The American Jobs Act and Nonprofits

During these tough economic times, nonprofit organizations, both faith-based and secular, are the front-line responders to communities in need.  From convening support groups and prayer services to providing child care, teaching job skills, and putting Americans back to work, these nonprofit and faith-based groups are supporting working families and individuals across the country.  

President Obama recently announced a major new proposal called the American Jobs Act and sent legislation to Congress for action.  The American Jobs Act is all about getting Americans working and putting money back in the pockets of the American people, and nonprofit organizations are a key part of this bill. 

The President recognizes that roughly one in twelve workers in the United States are employed in the nonprofit sector, which is why he made nonprofits – both faith-based and secular – a key part of this bill.  The Act will help all Americans by creating jobs now, sparking economic growth, and providing relief to millions of families.  Under the Act, all business and organizations – including nonprofits – can receive a tax credit through partnering with state entities when they hire long-term unemployed individuals or veterans.  The Act also includes an innovative entrepreneurship and wage protection program that will allow unemployed workers to receive unemployment insurance while they start new businesses – including nonprofit enterprises.  And employers won’t have to be as hesitant to hire new employees, because the American Jobs Act would cut the payroll tax in half for the first $5 million in wages, and temporarily eliminate employer payroll taxes on wages for new workers or raises for existing workers.  This is great news for many small business and nonprofit organizations.

The President is committed to making sure these initiatives are fully paid for, so we don’t add another dime to the federal deficit.  To do that, all Americans will have to pitch in.  For example, high-income earners will continue to receive the benefit of the tax code when they give to nonprofits.  However, instead of a 35 percent deduction, the wealthiest Americans will receive a 28 percent deduction that is more in line with what other earners receive.  Middle income donors will continue to get a 15 percent deduction. Far from a cap on charitable giving, this proposal continues to encourage giving, while helping make sure the jobs package is fully paid for. 

The President is supporting nonprofits through the American Jobs Act because these groups are working so hard to bring economic opportunity to low-income communities.  Across the country, innovative organizations are creating solutions to the challenge of unemployment.  For example, David, a young man in the Bay Area, was racing against the clock to find a job before his unemployment benefits ran out when he found the Roberts Enterprise Development Fund (REDF), a nonprofit that connects young people and adults to gainful employment.  Through REDF, David found a job as an operations supervisor of Green Streets and he now helps reduce landfill waste in low-income neighborhoods by an average of 40 percent.  David says that Green Streets has changed his life.  And more than helping David find another job, REDF helped him find a career. 

Another innovative nonprofit grew out of a church’s commitment to providing alternatives to gang violence. In Los Angeles, CA, Homeboy Industries, founded by Father Greg Boyle, uses a social enterprise model to assist at-risk, recently incarcerated, and formerly gang-involved young people. After completing the organization’s job-readiness programs, participants are placed in one of four businesses run by Homeboy, where former rivals work side by side baking bread, learning to silkscreen, developing retail skills, or running a restaurant and catering business.

The American Jobs Act builds on a record of accomplishment in support of nonprofits, including passage of the Edward M. Kennedy Serve America Act, which would dramatically increase the size of AmeriCorps, create new avenues for Americans to serve their communities and invest in innovative community solutions through the Social Innovation Fund. 

There is no one sector that can revitalize a struggling economy on its own, not government, not nonprofits, not public or private organizations.  But together, all sectors can make a difference and put Americans back to work.  We are proud that the American Jobs Act recognizes the critical role that faith-based and secular nonprofits play in the American economy and social service sector.  And we hope Congress works swiftly to pass this bill, for the benefit of all Americans.

Learn more about how the American Jobs Act helps nonprofits here: Non-Profits and the American Jobs Act.

Melody Barnes is President Obama's Domestic Policy Adviser and the Director of the Domestic Policy Council