Voters could make it harder to get municipal funds
Related: Amendment 3: Signs remind residents of where their tax dollars go to work
By Rich Pollack
It was a good day for the eight nonprofit organizations that came before the Delray Beach City Commission in August seeking a renewal of funds to help them keep doing their work.
Commissioners, after hearing presentations from organizations including Arts Garage, Achievement Centers for Children and Families, Spady Museum and the Delray Beach Public Library, agreed to spend more than $3 million to support the eight organizations and the services they provide to the community.
While representatives from the nonprofits were pleased to receive the grants, they left with a cloud of uncertainty in the air, knowing that there may be far less money available next year — if any — should voters approve a state constitutional amendment that would expand homestead exemptions and leave municipalities with far less revenue.
Amendment 3, which goes before Florida voters in November, would expand the current $51,411 homestead exemption to $150,000 next year and $250,000 the following year. Already local governments are looking at ways to make up revenue losses should the amendment get the 60% voter approval needed for passage.
Nonprofit organizations are also keeping a close eye on the referendum, knowing that local governments will prioritize core services if belts need to be tightened.
“If cities are faced with having to make spending cuts, discretionary grants and contracts for cultural programs will be the first to go,” said Steven Abrams, a former Palm Beach County commissioner and Boca Raton mayor.
What municipalities give
In coastal southern Palm Beach County, larger cities tend to give grants to nonprofits while small towns do not. The exception is Highland Beach, which gives a $2,500 contribution to the Highland Beach Sea Turtle Team, a volunteer-based nonprofit organization.
Delray Beach will fund eight organizations in the next fiscal year, with the library — one of only two larger-city libraries in the state that are nonprofits — drawing the largest donation of about $2.27 million total. The remaining seven nonprofits each receive less than $275,000.
Boca Raton in its current year’s budget allotted just over $500,000 for 75 nonprofits, with the largest donation being $37,000 to Boca Helping Hands.
In Boynton Beach, each commissioner is allotted $6,000 a year in discretionary funds — or a total of $30,000 — that they often use to support nonprofits.
In addition, the city will provide about $40,000 to a handful of nonprofits and cover more than $280,000 of operational costs for the Schoolhouse Children’s Museum.
Funds already shrinking
For cultural organizations, which have seen state cutbacks in the arts over recent years, a reduction in grants from local governments could impact programming and lead to a reduction in staffing.
Most will have to do what local governments will have to do: Look at cost savings and search for other revenue sources.
“We will have to evaluate every program again, determining whether we can afford to continue each one,” said Marjorie Waldo, Arts Garage president and CEO. “We will have to figure out if we can do more with less. We will call on our community to continue to support our efforts. And of course, we will have to pass some of the losses on to the consumer in increased pricing.”
Looking for support from the community may be a challenge for many nonprofit organizations since there is already stiff competition for every philanthropic dollar and it is likely to get worse.
“There’s not enough philanthropic dollars left to fill the gap if government funding goes away,” said Jeff Perlman, a former Delray Beach mayor and now executive director of the Carl Angus DeSantis Foundation, which funds nonprofits in Palm Beach and Broward counties.
Foundations, Perlman says, are already feeling pressure.
“Losing support from local governments is going to add to an already strained situation,” he said.
Compounding the growing demand for services from nonprofit organizations is a cutback in federal government funding, especially in the human services area.
“The pie for funds is getting smaller and the demand is getting greater,” said Mike Donohue, communications and external affairs manager for the Florida Nonprofit Alliance. “There’s a higher demand for services and less money to fund those services.”
Donohue said that a reduction in municipal government funding will also put more pressure on nonprofits.
“People need to consider that when public sector services are cut, people will look toward nonprofits,” he said.
Potential impacts
Donohue’s organization, which focuses on supporting and helping to strengthen Florida’s statewide nonprofit community, recently surveyed members and found that almost 90% of those responding said they expect greater competition for other funding sources should Amendment 3 pass.
The survey also asked the 83 nonprofits that responded how they would adjust to a reduction in revenue should the amendment pass, with 65% saying they would cut programs or services or turn clients away.
Of those that responded, 54% said they may have to reduce services and 51% said they would have to delay expansion plans. Close to 50% said they might have to tap into financial reserves, while 32% said they would leave vacant positions open.
Beside the direct impact a cut in municipal funding could have on nonprofits lies an indirect impact on those organizations’ abilities to get federal government funding as well as funding from foundations.
“It’s difficult to get federal funding without showing you have local government support,” Abrams said.
The former mayors also point out that vetting by local governments of a nonprofit gives other funding sources an additional layer of comfort knowing that the organization has value.
One of the questions that has been raised by some who favor the amendment is whether local governments should be funding nonprofit organizations.
“It’s a viable argument,” says Perlman, who added that he’s heard that concern raised over the years.
Nonprofits fill voids
Both he and Abrams, however, point out that in many cases the organizations receiving tax dollars are providing services that would fall to local governments if the not-for-profits were absent.
“The thought was that by providing a service that didn’t already exist, the city wouldn’t have to provide that service or deal with the fallout of not having it,” Perlman said.
Abrams points to Boca Raton’s funding of the Mae Volen Senior Center, saying that means the city does not need to have its own senior center.
The same could be said for affordable child care with the Fuller Center in Boca Raton and the Achievement Centers for Children and Families in Delray Beach, which provide services to meet a need that the cities then don’t have to fill.
Should local governments need to cut their support of nonprofits, the determination of how that will be done is still up in the air.
Boca Raton Mayor Andy Thomson said his city will have a tough time helping nonprofits because the amendment limits how tax dollars can be spent — focusing primarily on core services, a category that nonprofit organizations do not meet.
“Historically, we have always been, I think, pretty generous giving out funds on that,” he said. “It may be more difficult now.”
Delray Beach leaders will also have to decide what organizations to support, if any, should the amendment pass.
“There will be tough decisions that will have to be made,” City Manager Terrence Moore said.
Children’s Services Council
In addition to getting municipal government support, many of the nonprofit organizations in the area that provide services to support children receive their funding from the Children Services Council of Palm Beach County, which is a taxing district that receives funding directly from property taxes.
More than 90% of its revenue comes from local property taxes and helps the council fund more than 700 organizations that strengthen the health and well-being of children and families throughout the county.
Should Amendment 3 pass and the homestead exemption increase to $250,000 in two years, the Children Services Council would lose about $26 million, or about 15% of its budget.
The council and many other organizations are in the process of planning what steps to take to continue funding children’s programs should the amendment pass.
“We are working diligently and thoughtfully to determine how to protect the services families depend on,” said Lauren Zuchman, the council’s chief communications and partnership officer. “A reduction of this size will inevitably affect programming, but it is too early to say what that might look like.”
Downstream effects
Abrams, the former Boca mayor, believes that cuts in funding to nonprofits by local governments would have their greatest impact on low-income families as well as others who need community support.
“If local government isn’t supporting human needs, then nonprofits have to make up the difference,” he said. “Human needs don’t go away.”
Arts Garage’s Waldo takes a broader view and sees the impact of cuts to nonprofits — especially the arts — as having a potentially negative economic effect.
She said that Arts Garage generates about $3.8 million in economic impact annually and serves more than 13,000 patrons, including those who visit area restaurants, hotels and other businesses.
“We are partners in making our town the special magnetic place that it is because the work generates returns beyond our doors,” she said.
Mary Hladky contributed to this story.
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