I’m a news junkie. So, I was up very late on election night, actually very early the next morning. Now that I’ve caught up on some sleep, I’ve been thinking about what the midterm election means to charities. In this post, I’ll layout some of my nonpartisan thinking. Just be warned, I’m also going to share some statistics and a bit of history as we consider what the election means for the nonprofit sector.
The midterm elections this week resulted in the Democratic Party regaining control of the US House of Representatives. Let’s put that into a bit of historical perspective. Despite successfully securing a majority in the House, the Democratic Party’s much-hoped-for Blue Wave did not materialize. As I write this post, the Democrats are expected to gain a 27 to 34 seat advantage over Republicans in the House. However, Republicans not only hung on to control of the Senate, they actually enhanced their position by three to five seats.
To put the Federal election results into some context, let’s look at the 2010 midterm elections during President Barack Obama’s second year in office. Going into the 2010 election, Obama’s approval rating was six points higher than Trump’s was prior to the 2018 election. Nevertheless, Democrats lost 63 House seats and lost six Senate seats.
“[The 2018 midterm elections are] only the third time in the past 100 years that the party holding the White House has gained seats in the Senate in a midterm election while losing seats in the House,” according to MarketWatch. “The President’s party has won seats in both the House and Senate just twice in the past century in a midterm election.”
This all means that both Democrats and Republicans can declare success this week. But, what about the nonprofit sector?
While it’s too early to know with any certainty, there are some things we learned on election night and other things we can learn from history:
1. Impact on the Election. In the lead up to the vote, nonprofit organizations flexed their muscle along with their corresponding Political Action Committees. On a variety of issues, the nonprofit sector demonstrated that it could have a profound impact on public policy. Regardless of where you stand on the issues, here are just a few examples to illustrate the point:
In Massachusetts, the American Civil Liberties Union, Human Rights Campaign, MassEquality, Planned Parenthood Advocacy Fund of Massachusetts, The Yes on 3 Campaign, and other organizations joined forces and scored a massive victory on election night when voters, by a two-to-one margin, reaffirmed the rights of transgender people.
In North Carolina, voters approved a measure directing the legislature to amend the state constitution to guarantee the right of citizens to hunt and fish. This was a victory for the Congressional Sportsmen’s Foundation and the National Rifle Association.
In Florida, the Humane Society of the United States and PETA persuaded voters to change the state constitution to ban greyhound racing.
Nonprofit organizations have political power. When nonprofit organizations join forces, they can have a dramatic effect on public policy.
2. Good News for the Stock Market. Historically, Americans prefer divided government, so it’s not surprising that Democrats were able to regain control of the House. Like the populace, the stock market also prefers divided government.
“Here’s what Investor’s Business Daily found, looking at S&P 500 returns during each two-year election cycle, from election day to election day. The best outcome, an average 18.7% two-year return, came when Congress was divided. Unified control of Congress by the same party as the president yielded an average 17.3% two-year gain. When control of Congress was unified under the opposition party, gains averaged 15.7%.”
If the stock market goes up, many donors will own appreciated stocks that they can donate to charities. Foundations will see their stock holdings grow and, therefore, have more money to grant to nonprofits. That would be good news for investors and charities.
3. Planned Parenthood Funding. If you work at Planned Parenthood, the election outcome is great news for you for two reasons. First, given that Democrats now control the House, we can safely assume that continued funding for Planned Parenthood is reasonably secure. Second, with the Republicans still controlling the Senate, Planned Parenthood still has a potent issue to use in fundraising appeals. For that matter, all pro-choice organizations can still use Republican control of the Senate as a fundraising issue since the Senate approves judicial appointments.
4. Raising the Minimum Wage. Democrats in the House are likely to seek an increase in the Federal minimum wage. During his campaign, President Donald Trump said he was receptive to raising the minimum wage. Later, a Trump surrogate said the administration might be interested in doing away with the minimum wage altogether. So, we don’t really know where Trump stands on the issue. We also don’t know what would happen in the economy if the minimum wage were increased. While the measure would be good for some, it could result in fewer jobs. It could also contribute to a rise in the inflation rate and slow overall economic growth. It would also put pressure on employers to increase all wages.
Personnel costs for many nonprofit organizations would likely rise. On the other hand, if workers earn more, they’ll have more money with which to contribute. It’s impossible to know the effect a rise in the minimum wage will have on nonprofits.
5. Political Cooperation. The day after the election, Trump and Rep. Nancy Pelosi (D-CA) both expressed interest in increasing spending on the country’s infrastructure. This is an issue on which Democrats and Republicans in Congress might actually be able to agree.
This could stimulate the economy. It would also maintain and, perhaps, create good paying jobs. This could lead to increased charitable giving by individuals and corporations. There may be other issues that Congress will be able to address in a bi-partisan fashion.
On the other hand, a number of Democratic Congressional leaders seem interested in focusing energy on investigating and impeaching Trump and Supreme Court Justice Brett Kavanaugh. If they prevail, Congress could become even more polarized, if that can be imagined.
Regardless of your political orientation, the 2018 midterm elections have had and will have an effect on the nonprofit sector. Exactly what that impact will be is unclear. However, your organization will likely experience some challenges and reap some rewards. Time will tell. Savvy nonprofits will remain nimble and develop plans to effectively cope with challenges and seize opportunities.
One thing is for sure: Beginning in January and for at least the next two years, watching Congress is likely to be more entertaining than watching Keeping Up with the Kardashians.
What do you think the midterm elections will mean for your organization?
That’s what Michael Rosen says… What do you say?
Michael Rosen Says... 