Editor’s note: This commentary is by Lauren-Glenn Davitian, who is the director of Common Good Vermont.
Vermont’s nonprofit organizations play a vital role in the state’s economy and add true value to Vermonters’ quality of life. This work is fueled by more than $736 million in annual grants and contracts from state, federal and foundation sources. But recently released reports suggest that Vermont’s mission-driven organizations are hampered by inefficient government funding and contracting practices, which reduce program efficiency and divert funds from mission critical work.
This month, the Urban Institute released its National Study of Nonprofit-Government Contracts & Grants 2013. Combined with the recent Nonprofit Finance Fund’s 2014 State of the Nonprofit Sector Survey , these reports explain what nonprofits have long known: government and philanthropic sources fail to cover the true costs of delivering community based services.
According to Mark Redmond, executive director of Spectrum Youth & Family Services, “Vermont nonprofits are contracted by the state Legislature and federal government to carry out various social programs. While this is a good thing, government revenue has steadily decreased, while costs have increased, thereby putting intense pressure on nonprofits to fundraise from private philanthropy to fill in the gaps. There is a growing discrepancy between state and federal investments and what it actually costs nonprofit organizations to deliver valuable services.”
According to S.293′s sponsor, Sen. Diane Snelling, “This process of accountability will help determine the policy impact of every tax dollar spent.”
These reports show, that like other states, Vermont nonprofits suffer from chronic late payments from government sources, complex applications and onerous reporting requirements. To address these issues, they are likely to capitalize late payments by drawing from reserve funds and lines of credit. And, in the face of decreased funding, more likely to freeze or reduce employee salaries rather than cut programs.
Lauren-Glenn Davitian of Common Good Vermont points to the efforts Vermont nonprofits are making to respond to bureaucratic and funding roadblocks: “Vermont’s mission-driven organizations are leading the way toward smart business practices and strong outcomes for our communities. Our colleagues are actively working with state and private funders — and each other – to diversify revenue, achieve organizational efficiencies, and craft smarter, data-driven contracts. As a result of these efforts and the strong partnership of the state of Vermont, the state is now nationally recognized as a leader in the reform of its contracting and grant systems — an example of state government and nonprofit organizations working hand-in-hand to streamline the process, reduce costs, and improve service to the community.”
Monical Hutt, director of policy and planning for the Vermont Agency of Human Services, reports that AHS is moving forward “very intentionally” to work with nonprofit agency partners to streamline contracts and grants and improve results for Vermonters. She underscores “across state government, collaboration with our contractees and grantees is the essential foundation of this work.”
The recent passage by the Vermont Legislature of S.293, “the Outcomes” bill, is a major step in this direction. Soon to be signed by Gov. Peter Shumlin on June 11, its passage ensures that direct links will be made to the goals of the Legislature and to those tasked to carry out the work. More than 2,000 nonprofits and state personnel have received RBA training over the past two years — including the Vermont Legislature through the efforts of Benchmarks for a Better Vermont. http://bbvt.marlboro.edu Results-Based Accountability is now adopted as a common language and basis for rationalizing many state contracts and foundation grants.
According to S.293′s sponsor, Sen. Diane Snelling, “This process of accountability will help determine the policy impact of every tax dollar spent.”
While Vermont’s mission-driven organizations faces the challenge of lean resources and contracting hurdles, meaningful steps are underway to create the necessary partnerships with the state, philanthropists and the public to improve the distribution of public and private dollars, make data-informed decisions, and direct funds to the programs that make a difference. By working together to build a “culture of accountability” the nonprofit sector increases its efficiency, public confidence, and continued investment. As a result, nonprofits improve Vermont for all Vermonters and turn the curve on our state’s most pressing issues.
