President Ronald Reagan, known for his optimism, reportedly had a favorite joke about twin boys that went something like this …
The six-year-olds were identical in appearance, but opposites in attitude. On Christmas morning, the two young lads raced down the stairs to see what Santa brought.
When Pete, the pessimist, saw the giant pile of toys with his name, he began wailing. Dismayed, his mom asked why he wasn’t happy with all the toys. He whimpered between sobs, “Because if I play with the toys, they’ll just break!”
Suddenly, the parents heard twin-brother Owen whooping with glee. They looked over as he joyfully dug into the big pile with his name tag. Startled by both the giant pile of horse manure and the fact that Owen was using his bare hands to dig deeper into the pile, his dad yelled, “Son, what are you doing?!” Optimistic Owen turned around with a big grin and replied, “With all this manure, there’s got to be a pony in here somewhere!”
So it is with a once-in-a-generation $350 billion funding program for which nonprofits are eligible, indirectly, to receive a piece. The good news for nonprofits is that the National Council of Nonprofits already dug into the 242-page bill where the program is buried, the 117 pages in the Federal Register presenting the U.S. Department of the Treasury’s Final Rule implementing the program, Treasury’s 44-page Overview of the Final Rule, and 50 pages of FAQs — all to identify, clarify, and improve the breadth of nonprofit eligibility.
It’s now up to you to triumphantly put a saddle on that pony and put resources in your nonprofit to address challenges and improve conditions in communities you serve.
Congress created a $350 billion funding program in the American Rescue Plan Act of 2021 (ARPA). That program, the Coronavirus State and Local Fiscal Relief Fund (CSLFRF), designates specific amounts for each state, county, city, “non-entitlement area” (local governments typically serving populations of less than 50,000, including cities, towns, townships, and villages), Tribal, and territorial government.
Congress declared that those governments may spend some or all their allotments on themselves and/or to distribute the funds as “assistance to households, small businesses, and nonprofits, or to aid impacted industries.”
Beginning in May, the federal government started funding the second (and final) tranche of ARPA dollars to state and local governments, prompting some to hold public hearings on how best to spend their allocations, as recently done by the Boston City Council. Some states received their full allocation last year due to high unemployment rates, but few have spent all of their ARPA funds so far. Each government has until the end of 2024 to make final decisions on how to spend their allocations. They must spend all dollars by the end of 2026.
NPOs Can Get Funding In Two Ways
The Treasury Department, seeking to reinforce that Congress authorized governments to spend their ARPA allocations on or through charitable nonprofits, clarified that governments may spend their allocations on charitable nonprofits in two ways:
- To give direct assistance to nonprofits as beneficiaries trying to recover from the pandemic’s impact on their organizations; and,
- To hire nonprofits as providers of services to others on behalf of those governments.
To be over simplistic, nonprofits receiving funds as beneficiaries would be akin to nonprofits receiving a general operating support grant from a foundation. You still must be a good steward of the funds, spending them only as permitted by law, but you should not have to provide overly detailed reports.
Nonprofits hired to be providers of services to others on behalf of the government would be like receiving a program grant from a foundation which will require reports showing funds were spent on the program and not on other uses. More complex federal compliance oversight and accounting rules will apply.
A Treasure Hunt
Whether your nonprofit is reeling because of COVID-induced financial pains or your community’s demands exceed capacity, odds are high that your staff members are exhausted. So instead of viewing the pursuit of an ARPA grant as pushing yet another Sisyphean boulder up a hill, inject some fun by looking at it as a treasure hunt.
But first, please recognize that while this commentary is written with some levity so you’re not bored (and will keep reading), it’s based on extensive involvement the National Council of Nonprofits has had with this ARPA program since its inception, both in Congress and at the Treasury Department. Plus, we’ve worked with our nationwide network of state associations of nonprofits and others to create a updated and expanded Special Report, which identifies more than 60 examples of ARPA-funded nonprofit programs from across the country you can use for ideas (available free at https://bit.ly/3Nd9vru).
The tips below share insights we’ve gained and come with the caveat that, because every nonprofit is different, one strategy doesn’t fit all. Therefore, adjust as you see fit.
Tip #1: Action Is Required
A good treasure hunt requires action, as we know from Indiana Jones and Lara Croft. You’ll need to take action to avoid being left behind.
Congress made nonprofits eligible for this ARPA funding, but it didn’t mandate governments spend a specific dollar amount or percentage on nonprofits — or on any other entities. Instead, Congress gave unprecedented freedom for government leaders to spend their allocations as they see fit.
