THE FEDERAL BUDGET AND THE NONPROFIT SECTOR: FY 1992
Summary of Principal Findings
- The President's FY 1992 Budget. In the FY 1992 budget it put forward in February 1991, the Bush administration proposed to continue the recent modest increases in federal spending in the budget functions of special concern to private, nonprofit organizations. After excluding Medicare and Medicaid, the large federal health programs which have grown substantially over the last decade or more, the inflation-adjusted value of FY 1992 spending in these policy areas of concern to nonprofits would be $1.9 billion, or 1.2 percent, above what it is projected to be in FY 1991.
- Prior Cuts. This proposed modest increase in federal spending in fields of interest to nonprofit organizations comes, however, against a backdrop of sizable past reductions. From FY 1982 to FY 1991, the inflation-adjusted value of federal spending in the six budget functions of greatest concern to nonprofit organizations, exclusive of Medicare and Medicaid, declined a cumulative total of $112.3 billion compared to what would have been spent had FY 1980 spending levels been maintained. Although growth occurred in some areas, the real value of federal spending as of 1991 was still well below its 1980 level in a number of crucial budget fields, such as education, training, employment, and social services; community and regional development; and international affairs.
- Implications for Nonprofit Revenues. Because government relies heavily on nonprofit organizations to deliver publicly financed services, these changes in federal spending have had significant implications not only for the scope of government action in these fields, but also for nonprofit revenues. In particular, although the president's FY 1992 budget (outside Medicare and Medicaid) would leave federal support to nonprofits at approximately what it was in FY 1991, because of prior cuts made earlier in the 1980s the inflation-adjusted value of federal support to nonprofit organizations in FY 1992 would remain approximately 10 percent below what it had been in FY 1980. For the FY 1982-91 period as a whole nonprofit organizations lost $33.6 billion in federal support that they would have had available had FY 1980 spending levels been maintained.
- Congressional Action on the FY 1992 Budget. In its own action on the FY 1992 budget to date, the Congress has generally gone along with the main contours of the president's proposals, consistent with the parameters of last year's multiyear budget agreement. However, the House and Senate have earmarked slightly higher increases in federal spending in the budget functions of greatest concern to nonprofit organizations than the president. In particular, the budget resolution passed by the House and Senate on May 22, 1991 projects an inflation-adjusted increase in federal spending in these areas, excluding Medicare and Medicaid, of $3.0 billion over FY 1991 levels, compared to the president's proposed $1.9 billion.
- Private Giving. Private giving has generally not been able to offset the cumulative, overall reductions in federal spending in fields of interest to nonprofits during this period. Between FY 1982 and FY 1989, the latest period for which data are available, private giving offset only 46 percent of the cumulative reductions in federal spending in these fields. Private giving has, however, managed to catch up with the losses in federal revenue that private nonprofit organizations experienced in these fields. For the FY 1982-89 period as a whole, private giving grew by $52.7 billion, compared to a $33.0 billion shortfall in federal support. This is so because Congress held the line on further cuts while private giving continued to grow. At the same time, there is little evidence that the growth of giving has been sufficient to cope with the growing needs left behind by the overall federal cuts and changing social and economic problems.
