How #Obamacare Hurts Philanthropy

April 1, 2014

Since the plan was announced, #Obamacare has raised debate over whether it hurts constitutional rights, freedom of religion and numerous other issues. But what you might not understand is how Obamacare hurts philanthropy -- deeply, truly, in the most threatening of manners. Political posts are not for everyone. But if you have heart and a soul and have at one point donated to a charity, or known someone who has benefited from a charity, then you may want to keep reading. 

The contraception mandate requires non-grandfathered health plans to cover contraceptive services for women without cost-share -- in other words, free birth control and coverage for other contraceptive measures including Plan B and abortion services (though those do not have to be free). I am assuming that any living, breathing human is aware of the uproar that followed this mandate. But if you're not, here is the argument: for some, providing birth control goes against core religious beliefs or strongly held moral convictions, which are protected under the First Amendment. So, affront to religious freedom aside, what does contraception have to do with philanthropy? 
After a lot of rallies, a lot of protests and a whole lot of nuns, the Obama administration announced that all faith-based nonprofits would be exempt. However, what they did not advertise was the requirements for being categorized as an exempt faith-based nonprofit. In order to be exempt, the nonprofit must:
1. Has the inculcation of religious values as its purpose
2. Primarily employs persons who share its religious tenets
3. Primarily serves persons who share its religious tenets
4. Is a non-profit organization under Internal Revenue Code 
section 6033(a)(1) and section 6033(a)(3)(A)(i) or (iii)*

What's the problem?

First off, one problem is that this exemption redefines what it means to be a faith-based nonprofit -- a definition that is different than the one the IRS uses to qualify faith-based nonprofits (FBOs) for tax purposes (wouldn't it be helpful to have matching definitions within our government?). This definition limits FBO to churches or other houses of worship, church associations, or exculsively religious activities or any religious order. This will disqualify the majority of FBOs, who do not fall under this strict definition. 

In addition, if they do make it past the definition, this mandate does not cover faith-based organizations who primarily serve clients outside their own faith. This affects the majority of faith-based nonprofits. The majority of faith-based nonprofits make their services available to everyone (this was a mandate passed by Bush in 2002 if FBOs wanted to compete for government grants). There are a number of nonprofits that were funded by a specific religious organization or by founders of a specific denomination, but they will offer their services to anyone and everyone regardless of the client's faith orientation. Not only is that a law if they want to be eligible for government grants, it's also the Christian thing to do. Many did this before it was even a law because they believe in following the teachings of Jesus Christ, which emphasize service and compassion and inclusion. 

Therefore, relatively few faith-based nonprofits qualify for the contraception mandate exemption simply due to the fact that they are helping those outside of their own faith. Or, in other words (my words), they're being penalized for acting according to their religious beliefs and helping serve everyone. 

What's the fallout?

So we have ourselves a problem. What's the fallout? If employers do not provide plans which cover contraception, they will face a fine of $2,000 per employee. If we take a faith-based nonprofit such as Catholic Charities of West Michigan, with 265 employees, that's a total yearly fine of $530,000. That's $530,000 that should be being spent on continuing their work of helping people. Faith based organizations are some of the primary providers of foster care, adoption services, education, health care, homeless shelters, food banks, housing assistance, job development...just to name a few. They are everywhere, and the majority of their work goes unnoticed. 

Simply put, the majority of these faith-based organizations will not be able to afford the fines leveraged on them by Obamacare, and they will end up closing. And what happens to all their clients then? When the nonprofits shut down, where will all those who need help go? You better believe that if you hadn't noticed problems of homelessness, illiteracy, mental illness and poor health in your city yet, you will. Because those people are going to be forced out of the nonprofits and back onto the streets. 

How much is your free birth control worth? 
Is it worth severely damaging the nonprofit sector, 
interrupting the valuable social services that make our world go round? 

As always, you're welcome to leave comments, discussion, question and opinions below. 
Philanthropy is my passion, so I am more than happy to answer anything else I can.
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  1. I don't pretend to be knowledgable on all things Obama Care, because I've never read the whole bill (have you seen the size of that thing??) so I can't say with conviction that I "hate" it. But it does seem to be causing more problems rather than solving them. It seems that most people's insurance (people I know personally) has gone up in price (my own nearly doubled) and it has resulted in tons of lay-offs, especially in the medical field. Being a nurse, I've seen/heard of several layoffs in my areas and it has even resulted in the CLOSING of several facilities because they can't afford to operate anymore due to the cost of insuring the employees.

    Like I said, I am not an expert, nor do I know everything that Obama Care entails, but I definitely agree with you that it is hurting many companies and organizations.

  2. I see your point, but I don't understand why it's such a big deal. It's not forcing members of non-profits to use birth control. It's not forcing a religion to agree with the practice of birth control. It's simply saying the health insurance provided to employees must have the option. Whether or not they take advantage of that option is up to them.

    Regardless of all of that, I would say I still support the mandate that the option be offered because of the wide range of uses. There are a huge amount of health issues that can be treated with contraceptives, including endometriosis. In addition, access to contraceptives has been proven to reduce the poverty rate by allowing women to better plan out their families and reduce the number of abortions since the vast majority of women who use contraception aren't getting pregnant in the first place.

    None of this is saying that religions must approve of something they are morally against. They don't actually have to do anything. Health insurance should provide this basic health care option to their clients.

    I'm sorry for disagreeing (and I'm sorry this is turning out to be a long comment), but I don't understand why personal health decisions and basic health care should have any input from the employer.

    1. I think the reason employer's have input is because they are the ones paying for it as part of your employment agreement. And the concern is that the Contraception Mandate forces religious employers to provide insurance which covers contraception, something that may be against their religious beliefs -- making it a constitutional issue due to freedom of religion protection. If the employee chooses to forgo the employer provided option and get their own individual health insurance, that's totally up to them. Maybe some people will find that cheaper or more convenient in the long run? I'm not sure.

      I appreciate your comments, and disagreeing!

  3. I always find this topic interesting, because it inevitably draws a line between people and their beliefs. I, in no way, am an Obamacare expert. I'm with Kalyn - I couldn't imagine reading the large amount of fine print. But I do agree that it has benefited some and hurt some. I have seen people's coverage double and I have seen people receive coverage at a much lower rate. It seems with this healthcare debacle, I've heard of a lot more people and organizations hurting rather than being benefited.

    But the way you presented this is great!

  4. How frustrating to live in a society where penis pumps and Viagra are automatically covered by insurance, but some people actually have to struggle to have their birth control covered.

  5. Amen to everything you said. And really, this creates a slippery slope (to use a term I heard all the freaking time in my poli sci classes) because if we're allowed to violate the constitutional rights of FBOs based on something as simple as contraception, what happens when we're faced with an even bigger issue? It's conceivable (no pun intended, sorry!) that FBOs will be forced to provide a myriad of services that are contrary to their constitutionally protected rights. Where does it end?


Your comments make my day! Thanks for taking the time to share your thoughts.

Hayley Larue Design