of the new president and Congress on these issues, among others:

* Ensure a level playing field on access to grants, contracts and other forms of financial support for the nonprofit and for-profit sectors, while recognizing the limited access nonprofits have to working capital. "Current rules and requirements can pose significant financial barriers to the participation of nonprofits in government-funded programs," an Independent Sector position paper said.

* Promote volunteering and community service and reauthorize the Corporation for National Service an extend AmeriCorps. President Clinton's pet program AmeriCorps could see its support wither under a Republican administration.

* Ensure accountability of the sector by increasing the funding of the exempt-organization division of the Internal Revenue Service. "While the IRS has taken some positive recent steps through reorganization and elevating the importance of the role of the exempt organization function, it continues to suffer from lack of adequate staffing and financial resources". Independent Sector said.

Missing from the 107th Congress will be some familiar faces, such as Virginia's Democratic Sen. Chuck Robb and 79-year-old Republican William Roth of Delaware, author of the Roth IRA. Both were defeated Nov. 7.

"As chairman of the Senate Finance Committee, Bill Roth was extremely helpful for charities," Bass said. "It is likely that Charles Grassley of Iowa will take that chairmanship, and it's unknown how he'll deal with us."

In a survey of its constituents, OMB Watch found campaign finance reform as the top presidential election issue, followed by investing in people programs, streamlining government grant procedures, allowing a deduction for non-itemizers and encouraging federal agencies to consult with nonprofits on regulations and programs.

Another nonprofit, the Alliance for Children and Families headquartered in Milwaukee, is also submitting a proposed agenda that seeks support for child welfare and mental health and behavior care.

With its founder in the new administration, America's Promise will also have something at stake in the 107th Congress as the Younger Americans Act comes up for consideration. Modeled after the Older Americans Act that provides funding for charitable efforts such as Meals On Wheels, the Younger Americans Act would invest $2 billion in programs for disadvantaged youth over five years.

"I think it's a perfect time for a piece of legislation on this," said America's Promise spokesman Matt Lauer. "It has support on both sides of the aisle."

Richard Williamson is a reporter for the Denver News Bureau.

Nonprofits Submit Political Wish List

Nonprofit sector leaders have developed a proposed agenda for President-elect George W. Bush based on a survey of organizations across the country. Leading the effort were the Advocacy Institute, National Committee for Responsive Philanthropy, OMB Watch and the Union Institute's Office of Social Responsibility. Here are the top proposals:

* Reduce the corrosive influence of money on federal campaigns by embracing the principles of public financing and other possible models for reform.

* Invest in programs that address community needs and help the many people who have not benefited enough from the healthy economy.

* Simplify rules governing nonprofit policy participation and improve the relationship between federal agencies and nonprofits of all sizes and types.

* Allow nonitemizers to deduct charitable contributions on federal returns.

* Speed up grant payments. Simplify application and reporting requirements. Provide technical assistance to help small nonprofits apply for federal funds.

* Create a new national grant program to provide community-based organizations with operating support.

* Require greater disclosure from nonprofits and philanthropies, and improve access to nonprofit disclosure information. Improve IRS enforcement of current laws.