The White House Office of Management and Budget (OMB), on December 26, released its long-anticipated overhaul of federal grants policies and procedures, and charitable nonprofits achieved several important goals that will strengthen organizations performing work in communities on behalf of governments and the nonprofit community as a whole.
Titled “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,” the final guidance will require state and local governments using federal funds to reimburse nonprofit contractors and grantees for reasonable indirect costs, sometimes called administrative or overhead expenses. The 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.
In a statement, the National Council of Nonprofits summarized the significance of the new OMB guidance this way:
“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.”
On December 5, the National Council of Nonprofits and the Urban Institute published companion reports as part of a multi-year collaborative project designed to identify the scope of the problems that charitable nonprofits face when performing work on behalf of governments pursuant to contracts and grants and to promote solutions that will benefit individuals served by nonprofits, taxpayers, nonprofits, and governments.
Nonprofit-Government Contracts and Grants: Findings from the 2013 National Survey from the Urban Institute provides key data on the problems experienced by charitable nonprofits in performing work under contracts and grants with governments, including findings on late payments, failure to pay the full costs of services provided on behalf of governments, changes to written agreements in mid-stream, and unnecessarily burdensome application and reporting requirements.
A Dozen Common Sense Solutions to Government-Nonprofit Contracting Problems from the National Council of Nonprofits, explains why reforms are so important right now and provides a menu of proven, replicable solutions that states and localities can utilize to fix broken contracting and grantmaking systems, save money for taxpayers, and work better with nonprofits to serve communities.