National Study of Nonprofit-Government Contracting: State Profiles

Abstract

This compilation of state profiles from the 2010 National Survey of Nonprofit-Government Contracting and Grants, provides national and state-by-state snapshots of human service organizations that have contracts and grants with local, state and federal governments. The individual state profiles are designed to document the extent of nonprofit-government contracting, processes and problems. They also examine the impact of the recession on these organizations and the cutbacks they have made to keep their programs operating. States are also ranked according to number of grants, types of issues, and actions taken by human service nonprofits to address the challenges they face.

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Introduction

Governments contract with human service nonprofit organizations to deliver pivotal services to individuals, families, and communities. The U.S. economic recession has depleted many nonprofit budgets while increasing the demand for their services. Many state governments—which are large providers of government contracts and grants—are in a fiscal crisis. As a result, many nonprofits were forced to freeze or reduce salaries, draw on reserves, or scale back their operations. Each state is faced with unique financial challenges and employs different policies and procedures which are affecting the nonprofit-government contracting relationships in various ways. This report provides state by state data on government contracts and grants with human service nonprofits, problems encountered, and the effect of the recession.

Government contracting problems are widespread at the federal, state, and local levels. Key problems facing nonprofits were identified in this study and include late payments, changes to contracts, complexity of application and reporting requirements, and insufficient payments. Whether these were large or small problems, well over half of all nonprofits experience problems with their contracts and grants.

Nationwide, nearly 33,0003 human service providers had almost 200,000 government contracts and grants in 2009. Government contracting is more widespread in Arizona, where human service nonprofits averaged six contracts each, than in South Carolina, where nonprofits averaged three contracts each.

The types and sizes of government contracts are as varied as the organizations that receive them. Nationwide, 54 percent of human service nonprofits have government contracts and grants that require matching or sharing of costs. The number ranges from 82 percent of nonprofits in New Hampshire to 37 percent of organizations in Arizona. In addition, many contracts and grants limit the amount of money that can be used for program or organizational administrative costs. In Utah, 78 percent of organizations report limits on program administrative-overhead costs. In North Dakota, only 29 percent report such limits.

Human service nonprofits have been hit hard by the recession. Revenues from major sources such as government and donations have declined, and about 42 percent of human service nonprofits faced a budget deficit in 2009. Half of all organizations froze or reduced employee salaries, and almost 40 percent drew on reserves or reduced staff size. There were notable differences by state; 66 percent of nonprofits in Connecticut froze or reduced salaries but only 24 percent in Arkansas took this action. In Indiana, 62 percent of organizations drew on reserves but just 22 percent did in South Dakota.

This study also identifies key problems with government contracts and grants. The problems include insufficient payments to cover the cost of services provided, complexity of and time required to apply for and report on outcomes of contracts and grants, changes made by governments to existing contracts and grants, and late payments. The results varied significantly by state with some states reporting fewer problems than others. For example, 84 percent of organizations in Rhode Island had problems with payments not covering the full cost of contracted services, compared to just 37 percent of Montana nonprofits. Eighty-three percent of organizations in Illinois reported that late payments were a problem, but only 11 percent of organizations in South Dakota report that late payments were a problem.

The policies, procedures, and budget situations of each state are affecting the nonprofitgovernment contracting relationships in different ways. This report provides state-by-state data on the government contracting experience in all 50 states and the District of Columbia as well as an overview of the nation. It also includes state rankings for contract limitations, the effects of the recession, and problems experienced by nonprofits with government contracts and grants.

End of excerpt. The full report is available in PDF format.)

Publications on Human Service Nonprofit-Government Contracting

Human Service Nonprofits and Government Collaboration: Findings from the 2010 National Survey of Nonprofit Government Contracting and Grants

Contracts and Grants between Human Service Nonprofits and Governments

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