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State wants to pare grants to nonprofits

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Trisha Lester

Trisha Lester

Ret Boney

RALEIGH, N.C. – An effort by state officials to withhold a portion of grants awarded by state agencies to fund oversight is being opposed by a statewide association of nonprofits.

The proposal, which is being drafted into a bill for consideration by the Joint Legislative Program Evaluation Oversight Committee, would allow state agencies to withhold a total of 2 percent of the grants they award to fund oversight and the operation of a grants database.

That reduction would harm the state’s nonprofits, says Trisha Lester, vice president of the N.C. Center for Nonprofits, a nonprofit that represents about 1,500 members across the state.

“The big issue is that state grants already are not providing enough to cover the costs of the grants, including audits,” says Lester. “Our nonprofit members say the withholding would hamper their ability to provide services at a time when they’re already stretched very thin.”

The initial recommendation came from a report produced last year by the Program Evaluation Division of the General Assembly that concluded greater oversight of nonprofits receiving grant funds from state agencies is needed.

While the N.C. Center for Nonprofits supports most of the recommendations issued in the report, it is circulating a petition opposing the withholding and already has received signatures from over 200 individuals, says Lester.

Her organization is reaching out to its members for ideas on alternate ways to fund oversight and will be sharing those ideas with General Assembly staff in the future.

The recommendation to withhold a portion of funding gained momentum in a recent working-group meeting that included the Program Evaluation Division, the State Auditor and representatives from the Office of State Budget and Management and the Controller’s Office.

“There was strong endorsement for oversight,” says Carol Ripple, principal program evaluator for the Program Evaluation Division. “Because oversight doesn’t come free, there’s a recognition that there has to be funding behind it.”

Funding evaluation, measurement and oversight is important, but tends to be unpopular, says Ripple. That creates tension between ensuring the maximum amount possible goes to services and ensuring adequate accountability.

“North Carolina deserves this level of accountability,” she says, noting that many agencies are doing a good job of oversight. “Right now we have some audit assurance that money was spent, but not to what end. There needs to be this level of accountability statewide and it needs to be paid for.”

An advantage to the withholding, Ripple says, is that the beneficiaries of the money are footing the bill for oversight rather than the taxpayers.

But Lester says the costs ultimately could fall on the doorstep of state government and the communities it is trying to strengthen.

“It could have a deleterious effect on nonprofits and the communities they serve,” she says. “There are many nonprofits struggling to meet huge increases in demand. I think it’s penny-wise and pound-foolish.”

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