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Michigan Nonprofit Survey of State Grant and Contract Process

Prepared by the Michigan Nonprofit Association

OVERVIEW OF THE SURVEY

Michigan’s nonprofit community has always worked hand-in-hand with our State government to provide many of the needed social services. From homeless shelters, to protecting our great lakes, to neighborhood improvement and supporting the arts, nonprofits provide valuable services that would be otherwise unavailable to our citizens.

In addition to foundation, corporate, and individual support, Michigan’s grant and contract making process makes it possible for nonprofits to fulfill the services required by the people of Michigan. By outsourcing to the nonprofit community, the State is able to provide these services by experienced personnel at the local level, and the nonprofits are able to provide services that would otherwise be unavailable. This makes the grant and contract making process a vital component in many of the services that Michigan’s citizens utilize on a daily basis.

In these difficult economic times it is more important than ever for nonprofits and government to work together. The Michigan Nonprofit Association recently sent a survey out to its 700+ members across the State to gauge how well they perceive the grant and contract making process to be working. This survey was designed not only as a measure of the current state of the process, but as a tool for both government and the nonprofits to use when looking for ways to improve the system.

The survey asked respondents to answer questions regarding the type of organization they represented, where they were located, their size, funding situation, and whether they currently had a grant or contract with a state agency. If the respondent’s organization did have a grant or contract from the State, they were then asked a variety of questions about that grant or contract. If the respondent did not currently have a grant, then they were asked questions related to why they did not. Finally, all respondents were given a chance to comment on the grant and contract making process in general.

The survey was completed and returned by 218 respondents, representing a diverse segment of the nonprofit community. Respondents came from organizations involved in education, human services, health, community improvement, arts, and many other areas of focus located throughout the state of Michigan.

In addition, the Michigan Nonprofit Association held focus groups with leaders from the nonprofit community to further identify problem areas with the grant and contract making process. These focus groups provided anecdotal information to complement the statistical data taken from the survey.

Sixty-four percent of nonprofits responded that they currently had a grant or contract with the State, while 36% responded that they did not. This shows that a significant portion of the nonprofit sector is currently relying on the State’s grant and contracting program for at least a portion of their funding.

KEY FINDINGS

Few nonprofits are finding information regarding available grants through state agency announcements.

There is a consensus among nonprofit grantseekers that information regarding available grants and contracts from state agencies can be difficult to find. The majority of nonprofits that have grants or contracts with the state find out about them through previous experience with that particular agency, or through contacts they have with the agency.

This creates a system in which large, established nonprofits have a clear advantage in securing state grants. Smaller nonprofits may not have contacts within an agency from which they can receive grant information from, thus keeping them out of the state grant and contracting process.

This is further backed up by the responses from nonprofits who have never applied for funding from the state. Thirty-eight percent stated that they did not know how to find information about state funding, while 34% responded that they did not know if there was funding available for their services. This shows that nearly 3 out of 4 nonprofits in Michigan who have not applied to receive funding from the state have not done so because they simply do not know where to find the necessary information.

The turnaround time from when a grant or contract is awarded until money is received can be excessive.

Nonprofits report that once they receive notification of being awarded a state grant or contract, they are given little or no information about when the deal will be finalized and payment will begin. This can create a difficult situation for nonprofits when developing programs based on the expected money coming in from the state. The turnaround time ranged from 3 weeks to 8 months.

Without knowledge of when to expect money from the state, nonprofits often have to begin a project without that funding. This creates a further financial burden by requiring them to tap into otherwise allocated resources in order to fund the project until state money begins coming in.

Reporting requirements can place an undue burden on nonprofits.

While the majority of the survey’s respondents stated that they had an accessible contact person with the agency that handled their grant or contract, they often added that the reporting requirements themselves were often redundant and burdensome. This creates the problem in which nonprofits are spending a great deal of time, and a large portion of their resources, simply completing all of the reporting requirements. If an organization does not have the resources available to both perform their services and complete the reporting requirements, they often choose to discontinue the grant or contract with the state. Forty-six percent of organizations that had been funded in the past but no longer are, report that it is because the reporting requirements were too much for them to handle.

The reporting requirements can also be unclear. There is often ambiguity over how reimbursement for services will be handled in the reports, which can lead to nonprofits being denied payment because the service was not done in the manner in which the agency requires.

The application and administration of a grant or contract varies a great deal between state departments, making it difficult to understand the requirements.

There is a clear lack of uniformity between state agencies when it comes to their grant and contracting processes. Each agency has their own procedures and requirements in both the application and administration process. This makes it difficult to understand what the requirements are for an agency, especially for nonprofits that have grants and contracts with multiple agencies.

RECOMMENDATIONS

Based on the responses from this survey, as well as previous discussions with leaders in the nonprofit community, the Michigan Nonprofit Association has developed a series of policy recommendations to State policymakers aimed at improving the State grant and contracting process:

• Analyze Current Contracting and Granting Procedures – Convene a meeting of State department delegates, nonprofit representatives and business leaders to commission a study of the State’s overall granting and contracting process.
  
• Adjust Payment Reimbursement Procedures – Review payment procedures in all departments to determine where delays occur and what changes can be made to avoid delay in payment. Also, develop special rules for small nonprofits that allow payments to an account that can be drawn upon to pay for expenses the group cannot afford to advance.
  
• Initiate Outreach to Make Nonprofits More Aware of State Grant Programs – Agencies need to conduct outreach programs to make more nonprofits aware of State grant opportunities. An excellent location to post all grant opportunities is on the State’s homepage (www.michigan.gov) as well as the Michigan Nonprofit Association’s E-mail Funding Opportunities Bulletin (www.mnaonline.org).
  
• Expand Technical Assistance on Grant Application Process – All State agencies need to provide training and technical assistance for nonprofits that wish to apply for State grants.
  
• Simplify and Unify Nonprofit Financial Reporting Requirements – The State needs to stop redundant and burdensome reporting requirements. Each department needs to consistently provide educational information to assist nonprofits with reporting, and should streamline reporting requirements to ensure coordination with federal and local requirements.