One of the issues that will come up again soon is the tired non-profit vs. for-profit credit counseling argument. If bankruptcy reform passes and filers are required to seek counseling before their debts can be discharged, it’ll help credit counseling, sure. And it’ll help the people filing BK, too.
But there’s a lot of potential ugly in all this. Will Ameridebt-style mills usher BK filers through quick, worthless education programs just to collect the fee? Will BK attorneys refer their clients to the counselors who pay a kickback fee, or will they send them to the most reputable agency they know?
I think the for-profit side has been on the warpath because they need to be rid of the non-profit before this thing passes. If they can get the IRS to strip non-profit status from NFCC-style agencies, then the for-profits will have a seat at the table when the bankruptcy filers are sent out to get credit counseling.
Part of the debate stems from a lack of understanding of the nature of a non-profit organization. Non-profit doesn’t mean charity. Everyone assumes all non-profits give their services away for free, and that they get by on donations and grants. There are plenty of non-profits with commercial objectives. The distinction is that no one owns a non-profit; there are no shareholders to benefit should the non-profit make a profit. There’s less incentive to overcharge and maximize returns, but there’s still a desire to make money. Even non-profits have to provide for their employees, buy equipment, pay rent, etc.
Look at Thrivent Financial for Lutherans. A Fortune 500 company, Thrivent has 62 billion dollars in assets that they manage. And yeah, they’re non-profit. If credit counseling agencies aren’t run out of a church basement, they’re criticized for not being non-profit enough. What about Thrivent?
Well maybe they’ll be criticized, too. I have a congressional report, (thanks, Paul Richard) that has some things to say on the subject of commercial non-profits (they’re talking about insurance companies). The suggestion is that organizations whose activity is commercial rather than fraternal should lose tax-exempt status, because it gives them an unfair advantage. There are eight pages of debate on the subject in the report, which I’m still slogging through.
But look at this story about non-profit hospitals. Nonprofits are taking a beating everywhere, it seems.
This stuff is only beginning, and it’s already giving me a headache. I’ll be screaming about the anti-nonprofit bias in the media, I’m sure. But now I’m going to take some aspirin.