Making Public Policy toward the Nonprofit Sector in the U.S.: How and Why Broad, “Sector” Interests Are Advanced – Or Not – in Federal Policymaking

Abstract The nonprofit sector is a vital part of U.S. society with roots deep in the country’s history. In light of the nonprofit sector’s favored place in American society, it is perhaps not surprising that nonprofit leaders have had some important successes in advancing sector-interests in federal policymaking since 2000, which is the focus of this paper. Nonprofit sector advocates have secured some significant new sector-wide benefits (e. g., the recently established mandate that nonprofit contractors paid with federal funds be reimbursed reasonable indirect costs) and, perhaps just as importantly, have fended off numerous attacks on sector interests (e. g., efforts to cap the value of itemized deductions for upper-income taxpayers). However, while nonprofit sector leaders have won some notable policy victories in recent decades, especially in defending sector interests, they have also been somewhat frustrated in efforts to advance the sector even further by a variety of structural and other constraints that weaken the nonprofit sector (and some other industries) in federal policymaking. Importantly, almost all interests typically win many more “defensive” than “offensive” policy victories. At the same time, nonprofit sector advocates have also been weakened by free riders (who limit advocacy in other industries as well), the subsector orientation of many nonprofits, limits on nonprofit lobbying and electoral activity, the disconnect of national sector advocates from local nonprofit leaders, and other reasons. Suggestions for overcoming these challenges include: strengthening links between local and national sector advocates, connecting sector and subsector advocacy efforts, perhaps relaxing restrictions on nonprofit lobbying and electoral activity, better resourcing national sector advocates, and finding and communicating the “big idea” behind the sector that will persuade policymakers to be more supportive.