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Government-Nonprofit Contracting Challenges Documented and Solutions Proposed in New Reports

Posted: 
May 15, 2014

Significant shortcomings in government-nonprofit contracting practices persist, but common sense solutions to the problems are ready for implementation, according to new reports released today by the Urban Institute and the National Council of Nonprofits (Council of Nonprofits).

Toward Common Sense Contracting coverThe Council of Nonprofits today released Toward Common Sense Contracting: What Taxpayers Deserve, a report that examines the causes and consequences of five recurring problem areas that involve billions of dollars. The report connects new data from the Urban Institute with the experiences of front-line nonprofits that are delivering services on behalf of governments at all levels. The report goes on to lay out sixteen proven and often readily available solutions to these problems. 

The Urban Institute also today released its state-specific data from a national survey documenting the serious and widespread problems experienced by nonprofit organizations that have contracts and grants with governments at the local, state, and federal levels. The report, National Study of Nonprofit-Government Contracts and Grants 2013: State Profiles, provides essential nationwide and state data on contracting practices, and ranks states on several areas of concern.

Together, the reports shed light on widespread issues and identify ways for nonprofits and governments to work together to chart a new path forward.

“American taxpayers deserve better. These costly problems with government contracts and grants have persisted for too long. They are harming our communities, diverting already limited resources away from nonprofit missions, and wasting taxpayers’ money," said Tim Delaney, President and CEO of the National Council of Nonprofits. “Importantly, this is not a situation pitting nonprofit leaders and employees against government officials and employees. Governments and nonprofits are natural partners, serving the same communities and the same constituents. On this issue, the common enemy is the antiquated and fragmented government-nonprofit contracting systems that hurt everyone."

“The new data demonstrate what most nonprofits already know; the systems are broken,” said Beth Bowsky, Policy Specialist – Government-Nonprofit Contracting for the National Council of Nonprofits. “We’ve been encouraged by the progress in some states with implementing the solutions outlined in the report and encourage other states not to be left behind.”

“This report is not designed to sit on the shelf, but to be used as an action plan for solving the contracting problems for the benefit of individuals in need of services, taxpayers, and entire communities,” said David L. Thompson, Vice President of Public Policy for the National Council of Nonprofits. “We extend an open invitation to all interested people – officials within government, frontline nonprofit employees and volunteers, individuals relying on services, taxpayers, and politicians – to help identify the problems that need solving immediately, craft the appropriate solutions, and take action to get them implemented.”

New reports:

Problems examined:

  • Governments not paying nonprofits the full costs of providing the services (with a special focus on indirect, or administrative/overhead, costs)
  • Governments utilizing wasteful contracting application processes
  • Governments changing contract terms mid-stream
  • Governments routinely failing to pay on a timely basis
  • Governments imposing complex and time-consuming reporting requirements

Solutions offered:

  • Government-Nonprofit Task Forces
  • Nonprofit Liaisons
  • Payment of Indirect Costs Incurred
  • Joint Training Programs
  • Clear and Consistent Definitions
  • Repeal of Arbitrary Caps on Indirect Costs
  • Public Accountability through Disclosure of Indirect Cost Reimbursements
  • Prompt Payment Laws
  • Prompt Contracting Laws
  • Public Disclosure of Government Accountability
  • Independent Government Office to Protect Charities from Contracting Abuses
  • Standardized Language for Contracts and Grants
  • Ongoing Provider Input
  • Document Vaults
  • Standardized Monitoring and Reporting
  • Standardization and Consolidation of Audits

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The National Council of Nonprofits is a trusted resource and advocate for America’s charitable nonprofits. Through our powerful network of State Associations and 25,000-plus members – the nation’s largest network of nonprofits – we serve as a central coordinator and mobilizer to help nonprofits achieve greater collective impact in local communities across the country. We identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve.

Colorado Nonprofit Leader Recognized by National Network

Posted: 
April 23, 2014

Gerry RaselGerry Rasel, Director of Membership Services for the Colorado Nonprofit Association, was honored by the National Council of Nonprofits with the third annual Flo Green Network Champion Award.

