Nonprofits and the Government

There have been a lot of stories lately about how nonprofits interact with the U.S. government. From tax issues to government contracts, the nonprofit world constantly intersects with the public sector at all levels. Small nonprofits like Xico mostly work with local and state government for funding but we still have to file our tax returns with the IRS.

Current issues that the nonprofit community is talking about:

1. Taxes- but nonprofits don’t pay taxes! True, but they do have to file tax returns to show that they are actually nonprofits. The IRS has recently cracked down on organizations that don’t file but others think they should be even more strict.

2. Government contracts- Many nonprofits receive grants and contracts from the government. This money can be very useful, but it also comes with a lot of red tape and regulations. Read more about why government contracts may not be worth it for nonprofits. Or look at the data on nonprofit/government relations.

3. Services- Often, services provided by nonprofits overlap with those provided by governments. There is a lot of debate around which services should be provided by the government and which should be taken care of by private organizations. Nonprofits need to be aware of this issue and its implications for the communities they serve.