National Study of Nonprofit-Government Contracts and Grants …



National Study of Nonprofit-Government Contracts and Grants 2013: State Profiles

Sarah L. Pettijohn, Elizabeth T. Boris, and Maura R. Farrell

Data presented for each state:

Problems with Government Contracts/Grants 2012 Government Experience Compared to Previous Year Key Problems Reported for Government Contracts State Rankings: Small and Big Problems

Limitations on Full Costs in Government Contracts/Grants Limits on Program Administrative Expenses/Overhead Costs Limits on General Administrative Expenses/Overhead Costs Contracts that Require Matching or Sharing Costs Grants that Require Matching or Sharing Costs

Overview of Nonprofit Contractors and Grantees Number of Nonprofits with Government Contracts/Grants Dollar Amount of Government Contracts/Grants Types of Nonprofits with Government Contracts/Grants Average Number of Government Agencies Nonprofits Worked with in 2012 Actions Taken by Nonprofits in 2012

Financial Status of Nonprofits with Government Contracts/Grants Expenditure Size of Nonprofits with Deficits State Nonprofits Experiencing Declines in Revenue

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CONTENTS

INTRODUCTION NATIONAL ALABAMA ALASKA ARIZONA ARKANSAS CALIFORNIA COLORADO CONNECTICUT DELAWARE DISTRICT OF COLUMBIA FLORIDA GEORGIA HAWAII IDAHO ILLINOIS INDIANA IOWA KANSAS KENTUCKY LOUISIANA MAINE MARYLAND MASSACHUSETTS MICHIGAN MINNESOTA MISSISSIPPI MISSOURI MONTANA NEBRASKA NEVADA NEW HAMPSHIRE NEW JERSEY NEW MEXICO NEW YORK NORTH CAROLINA NORTH DAKOTA OHIO OKLAHOMA OREGON PENNSYLVANIA RHODE ISLAND SOUTH CAROLINA SOUTH DAKOTA TENNESSEE TEXAS UTAH VERMONT VIRGINIA WASHINGTON WEST VIRGINIA WISCONSIN WYOMING STATE RANKINGS METHODOLOGY APPENDIX

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Copyright ? April 2014. The Urban Institute. All rights reserved. Except for short quotes, no part of this report may be reproduced or used in any form or by any means, electronic or mechanical, including photocopying, recording, or by information storage or retrieval system, without written permission from the Urban Institute. The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance problems facing the nation. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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Introduction

Governments and nonprofit organizations partner to provide needed services in communities across the country. Contracts and grants are the mechanisms governments use to fund these partnerships. In the first national survey of nonprofits that receive government contracts and grants, Human Service Nonprofits and Government Collaboration: Findings from the 2010 National Survey of Nonprofit Government Contracting and Grants, we provided comprehensive evidence of the scope of government funding of human service nonprofits and the administrative issues that accompany that funding. We also documented the negative effects of the economic recession on human service nonprofits' ability to provide services; these effects were exacerbated by government actions such as late payments for services provided. The recession had dire effects on nonprofits' funding from government and private sources, in a time when the demand for services was higher than normal.

In 2012, we conducted a second national survey, Nonprofit-Government Contracts and Grants: Findings from the 2013 National Survey, expanding the scope of the previous study to include most types of nonprofits.1 We found that nonprofit-government contracts and grants reached approximately 56,000 nonprofits and totaled $137 billion and that the effects of the recession were still evident. The research reveals that problems reported with government contracts and grants in 2009 are not confined to human services nonprofits, although problems are less pronounced for grants than for contracts. Nonprofit organizations in 2012 were still dealing with many of the same issues as in 2009.

This report provides data on government contracts and grants with nonprofits, problems encountered, and the current fiscal situation of nonprofit organizations in each state. The State Rankings provide a useful indication of how states compare to each other on these issues. Some states are low performers on most indicators, while others have more mixed results. Each state is in a unique economic and political situation that affects the experiences of its nonprofits. The state profiles present infor-

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mation on the scope of contracts and grants in each state, the problems encountered, and the financial status of all types of organizations included in the study.

The number of government contracts and grants reported by nonprofits varied across the states. Of the nearly 56,000 nonprofit organizations with contracts and/or grants with the government in 2012, for example, California had 5,172 while Nevada had 194. Population in these states varies greatly with the U.S. Census Bureau reporting that in 2012 nearly 40 million individuals lived in California compared to just over 2.7 million individuals in Nevada.

Contracting with multiple agencies is a way for organizations to diversify their income and protect themselves from risk, but it can also complicate administration for nonprofits because different government agencies have different application and reporting processes and requirements. About 30 percent of nonprofits had a contract or grant with only one government agency, while 41 percent had contracts or grants with two to three agencies, and 29 percent had contracts or grants with four or more agencies. In Rhode Island, 42 percent of nonprofit organizations had contracts or grants with four or more government agencies, and 19 percent had funding from one agency, while in New Hampshire, 24 percent of nonprofits had funding from four or more agencies, but 52 percent had contracts or grants with only one agency.

Contracts and grants vary in structure and administration. Some require organizations to match or share the costs of programs or services they fund. Some limit the types of activities that nonprofits can spend money on. It is common for contracts or grants to restrict expenditures for program administration or overhead costs. Nationwide, 50 percent of organizations report such limits on program administration or overhead costs, and 53 percent report limits on general administration or overhead costs. States tend to have different policies on this issue. In Hawaii, 72 percent of organizations report limits on general administrative/overhead costs and 62 percent report limits on program administrative overhead. In Nebraska about one-third of all organizations report these constraints. These limits can severely undermine an organ-

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ization's capacity and effectiveness by restricting its ability to adequately manage its programs or invest in staff and equipment.

Of the organizations that responded, 95 percent stated that they must report some aspect of the results of their programs to governments. All of the organizations in several states report having such a requirement; Delaware was on the low end of this spectrum with 82 percent of organizations reporting these requirements. Such reporting requirements are an important way for governments to ensure accountability from nonprofits. Seventy-two percent of nonprofits reported a problem with the complexity of or time required by government reporting processes. As the trend toward more frequent and rigorous reporting continues, the challenges for both nonprofits and governments to reduce administrative burdens while providing adequate accountability will increase.

In addition to questions about reporting problems, the survey asked nonprofits whether other issues posed a problem to their organizations in 2012. These issues include the complexity of or time required by application processes for government contracts and grants, payments not covering the full cost of contracted services, government changes to contracts or grants midstream, and late payments. Nearly three-fourths of organizations nationwide reported problems with the complexity of or time required for applications and reporting. However, there is great diversity across the states and what might be a big problem in one state may not be as troublesome in another.

Organizations in different states faced different problems. For example, 75 percent of nonprofits in New Jersey reported a problem with payments from government not covering the full cost of contracted services, while only 28 percent of organizations in Colorado reported this problem. In Rhode Island, 81 percent of organizations reported a problem with late payments, compared with only 14 percent in New Hampshire. In Rhode Island, 67 percent of organizations reported a problem with changes to government contracts and grants midstream, but in the District of Columbia, only 23 percent of organizations reported this

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