“Time and time again, Gerry has shown her dedication to advancing the work of Colorado Nonprofits’ members and best practices of her peers at State Associations across the country,” said Jennifer Chandler, Vice President of the National Council of Nonprofits. “She is always goes the extra mile with a smile, and has proven to be one of the most respected mentors in our network of state associations of nonprofits.”

Renny Fagan, President and CEO of the Colorado Nonprofit Association, added, “Gerry is the heart of the Colorado Nonprofit Association. She’s made a real difference for our staff and our members. To be honored by the National Council of Nonprofits is just one more demonstration of Gerry’s impact in Colorado as well as around the country.”

The Flo Green Network Champion Award is named for Flo Green, longtime Executive Director of the California Association of Nonprofits and a founder of the National Council of Nonprofits (then the National Council of Nonprofit Associations). The award is presented to one individual who embodies the traits that Flo exhibited in her decades of service to the nonprofit sector: dedication to the State Association network, generosity of spirit, enthusiastic leadership, tenacious advocacy, passion for sharing knowledge, integrity, and a proven ability to motivate others in the network to exhibit the same qualities.

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The National Council of Nonprofits is a trusted resource and advocate for America’s charitable nonprofits. Through our powerful network of State Associations and 25,000-plus members – the nation’s largest network of nonprofits – we serve as a central coordinator and mobilizer to help nonprofits achieve greater collective impact in local communities across the country. We identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve. Learn more at www.CouncilofNonprofits.org

National Council of Nonprofits Elects New Directors and Officers

Posted: 
April 23, 2014

The National Council of Nonprofits (Council of Nonprofits) announced the election of leaders of state, regional, and national organizations to its Board of Directors.

At its most recent annual meeting, the following were elected:

  • Doug Bauer, Executive Director, The Clark Foundation
  • Henry Berman, Chief Executive Officer, Exponent Philanthropy (formerly Association of Small Foundations)
  • Chris Bray, Chief Executive Officer, Utah Nonprofits Association
  • Anne Hindery, Chief Executive Officer, Nonprofit Association of the Midlands
  • Val Porter, Director, Foundation Center - Atlanta

The Council of Nonprofits also elected new Board Officers, who will serve through the 2016 annual meeting:

  • Chair – Kyle Caldwell, Director, Charles Stewart Mott Foundation Pathways Out of Poverty
  • Vice Chair/Treasurer – Renny Fagan, President and CEO, Colorado Nonprofit Association
  • Secretary – Mary Ellen Jackson, Executive Director, New Hampshire Center for Nonprofits

“We are privileged to have such accomplished individuals helping to guide the Council of Nonprofits for the next few years,” said Tim Delaney, President and CEO of the National Council of Nonprofits. “As we work with nonprofits in their local communities across the country achieve greater impact, these are the informed leaders who will help advance our organization and the sector as a whole.”

“I couldn’t be more excited about the new leadership joining our Board of Directors,” said Howard Barnett, President of Oklahoma State University-Tulsa and outgoing Chair of the National Council of Nonprofits Board. “Their diverse viewpoints and expertise will increase our network’s impact in the coming years.”

A full list of the current Board of Directors, with links to biographies and photos, can be found at http://www.councilofnonprofits.org/who-we-are/governance/board-directors.

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The National Council of Nonprofits is a trusted resource and advocate for America’s charitable nonprofits. Through our powerful network of State Associations and 25,000-plus members – the nation’s largest network of nonprofits – we serve as a central coordinator and mobilizer to help nonprofits achieve greater collective impact in local communities across the country. We identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve. Learn more at www.CouncilofNonprofits.org

Nonprofits Should Focus Where the Action Is: In the States

Posted: 
February 27, 2014

Tim Delaney, President & CEO of the National Council of Nonprofits, made the following statement in response to the tax reform proposal put forth by House Ways and Means Committee Chairman Dave Camp (R-MI):  

“The National Council of Nonprofits urges charitable nonprofits to keep their advocacy efforts focused on activities in their state capitals and city halls rather than getting distracted by the latest federal tax reform proposal that is sure to generate lots of media attention. For the time being, charitable nonprofits should stay the course of focusing on the real legislative opportunities and threats in the states. In 2013, Congress enacted fewer than 80 bills, while states approved nearly 40,000 new laws. This year is likely to see the similar results.  

