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Improving Nonprofit Capacity for Meeting…. Federal Financial Requirements. How noncompliance Affects capacity.
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Improving Nonprofit Capacity for Meeting… Federal Financial Requirements
How noncompliance Affects capacity • Following Hurricane Katrina, donors found out from the media that the Red Cross was neither reporting on, nor allocating funds correctly. Consequently, both public and private donations to the organization decreased substantially. • The Fairbanks Community Health Center closed its doors with $1.2 million in debt. An investigation found that missing bank statements, a lack of adequate financial controls, and little communication with the board regarding finances were what led to the organization’s demise. • In July 2013, the state of Louisiana geared up to recover government revenue from 36 nonprofits because they had failed to submit progress reports on time. • The Department of Justice recently questioned $23.2 million granted to Big Brothers Big Sisters after an audit by the Office of the Inspector General revealed that the organization had failed to ensure that its local chapters had submitted adequate documentation in support of their expenditures.
Double-Edged Dependency:I Hate you! Don’t leave me! Findings from the 2013 Urban Institute Nonprofit-Government Contracts and Grants Study • In 2013: • Seventy-five percent of nonprofits were troubled by the complexity of applying for and reporting on government grants • Sixty percent of large nonprofits received grants that limited their financial management expenditures • Nonprofits relied on the government for sixty percent of their revenue • On average, human services nonprofits had seven government grants or contracts at any given time
OMB is the largest component of the Executive Office of the President. • Is known as the implementation and enforcement arm of the Executive Branch Budget development and execution Oversight of agency performance Coordination and review of Federal regulations Legislative clearance and coordination Executive Orders and Presidential Management • The Single Audit Act of 1984 and OMB Circular A-133: • Provide audit requirements for ensuring that government, educational, and other nonprofit entities expend grant funds properly • Designed to simplify fiscal requirements—prior to the Act, each awarding agency had its own set of rules and conducted its own audits • Nonprofit grant recipients are put in touch with contract managers at each of their awarding agencies • Nonprofits do not realize that agencies have neither control over, nor an understanding of federal financial regulations • According to inside experts, The OMB does not consider the nonprofit sector—its policies and procedures are designed with only the awarding agencies in mind
Council on Financial Assistance Reform • Consists of federal agency CFOs and senior officials at the OMB and Dept. of • Treasury • Works to improve financial management in the U.S. government by advising • and coordinating the activities of agencies: • Consolidates and modernizes financial systems • Improves quality of financial information • Implements internal controls having to do with financial information and • legislation • Initiatives to help grantees: • COFAR listserv • Trainings via Youtube/webcasts/online PowerPoint decks • Published studies • Dry information, do not reach right audience • Roundtable discussions • Invitations for comments on new publications/initiatives • Do not include diverse representatives
New cofar marketing plan Mission: To improve fiscal compliance by first engaging nonprofit grantees through a revised COFAR listserv. Target Audience: Administrative employees of nonprofits receiving $500,000 or more in annual federal funding
New cofar marketing plan • Theory of Change: The following theory of change illustrates how revising the COFAR listserv will help nonprofit employees to understand and adhere to federal financial regulations: • Inputs: • The updated listserv will encompass the following characteristics: • Personalization, in order to engage readers right away • A system for ensuring the listserv is being delivered to the most appropriate staff • A brief, standard message stressing the listserv’simportance • More comprehensible language and formatting • Strategically placed links to valuable sites such as the various appropriate grantee contacts, the OMB circulars and the Federal Register. • Outputs: • Recipients of the updated listserv will: • Have a better understanding of why information from COFAR is important • Have an easier time comprehending the information being given to them • Learn how they can seek help from and give feedback to the OMB. • Not be overwhelmed by the amount and density of the information included in the emails • Feel more at ease with the subject of federal financial guidelines.
New cofar marketing plan • Necessary Activities/Next Steps: The following activities will need to take place before the actual redesign of the listserv can begin in full: • Contact with COFAR must be established • Research must be done on COFAR’s current process for creating and distributing the listserv • A series of listserv emails (5-10) should be examined for trending strengths and weaknesses • Reasonable correspondence with OMB contacts should be maintained in order to establish a stronger relationship with the government parties at hand • A memo addressed to the OMB and COFAR explaining the purpose of the project must be drafted.
