Devolution's Discord: Resolving Operational Dissonance with the UBIT Exemption

Abstract

In 1997, the regional unemployment rate in Newport News, Virginia, was 4.2%, a strong sign of economic stability. Nevertheless, the region reported a second stunning figure during the same period: a 69% increase in requests for food assistance during one twelve-month period. In Macon, Georgia, the reported increase hovered at a little under 40%; in Greeley, Colorado, 50%. Publicly distributed food from the government fell from 22.2% to 13.4% between 1991 and 1997, leaving the private sector and hungry families to fill a shortfall of 24.5 billion pounds of food in the next six years. The burgeoning food insecurity of the working poor can be linked directly to recent changes in social welfare policies. The conservative parsimony in funding social welfare in the 1990s has fed the growing hunger for charitable services; the trend, however, is not new. Beginning in the early 1980s, the federal government began to retreat from directly funding anti-poverty programs. Instead, government policies called for an aggressive combination of state, local, and charitable deliveries. New policies minimized federal involvement in social services and devolved poverty assistance to state and local governments! Devolution, traditionally a shift of services and resources to state and local governments, has an added dimension. Rather than a shift from goveminent to government, the movement includes a transfer of responsibility from the federal government to private charities. This transfer of responsibility must be scrutinized. With devolution at its height, the greatest fear for charities is the impact of the crowning achievement of post-Reaganomics, the Personal Responsibilities Act of 1996 ("Welfare Reform Act") The Welfare Reform Act slashes $504 billion from the national welfare budget through 2002. When individuals lose government benefits, charities are the only institutional recourse for dislocated families and individuals. Unlike social welfare programs of the past, the safety net no longer exists.