“Nonetheless, Chairman Camp’s 979-page package should not be ignored. Over the next several months, its various components will be parsed and analyzed. For instance, the package contains a proposal – a two-percent AGI floor on charitable giving – that pleases economists who have been challenging charitable giving incentives for years. But their unproven theories could have devastating real-world consequences by diminishing charitable resources for communities.  

“In recent years, similar theories for tinkering with charitable giving have been tried in the states – after endorsement by powerful Washington politicians – and the results have been disastrous. For example, the President’s proposal to cap itemized deductions was enacted in modified form in Hawai`i in 2011, only to be repealed for charitable giving in 2013 due to the harmful consequences to the community. Several other states considered the cap on charitable deductions in 2013 and largely rejected it. Likewise, the call to convert tax deductions into tax credits – a proposal seen in several other federal tax-reform packages – was seriously considered before being rejected in Minnesota last year.  

“The charitable nonprofit community and the people they serve have a great deal at stake in the tax reform debate, which too often looks at the donors without considering community needs. For now, charitable nonprofits should focus their advocacy efforts in the states, where the challenges are real, and not be distracted by the headlines in Washington.”  

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The National Council of Nonprofits is a trusted resource and advocate for America’s charitable nonprofits. Through our powerful network of State Associations and 25,000-plus members – the nation’s largest network of nonprofits – we serve as a central coordinator and mobilizer to help nonprofits achieve greater collective impact in local communities across the country. We identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve. Learn more at www.CouncilofNonprofits.org.

Statement from National Council of Nonprofits on OMB Grant Reforms

Posted: 
December 19, 2013

Tim Delaney, President and CEO of the National Council of Nonprofits, made the following statement in response to today's release for public inspection by the federal Office of Management and Budget (OMB) of "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards" to streamline federal grants rules and procedures:

“The new guidance from OMB makes one point perfectly clear: that governments should pay the actual costs of the work performed under written agreements on their behalf. Once the new OMB grants guidance goes into effect, governments at all levels will be required to pay the indirect costs incurred by charitable nonprofits for services provided in communities when federal funds are involved.

The new guidance means that nonprofits should be able to focus more on their missions and should be under less pressure to raise additional funds to essentially subsidize governments. In turn, charities with no government contracts or grants could see less competition for scarce philanthropic dollars. This is a major win for the entire charitable nonprofit community.

“At issue is the clear requirement in the guidance that pass-through entities (typically state and local governments) reimburse their nonprofit contractors and grantees for their reasonable indirect costs, sometimes called administrative or overhead expenses. A nationwide study published December 5th by the Urban Institute found that governments arbitrarily limit indirect costs for necessary program and organizational expenses; one in four nonprofits (24 percent) reported that governments refuse to pay any indirect costs of the organization, and half (49 percent) reported that they were limited to 7 percent or less. This will no longer be tolerated when federal funds are involved.

“Other parts of the new guidance will allow nonprofits to focus more on delivering services in their communities, and spend less money on wasteful paperwork by raising the Single Audit threshold to $750,000, eliminating duplicative and unnecessary audit criteria, and clarifying cost allocation rules.

“The leaders at OMB are to be commended for acting on the concerns expressed during the regulatory process by charitable nonprofits contractors and grantees that are providing services in local communities across the country on behalf of governments. We look forward to continuing to work with OMB and governments at all levels to ensure fair treatment for nonprofit contractors and grantees, which will result in more efficient delivery of services.”

For more information on indirect costs and government contracting, see the National Council of Nonprofits' report, Investing for Impact: Indirect Costs Are Essential for Success, or visit our webpage on OMB grant reforms

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​The National Council of Nonprofits is a trusted resource and advocate for America’s charitable nonprofits. Through our powerful network of State Associations and 25,000-plus members – the nation’s largest network of nonprofits – we serve as a central coordinator and mobilizer to help nonprofits achieve greater collective impact in local communities across the country. We identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve.

