Special to Philanthropy Journal
By Nick Byrne
Local governments are increasingly faced with the challenge of providing more and better services to their residents despite tighter fiscal limits.1 In response, local governments throughout the United States are relying more on nonprofits to deliver services to residents. However, local governments generally do not adequately define the precise production process, outputs or outcomes to be delivered.2
In light of recent state funding cuts to human services in North Carolina3, a steady increase in the nonprofit entities delivering services4 and calls for government to continually do more with less, my research addresses two pertinent questions for study: (1) Are local governments increasing funding to nonprofit organizations (NPO) for human service delivery? (2) Are local government entities incorporating objective accountability measures into their funding decisions?
Upon reviewing survey results from thirty-three North Carolina counties accounting for over half of the state’s population, conducting interviews with eight county representatives responsible for administering nonprofit grant funding, and reviewing local government nonprofit practices, my research concludes that the vast majority of counties directly grant funding to NPOs for human services delivery. More surprisingly, just under half of counties reported that their nonprofit human service budgets had been decreased in recent years, and just over half indicated that they employed some type of accountability measure in administering grants to NPOs.
Notably, it does not appear that there is a statistically significant relationship between county population size, budget expenditure, and/or political persuasion within the county and whether the county government employs an accountability tool to govern its relationship with outside nonprofits. Indeed, different counties incorporate varied decision-making approaches to arrive at funding determinations. Although some counties rely more heavily on citizen boards and panels to make funding recommendations, the majority of counties interviewed noted that they rely more heavily on internal staff to review funding proposals and make final grant decisions.
Undoubtedly, local government-nonprofit funding considerations are and will remain highly subjective processes. Although no national model exists for assessing local government grant-making efficacy, certain funding accountability measures stand out at as notable in my research.
First, the more layers of internal and/or external grant review are incorporated into the grant review process, the better. Second, clearly stated eligibility requirements for nonprofit funding are recommended to ensure that a base, or initial, level of expectations is met throughout the process. Third, using a standardized application form clarifies funding eligibility requirements and provides the public with a solid record. Finally, county governments should strongly consider assigning key grant-making job functions to a dedicated staffer to adequately handle the government-nonprofit relationship.
Nick Byrne is a Juris Doctorate/Master of Public Administration candidate in the School of Law at the University of North Carolina-Chapel Hill.
1Berman, Evan M. & West, Jonathan P., “Public-Private Leadership and the Role of Nonprofit Organizations in Local Government: The Case of Social Services.” Policy Studies Review (Spring/Summer 1995): 235-46; Whitaker, Gordon P. & Rosalind Day, “How Local Governments Work with Nonprofit Organizations in North Carolina,” Popular Government 66 (Winter 2001): 25-32.
2 DeHoog, R.H. & Salamon, L.M., “Purchase of service contracting” in Salamon, L.M. (Eds), The Tools of Government: A Guide to the New Governance, Oxford University Press, Oxford 2002: 319-39.
3 “Nonprofits and the 2012 State Budget,” N.C. Center for Nonprofits. Last modified November 25, 2012, http://www.ncnonprofits.org/nonprofits-and-2012-state-budget#2011%20Budget.
4 Cain, Jeff, “What’s driving nonprofit sector job growth in a down economy?” Philanthropy Daily, June 13, 2010, accessed on November 25, 2012, http://www.philanthropydaily.com/?p=2593.