Government Contracting and Payment: Lingering Problems (Urban Institute)
A study released by the Urban Institute, conducted in partnership with the National Council of Nonprofits, examined the government contract and grant experience of nonprofits in 2012 compared to 2009. The release included an expert panel discussion. Article summarized from www.nonprofitquarterly.org.
Though there is certainly a contrast between the state payment environments of Illinois and Indiana, the study both confirms and identifies important issues for nonprofits who contract with the government at all levels. This is an important read for both board and staff leaders.
- The average among of money owed by state government to nonprofits has declined by 17.7 percent from 2009 to 2012.
- Human service nonprofits report that grant and contract payments typically do not cover the full costs of services.
- Roughly two-thirds of nonprofits surveyed found problems with differing government agency applications, reporting formats, outcome requirements, and financial or budget categories.
- More than half of nonprofits reported problems with differing definitions of services and target populations.
- Nonprofits report significant limitations placed on administrative expense recovery.
- Government grants and contracts increasingly require nonprofits to front the costs of service delivery.
- A troubling issue is governmental agencies requiring nonprofits to come to the table with matching funds – a government-mandated form of cost sharing.
- The nonprofits best able to weather these grant and contract challenges and obstacles are the larger nonprofits.
- Government grant and contract procedures are increasingly "rigged" to favor for-profits who can meet working capital and other requirements and that for-profits are not ask to do things such as cost sharing.