Federal Data Act Pushes Grant Transparency

Grant management for recipients of federal funds figures to become more streamlined. Congress has passed the Digital Accountability and Transparency (DATA) Act, bringing government-wide standards for grant reporting that is expected to result in easier reporting processes for nonprofits.

In conjunction with the Senate’s unanimous approval on April 10, the House of Representatives passage of the DATA Act – which now awaits President Barack Obama’s signature – will shine light on federal spending data that was previously hidden behind different systems and formats. For grant managers who receive funding from federal agencies, the law will bring a great deal of change to reporting standards.

According to information published by StreamLink Software, a grants software company in Cleveland, Ohio, the federal Treasury Department and the Office of Management and Budget (OMB) will begin creating the data standards necessary to regiment grantee and contractor reporting, and enable the online publishing of data after the bill is signed by the President. After a one-year review of what is currently being reported, agencies will have two years to implement the data standards into the information they report to the Treasury, White House, and government-wide grant and contract databases.

“We applaud the legislation’s intent to provide greater transparency into federal spending and appreciate the work of the Senate Homeland Security and Governmental Affairs Committee and House Oversight and Government Reform Committee to address many of the concerns industry had with previous versions of the legislation,” said Mark Hettinger, senior vice president of public sector and government affairs at TechAmerica. “The DATA Act is a step in the right direction for federal transparency and accountability.”

TechAmerica, a technology advocacy organization in Washington, D.C., did have concerns about potential national security risks but, according to Hettinger, those concerns were eased with the current version of the bill allowing Department of Defense the option to extend implementation of the bill’s requirements to enable better protection of data from damaging disclosure.

The changes to what organizations will need to report from their federal grant spending will be determined during the two-year pilot program period, according to Matt Rumsey, policy associate at the Sunlight Foundation. This program will determine what reporting needs to be consolidated and what, if anything, needs to be added.

“On the outset, [the DATA Act] will affect nonprofits that receive federal funding,” said Rumsey. “In the long run, it will help nonprofits looking to get federal funding because it will be easier to follow the money.”

Adam Roth, president and CEO of StreamLink Software, anticipates that nonprofits will have a few more items they will have to report to the federal government but that the reporting process will be easier. “Ultimately this will result in a much more streamlined process for nonprofits,” explained Roth, who noted that current reporting requirements are “all over the place.” He also said that organizations should be prepared to show the outcome of the dollars they receive.

Rumsey said the Sunlight Foundation, as well as other transparency advocacy organizations, have been pushing for something like the DATA Act for several years. While the changes will have the most impact on nonprofits receiving federal funding, Rumsey did note that it could have some impact on the philanthropic sector as a whole. Roth, meanwhile, believed the changes on the federal level came as a result of culture change, noting that many states had already moved to enact similar processes.

There had also been some movement prior to the DATA Act on the federal level, with Roth specifically mentioning recent changes by the OMB that place more importance on performance rather than compliance for grant recipients.

“I think this is a culture change,” said Roth. “The federal changes are a signal of the change in how business is being done.”

While Rumsey is pleased the legislation has passed, he stressed that the DATA Act is only the beginning. For the law to be as effective as it needs to be, he said, the law needs to be implemented correctly.

“This is a big step, but it’s not the last step,” said Rumsey. “We need to make sure the law is implemented strongly and that the government puts its energy behind it.”

A sign of how well the law is being implemented will be whether those agencies that are allocating dollars are following the guidelines set by the law, said Roth. He added that it is the responsibility of those in charge of implementing the law to ensure that the new standards are being followed across all agencies.