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Stimulating the economy through a $3.

84 billion matching grant investment in service and the nonprofit sector


Summary: 1. The nonprofit sector represents nearly 10% of the U.S. workforce and needs attention in the stimulus package or we risk loss of up to 1 million jobs and significant service cuts to children, families, and communities with devastating long-term consequences.1 2. Investments in effective youth-serving and job training organizations will create more jobs per dollar invested than will traditional components of the stimulus plan because of lower wages in these sectors and leverage of philanthropic and citizen support.2 3. The $3.84 billion government investment in service and the nonprofit sector outlined below will stimulate a minimum of $2.5 billion in additional philanthropic investment, pulling wealth off of the sidelines to invest in human capital and directly saving or creating an estimated 169,867 full-time jobs and 40,000 part-time jobs.3 4. Investments in service and the nonprofit sector can be targeted to effective organizations that serve children, youth, and adults seeking job skills; this investment in Americas human capital is an important component of long-term economic recovery.

Part One of Plan: Include in the stimulus package the bipartisan Serve America Act as introduced in the Senate by Senators Kennedy and Hatch and fully fund it for the first two years ($400 million in year one and $600 million in year two). Additionally, double the investment in AmeriCorps National and State programs and the National Service Trust, adding $420 million per year to current baseline spending for these programs. By end of summer 2009, these two investments would create more than 110,000 new full- and part-time jobs through the subject-specific corps of Serve America (Education, Energy, Poverty, Disaster Relief), the provision for Encore Fellowships, the Community Solutions Fund, and the doubling in funding for AmeriCorps. By the second year of the stimulus package, this investment in national service would create more than 140,000 new jobs. (This includes ~35,000 full-time and ~40,000 part-time AmeriCorps positions, and ~65,000 full-time positions through the Serve America initiative.) Both AmeriCorps and the Serve America Act have strong matching grant provisions to ensure this federal investment is amplified, and the Corporation for National &

Community Service has the capacity to quickly make significant investments in highperforming nonprofit organizations that meet critical needs. Additionally, demand for these stipended service opportunities is high. National service programs surveyed have noted that applications in the last two months are running at double to triple last years rates, in part because of the tumbling economy and in part because of the increased desire to serve.4 Part Two of Plan: The stimulus package should authorize and fund a $2 billion nonprofit stimulus fund to be administered by a newly created quasi-governmental organization or by the Corporation for National & Community Service in consultation with the Departments of Education, Labor, and Health & Human Services. The fund would be patterned after the network of social investment funds that President-elect Obama called for during the campaign. The purpose of the nonprofit stimulus fund should be to support the growth and/or economic stability of effective nonprofits in the areas of education, youth development, and job training. Investments would be matched by new commitments raised by community foundations or venture philanthropies, or by foundations which make charitable investments above the 5% minimum payout required by the U.S. tax code. The nonprofit stimulus find would be authorized to make matching grant investments of $1 million to $50 million in philanthropic organizations that match the federal dollars at a rate of 1-to-1 or better with new funds and that pledge to invest all federal and matching philanthropic funds in supporting effective nonprofits in their community or area of expertise in 2009 and 2010. We estimate that this $2 billion fund, in combination with the philanthropic match, will directly generate approximately 66,667 full-time jobs in both year one and year two of the stimulus initiative. Priority will be given to proposals from community foundations and other philanthropies with a compelling plan to select high-performing nonprofit organizations that have evidence of impact in education, youth development, or job training, and with a plan to distribute funds by summer 2009. All money must be matched and distributed by the end of 2009 or it will revert to the U.S. Treasury. For community foundations or other philanthropic organizations focused on cities, priority will be given to applications that include a plan to make a significant planning grant to one or more organizations to develop a plan to replicate the Harlem Childrens Zone concept in a low-income neighborhood.

Nonprofit Stimulus: Detailed Job Creation Estimates


Program FY09 Jobs Created 75,000 6,667 350 25,000 1,000 700 5,000 1,000 114,717 FY10 Jobs Created 75,000 8,000 500 50,000 2,000 700 6,000 1,000 143,200

Part One
AmeriCorps ServeAmerica ServeAmerica Community Solutions Fund (matched 3-1 through double match provision) ServeAmerica Innovation Fellowship Grants ServeAmerica Corps * ServeAmerica Fellowships ServeAmerica Encore Fellowships ServeAmerica Volunteer Generation Fund Volunteers for Prosperity TOTAL

Part Two
Nonprofit Stimulus Fund (matched 1-1) 66,667 66,667

Grand Total

181,383

209,867

* Includes Education Corps, Clean Energy Service Corps, Healthy Futures Corps, and Opportunity Corps

NOTES
1 In 2006, nonprofits accounted for 5% of U.S. GDP and 9.7% of jobs. In 2005, 12.9 million people worked for nonprofits (The Nonprofit Almanac 2008, http://www.urban.org/url.cfm?ID=901164). 2 The Community Solutions Fund described in the Serve America Act, for example, will be matched at an estimated 3:1 ratio by other philanthropic and government support. One study found that investments by private and community foundations brought a return of $8.58 in direct benefits for every dollar spent (Shapiro and Mathur 2008, http://philanthropycollaborative.org/FoundationStudy.pdf). 3 Where available, estimates of job creation use the number of positions specified in proposed legislation. Where the number of positions is not specified, job creation estimates are based on proposed funding. With respect to the Community Solutions Fund and the nonprofit stimulus described in Part II, we estimate that one job is created per $30,000 in funding from government and private matches. The median annual wages of all workers at nonprofit establishments in 2007 was $35,518 (Bureau of Labor Statistics, http://www.bls.gov/ncs/ncswage2007.htm), and most hiring resulting from this stimulus would be of front-line staff with lower salaries. For AmeriCorps programs expected to provide only living expense stipends, we estimate that one job is created per $10,000 in federal funding (which is typically matched by grant recipients with $5,000 to $10,000 in additional funds). See included table for detailed estimates. 4 For example, applications to the Teach for America education corps are up 50% this year. Applications to the year-long service program City Year are up 180%. At Citizen Schools, applications for its two-year Teaching Fellowship in after-school education (an entry-level position largely supported by AmeriCorps) have increased by 129% compared to last year.

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