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Nonprofits: Working with government funding is no piece of cake

There’s a popular urban myth that public funding directed at nonprofits is a source of great waste, fraud and abuse. In truth, of course, the vast majority of nonprofits do excellent, dedicated work at a bargain price. Unfortunately, as with so many other areas of the public policy debate, a few high profile bad apples can poison public perceptions. That’s been the case in North Carolina in this area in recent years.

Happily, a new report released this week by the Urban Institute and supplemented by the good folks at the N.C. Center for Nonprofits helps set the record straight. The truth? In most situations in which nonprofits are attempting to make use of public resources to do important work, it isn’t the nonprofit that’s the problem. In fact, problems are much more typically matters of government bureaucracy making things unnecessarily difficult.

This is from a news release distributed by the Center this morning:

The N.C. Center for Nonprofits today released its analysis of the first-ever national study of government contracting with nonprofits.  This new report by the Urban Institute shows long-standing problems experienced by North Carolina nonprofits that contract with federal, state, and local governments.  The problems include complex government bidding, inconsistent reporting requirements, unexpected mid-term contract changes, and even nonpayment for contracted services delivered.

These problems make it difficult and sometimes impossible for hundreds of nonprofits to serve North Carolinians in serious need.  Without significant changes, more people in all 100 counties of the state will lose the essential nonprofit services on which they depend for survival or safety.  Examples include services for food, shelter, and medical help, as well as prevention of child abuse, domestic violence, and the growth of gangs.”

Problems identified include:

Government Inconsistency – More than three out of five surveyed reported that government agencies changed their contracts mid-term, with nearly 30 percent identifying this as a major problem.

Burdensome complexity of contracting practices – More than three in four nonprofits reported that complexity and time required for reporting on grants and contracts was a problem.

Government underpayment – Nearly two-thirds of respondents reported that governments fail to pay them the full cost of services rendered.

Big funding cuts – Seventy percent of state-supported nonprofits in North Carolina reported a decrease in revenue from state grants in contracts in 2009, the fourth-highest decline of any state.

Add to all this the decline in private philanthropy and it’s no surprise that many nonprofits are hanging on by their teeth.

Though not sexy enough to make the radar screen of most candidates in the waning days of election season, this is a topic that legislators ought to seriously examine in 2011.

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