New White Paper Outlines Promising Solutions to Government-Nonprofit Contracting Problems

Posted: 
December 5, 2013

Washington, DC – A new white paper, issued today by the National Council of Nonprofits, provides actionable solutions to ongoing problems with government contracting and grant practices and procedures that hurt governments, nonprofits, and taxpayers.

Highlighting real-world examples of governments working with nonprofits to fix broken contracting systems, A Dozen Common Sense Solutions to Government-Nonprofit Contracting Problems illustrates twelve actions that governments and nonprofits can take, depending on the issues in their state or locality. These solutions, which directly address the problems outlined in Findings from the 2013 National Survey of Nonprofit‐Government Contracts and Grants by the Urban Institute, are designed to cut down on wastefully duplicative processes and ensure effective investment of taxpayer dollars.

“Nonprofits are community problem-solvers, so it’s no surprise that when government and nonprofits come together, solutions are not far behind. We’ve seen great strides in a few states since the initial reports documenting the problems were issued three years ago,” said Tim Delaney, President and CEO of the National Council of Nonprofits. “This white paper provides a menu of proven, replicable solutions that other states can use to fix broken systems, save money, and work better with nonprofits to serve communities.”

The two reports released today, A Dozen Common Sense Solutions to Government-Nonprofit Contracting Problems from the National Council of Nonprofits and Nonprofit-Government Contracts and Grants: Findings from the 2013 National Survey from the Urban Institute, are part of a multi-year collaborative project of the National Council of Nonprofits and the Urban Institute’s Center on Nonprofits and Philanthropy. The project is designed to identify the scope and depth of the problems that charitable nonprofits face when performing work on behalf of governments pursuant to contracts and grants.

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The National Council of Nonprofits is a trusted resource and advocate for America’s charitable nonprofits. Through our powerful network of State Associations and 25,000-plus members – the nation’s largest network of nonprofits – we serve as a central coordinator and mobilizer to help nonprofits achieve greater collective impact in local communities across the country. We identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve. Learn more at www.CouncilofNonprofits.org.

New Report Connects Reimbursement of Indirect Costs with Nonprofit Efficiency and Effectiveness

Posted: 
September 30, 2013

Council of Nonprofits releases fourth in a series of solutions-oriented “streamlining reports”
documenting issues with government-nonprofit contracting systems

Washington, DC - A new report details how a combination of governments’ inconsistent terminology, arbitrary application of those terms, and unrealistic expectations impair the ability of nonprofits to deliver services that governments at all levels contract with them to provide. The report, Investing for Impact: Indirect Costs Are Essential for Success, goes on to offer solutions that can result in even more efficient service delivery and better outcomes.

“This new report documents the harm created by government policies and practices that effectively force nonprofits to directly subsidize government programs by covering the actual indirect costs that are incurred while performing contracted services. This approach is not only unfair, but also unsustainable as nonprofits struggle in perpetual survival mode,” said Tim Delaney, President and CEO of the National Council of Nonprofits. “The solutions are simple and fair: governments must standardize the terminology and pay for the full cost of services which they contract with nonprofits to provide.”

“It is clear that there is momentum now moving us in the right direction. Acknowledgements from nonprofit watchdog groups and the OMB show that people are beginning to understand how important indirect costs are to effective service delivery,” added Jack Jackson, Senior Vice President, Finance and CFO of Catholic Charities USA. “State officials can help accelerate that process to the benefit of their communities.”

Investing for Impact is the fourth report in a series offering state and local governments solutions to improve contracting processes with nonprofits in ways that improve services to the public, restore value for taxpayers, and strengthen communities over time. More information on government-nonprofit contracting issues, and these earlier resources, can be found at www.govtcontracting.org.