Speak up to help your city, county, and state understand what the greatest needs are — including, when appropriate, asking for resources to advance your nonprofit’s mission in helping local communities. As old Lottery ads said, “You can’t win if you don’t play.”
Tip #2: Act with Urgency
Treasure hunt movies use upbeat theme music to excite the audience. Do you need some excitement to inspire you to act?
If so, ponder for a moment whether the other entities authorized to receive these federal funds — governments to use on their own initiatives, or “households, small businesses, and nonprofits, or …impacted industries” — are sitting around waiting. They’re not. Some localities reportedly are using their ARPA funds on things like golf courses.
Would that be the most urgent and best use of funds intended to help your community recover from the pandemic? If not, then throw it in gear.
Tip #3: Create Your Treasure Map
Just as Indiana Jones bounced from country to country searching for the lost ark and the Holy Grail, you also get to search in various places for treasure.
Pull out a blank sheet of paper to create your own treasure map. Draw two vertical lines to create three columns. Label the top left column as “Total Allocation,” the middle column as “Possibilities” and the right column as “Available.” Now create three rows, labeling them, “City,” “County,” “State.” (If your nonprofit operates in multiple cities and counties, then create space to add and track each as possible funding sources.)
Many governments have already spent portions of their allocations on specific organizations for designated purposes. Elsewhere, government leaders have decided to spend certain amounts on broad categories, but not specific recipients yet. That’s the “Possibilities” column where you will want to see if your nonprofit might match any of those categories. Other places have mostly unobligated funds and will be starting their decision-making processes (on their timetables). That’s the “Available” column showing where you can still influence outcomes.
Where can you get data to complete the remaining columns? That’s where your sleuth skills come in because there’s not a centralized place reporting that information. Accompanying Table B provides links to resources that can get you started.
Here are some places to get started:
* Local: Local Government ARPA Investment Tracker, Brookings Institute, update Apr. 13, 2022. https://brook.gs/3wyvv9E
* State: ARPA State Fiscal Recovery Fund Allocations, National Conference of State Legislatures, updated May 11, 2022. https://bit.ly/3lhjlwQ
* State: Check with your state association of nonprofits (and join if you’re not a member yet — there’s power in numbers): https://bit.ly/39uuVSF
* Nationwide: ARPA Spending Website, National Council of Nonprofits, updated regularly: https://bit.ly/3wldPzG
The best tool, however, is likely within your reach now – your phone. Contact your city, county, and state officials to ask them for this public information and then fill in the other columns with data you deem relevant.
Tip #4: Align Connections with Opportunities
Do you know the scenes when the hero holds the puzzle box, and she must align the rotating symbols in the correct sequence for the box to spring open and reveal the final clue to the treasure? That’s where you are now.
Superimpose on your treasure map the connections your nonprofit has with officials at the state and in each city and county where your nonprofit operates. Think about your board members’ contacts, as well as those of your staff members. Also consider colleague organizations for coalition building. Don’t forget the everyday advocacy that’s possible through the media, writing op-eds or gaining coverage for your community’s needs.
Prioritize the “Possibilities” and “Available” columns as the places where you’ll align your strengths to influence the direction those governments go with their unspent ARPA funds. You can’t be everywhere, so where are the very best places to focus on influencing decision-makers regarding the greatest needs.
When governments hold public meetings to hear from the public, don’t hoard your valuable frontline knowledge about the greatest community needs. Speak up and share your insights.
Tip #5: Identify the Greatest Need for the Public Good
Action heroes usually wind up with the treasure in hand, but if they see a greater need, they share or give it all away. Call me old-fashioned, but I believe nonprofits should do the same with these ARPA funds.
Assess for the greatest needs. If the pandemic harmed your nonprofit in a lasting way, then Congress determined you are eligible as a “beneficiary,” and you should make your case. If your nonprofit provides services that the community desperately needs, then step forward as a potential “provider of services” and make your case.
But if you have an easy “in” because the mayor or a county official is a close friend, yet your nonprofit doesn’t really need the funding to recover from the pandemic or provide urgently needed services, then help open the door for others. Be the hero by introducing colleague organizations to your decision-making contacts to help them partner together to improve the community.
There are still unmet needs because of the pandemic. Let’s all do our part to promote the equitable use of these once-in-a-generation funds.
Tim Delaney has been president & CEO of the National Council of Nonprofits since 2008. His email is firstname.lastname@example.org