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In The News …

DC area unemployment rate is unchanged at 5.3 percent (Washington Post: Local): “The Washington area jobless rate hovered at 5.3% in November, according to a Labor Department report released Tuesday that revealed little change in the local employment picture [...] the Washington economy has been steadily adding jobs, but not at a fast enough clip for the recovery to shift into higher gear.” Education and health services posted the largest job gains, with the latter alone adding 11,300 between November 2011 and 2012. Local leisure and hospitality continued to add jobs as well, while manufacturing and construction both subtracted. Overall, the area remains well below the national rate of 7.8%.

The Fiscal Cliff Legislation: A Primer for Nonprofits on Its Provisions (Nonprofit Quarterly): “The short message that should be taken away from the so-called “fiscal cliff” legislation passed last night is that it is no time to relax [...] Here is our scorecard on the fiscal cliff mini-bargain.” At the NPQ website, you can read an overview of the final legislation on charitable deductions, marginal tax rates, and other taxes (such as the payroll tax); that said, “good news for nonprofits and the communities they serve is that a variety of programs that benefit working class and lower income people have been saved — for the time being.”

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Fiscal Cliff — Averted?

by Marie LeBlanc, Community Partnerships Coordinator

While many Americans across the county rang in New Year’s Day 2013 with pomp, circumstance, and auld lang syne, the United States Congress was (for once) hard at work — barely scraping through the passage of legislation that averted the dreaded “fiscal cliff.” However, is the danger really past? Various news outlets and media sources have been reporting on the “wins and losses”of the fiscal cliff bill, trying to help citizens make sense of it — and understand the real-world implications on their wallets this month and tax bills come April. Yesterday, the Nonprofit Quarterly’s Rick Cohen offered his take on the implications for nonprofits.

According to Cohen, changes made to charitable deductions and marginal tax rates (increasing only on households with annual incomes above $450,000) “constitutes an absolutely minimal touch on charitable contributions.” Due to various tax provisions, on everything from the expiration of the payroll tax “holiday,” to changes in capital gains and dividend income tax rates, the “fiscal cliff bill not only raises less revenues than the President’s proposal, but even less than Speaker Boehner’s Plan B.” However, many programs serving working class and lower income populations have been saved for now, including unemployment benefits and various tax credits on earned income, children, and renewable energy.

The specter of the cliff itself impacted municipal and county-level spending, even before emergency legislation was passed. According to the DC Fiscal Policy Institute, “the impact of the federal budget impasse on the District was felt 10 days before the New Year’s Eve fiscal cliff deal.” Despite signs of growth in the DC economy, instability in the federal budget prevents these signs from being fully recognized and providing the foundation needed for expanding, and even maintaining, levels of social spending. Programs for domestic violence, mental health, and educational enrichment have fallen victim to the budget gridlock.

Ultimately, Cohen offers this perspective on the budget solution, and its potential future impact:

The fiscal cliff isn’t just a matter of “saving” the maximum deductibility of charitable donations or avoiding the reinstatement of the arcane and minimal Pease amendment, but recognizing how dysfunctional the nation has become and how the communities’ nonprofits serve are the primary victims. If the focus of nonprofit advocates leaving shoe leather in the halls of the Capitol is simply on maximizing the value of the charitable deduction or, perhaps more accurately, maximizing the value of the deduction for ultra-wealthy tax itemizers, then the result, reflected in the fiscal cliff legislation and future bills to be addressed in the next couple of months, will be a truly pyrrhic victory for the communities nonprofits serve.