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The National Council of Nonprofits is a trusted resource and advocate for America’s charitable nonprofits. Through our powerful network of State Associations and 25,000-plus members – the nation’s largest network of nonprofits – we serve as a central coordinator and mobilizer to help nonprofits achieve greater collective impact in local communities across the country. We identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve. Learn more at www.CouncilofNonprofits.org

National Task Force to Improve Government-Nonprofit Contracting Practices Begins Work

Posted: 
June 26, 2013

Washington, DC – Government officials and nonprofit leaders are coming together to identify and promote solutions to broken contracting systems.

As part of an ongoing initiative led by the National Council of Nonprofits (Council of Nonprofits), the new National Government-Nonprofit Contracting Reform Task Force is identifying and promoting proven solutions that streamline contracting policies, improve outcomes, and save taxpayers money, all while maintaining or even increasing accountability.

Demonstrating the collaborative nature of the Task Force and the partnership necessary between governments and nonprofits to deliver results, the Task Force will be co-chaired by Fran Barrett, InterAgency Coordinator for Not-for-Profit Services in the New York Governor’s Office, and Barry Silverberg, President & CEO of the Texas Association of Nonprofit Organizations (TANO).

“The National Government-Nonprofit Contracting Reform Task Force brings together recognized experts with hands-on experience in government-nonprofit contracting,” said Tim Delaney, President and CEO of the National Council of Nonprofits. “Governments and nonprofits recognize that the antiquated contracting ‘system’ is so broken that it has become a nationwide problem hurting taxpayers and the public. So we recruited Task Force members from government and nonprofits, each region of the country, and red and blue states to enable the experts to identify, exchange, and disseminate policies and practices that result in real systems improvements to best serve our communities.”

“In New York, we have recognized that the current contracting system imposes costly and burdensome challenges, so we have launched efforts to streamline processes that will save taxpayers money and allow nonprofits to focus more time on delivering results, rather than paperwork,” said Fran Barrett. “I look forward to working with my colleagues across the country to find and share more solutions to make this process more efficient nationwide.”

“Here in Texas, as a first step, government and nonprofits have been focusing on building relationships with each other so we can truly work in partnership to better serve our communities by improving contracting systems,” said Barry Silverberg. “I think that is where reform efforts need to start. I am eager to share what we’ve learned so far and to learn from the collective wisdom of others on the Task Force who have been seeking to improve their human services contracting systems as well."

The first meeting of the new Task Force will be held in Chicago at the end of June. Additional information on the Task Force and the Government-Nonprofit Contracting project can be found at www.govtcontracting.org.

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The National Council of Nonprofits is a trusted resource and advocate for America’s charitable nonprofits. Through our powerful network of State Associations and 25,000-plus members – the nation’s largest network of nonprofits – we serve as a central coordinator and mobilizer to help nonprofits achieve greater collective impact in local communities across the country. We identify emerging trends, share proven practices, and promote solutions that benefit charitable nonprofits and the communities they serve. Learn more at www.CouncilofNonprofits.org.

 

 

Task Force Members

  • Fran Barrett, co-chair, InterAgency Coordinator for Not-for-Profit Services, New York Governor's Office
  • Barry Silverberg, co-chair, President & CEO, Texas Association of Nonprofit Organizations (TANO)
  • Henry Bogdan, Managing Director, Public Policy and Advocacy, Maryland Nonprofits
  • Walter Davenport, Consultant/Corporate Director, Walter C. Davenport, CPA
  • Susan Dreyfus, President & CEO, Alliance for Children and Families
  • Matthew Hammoudeh, Assistant Secretary of Operations, Illinois Department of Health and Human Services
  • Jack Jackson, Senior Vice President for Finance/CFO, Catholic Charities USA
  • Tracy Kahlo, Executive Director, Partnerships for Action, Voices for Empowerment (PAVE)
  • Maggie McConnell, Assistant General Counsel for Business Services, Maricopa County Community College District
  • Naomi Munzner, Director, Office of Grants Management, Minnesota Department of Administration
  • Walter Sachs, Inspector General, Department of Management Services, Florida Department of Management Services
  • Michael Weekes, President & CEO, Providers' Council
  • Dace West, Director, Denver Office of Strategic Partnerships
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