Since at least the 1960s, and accelerated in the 1980s, all levels of government have been entering written agreements with charitable nonprofits to deliver a broad array of services to the public. Governments have largely found nonprofits to be good partners: mission-driven rather than profit-focused, and more efficient and effective than unwieldy government bureaucracies. The National Council of Nonprofits has worked through its network of state associations of nonprofits and with governments at the local, state, and federal levels to help repair the broken contracting “system” by building relationships, identifying solutions and promising practices that can be replicated in multiple jurisdictions, and advocating for their implementation.

Why It Matters to Nonprofits

In return for providing services on behalf of governments, governments have paid nonprofits late, changed contract terms mid-stream, and required increasing levels of burdensome complexity in applications and reporting requirements. Government grantmaking and contracting systems must be fixed so people receive services when they need them, taxpayers receive full value for the programs they fund, and communities are strengthened through wise stewardship. Without responsible solutions, our communities will suffer even more.

Where We Stand

Charitable nonprofits are private organizations that share a commitment with governments to improving lives and communities throughout the country. The National Council of Nonprofits is dedicated to improving government-nonprofit contracting systems, and to strengthening the public-private partnership at all levels through collaboration and direct engagement. Specifically, the National Council of Nonprofits supports reforms to government-nonprofit contracting processes that streamline policies and procedures to avoid duplication and waste, develop standardized definitions for contracting and grant language, and ensure that payments to nonprofit organizations for direct and indirect costs from the federal government through state and local governments are applied consistently, fairly, and in a timely manner.

At the state and local levels, the Council of Nonprofits supports

1. Creation of a senior Executive Branch Liaison to the Nonprofit Sector, such as a full cabinet-level official, special advisory council, or as a senior advisor in the Governor’s Office, and/or in the office of the State’s primary nonprofit regulator and other cabinet-level departments with the goal of ensuring collaboration between government and charitable nonprofits.
2. The commitment of governments and nonprofit providers to collaborate in streamlining and reforming the existing dysfunctional contracting systems that deprive individuals of the services they need, deny taxpayers the full value of the programs they fund, and prevent nonprofit organizations from achieving their full impact.
3. Collaboration between state and local governments and nonprofit contractors and grantees
   1. to ensure full and fair implementation at the state and local levels of the cost principles and other federal grants reforms contained in the Office of Management and Budget Uniform Guidance, and
   2. to promote greater efficiency [and cost savings] by replacing existing state and local laws, regulations, and procedures with one uniform system based on the federal cost principles and reforms in the Uniform Guidance and applying them to all of their contracts and grants with charitable nonprofits, regardless of public funding source.

National Council of Nonprofits 2017 Public Policy Agenda

Common Problems

Research consistently finds that governments are not always good partners with nonprofits, with many governments routinely failing to pay the full costs of the contracted services, imposing unnecessary and wasteful burdens, and not honoring their legal obligations of the written contracts they signed — all of which add unnecessary costs to governments and nonprofits alike. These challenges increase nonprofit costs of doing business. The consistent underfunding is a significant contributor to what is known as the “nonprofit starvation cycle” and results in a myriad of challenges for nonprofits, all of which ultimately limit a nonprofit’s ability to achieve outcomes and erode the availability of quality services in communities throughout the country. For more information, go to Common Problems in Government-Nonprofit Grantmaking and Contracting.

Solutions

Governments and nonprofits are natural partners, serving the same constituents in the same communities. It is in everyone’s best interest to work collaboratively to identify and implement meaningful solutions to common problems. Learn more about common sense grantmaking and contracting solutions that meet the test of helping taxpayers, those needing services, and governments just as much as they help nonprofits. For more information, go to Solutions to Government-Nonprofit Grantmaking and Contracting Problems.

Additional Resources

National Council of Nonprofits

• Toward Common Sense Contracting: What Taxpayers Deserve (May 2014)
• A Dozen Common Sense Solutions to Government-Nonprofit Contracting Problems (December 2013)
• Investing for Impact: Indirect Costs Are Essential for Success (September 2013)
• Partnering for Impact: Government-Nonprofit Contracting Reform Task Forces Produce Results for Taxpayers (April 2013)
• Three Simple Things Statewide and Local Elected Officials Can Do to Strengthen Communities, Improve Government, and Save Taxpayers Money (October 2012)
• Three Simple Things State Legislators Can Do to Strengthen Communities, Improve Government, and Save Taxpayers Money (October 2012)
• Costs, Complexification, and Crisis: Government’s Human Services Contracting “System” Hurts Everyone (October 2010)

Urban Institute

• National Study of Nonprofit-Government Contracts and Grants 2013: State Profiles
• Contracts and Grants between Nonprofits and Government (2013 brief)
• Nonprofit-Government Contracts and Grants: Findings from the 2013 National Survey (2013 full report)
• Contracts and Grants between Human Service Nonprofits and Governments (2010 brief)
• Human Service Nonprofits and Government Collaboration: Findings from the 2010 National Survey of Nonprofit Government Contracting and Grants (2010 full report)

State by State

• State-Specific Grantmaking and Contracting Reform Resources