On February 28, 2012, the US Office of Management and Budget (OMB) issued an Advance Notice of Proposed Guidance [pdf] regarding potential reforms for grants programs and cooperative agreements managed by federal agencies.
Each year, the US government spends more than $600 billion through federal grants and cooperative agreements, which offer funds and related technical assistance to nonprofits and community institutions, as well as local, state, and tribal governments.
Funding recipients, program administrators, and service providers involved in these funding channels must navigate a complex set of application processes, oversight requirements, and compliance standards.
OMB has proposed a number reform ideas, each with a set of attendant questions, under three general areas: (1) standardizing information collected across agencies; (2) adoption of a risk-based model for Single Audits; and (3) new administrative approaches for determining and monitoring the allocation of federal funds.
The due date for submissions is Monday, April 30, 2012 5pm ET. Public comments on the specific reform proposals can be submitted electronically through Regulations.gov, the US federal government information service for regulatory issues and agency rulemaking.
Specifics areas proposed for reform include:
- Concentrating audit resolution and oversight resources on higher dollar, higher risk awards.
- Streamlining universal compliance requirements, while reducing the number of types of compliance requirements tested
- Strengthening the guidance on audit follow-up for Federal awarding agencies
- Reducing burdens on pass-through entities and subrecipients by ensuring across-agency coordination and better target audit follow-up
- Consolidating cost principles into a single document, with limited variations by type of entity
- Using flat rates instead of negotiated rates for “indirect costs” (i.e. ‘facilities and administration”)
- Exploring alternatives to time-and-effort reporting requirements for salaries and wages
- Expanding application of the Utility Cost Adjustment for research to a greater number of higher education institutions
- Including the cost of certain computing devices and charging directly allocable administrative support as a direct cost
- Clarifying the threshold for an allowable maximum residual inventory of unused supplies
- Eliminating requirements to conduct studies of cost reasonableness for large research facilities
- Eliminating restrictions on use of indirect costs recovered for depreciation or use allowances
- Eliminating requirements to conduct a lease-purchase analysis for interest costs and to provide notice before relocating federally sponsored activities from a debt-financed facility
- Eliminate requirements that printed ‘‘help-wanted’’ advertising comply with particular specifications
- Allowing for the budgeting for contingency funds for certain awards
- Requesting that the Cost Accounting Standards Board consider increasing the minimum threshold for disclosure statements
- Allowing for excess or idle capacity for certain facilities, in anticipation of usage increases
- Allowing costs for efforts to collect improper payment recoveries
- Specifying that gains and/or losses due to speculative financing arrangements are unallowable.
- Providing non-profit organizations an example of the Certificate of Indirect Costs and indirect cost proposal documentation requirements
- Creating a consolidated, uniform set of administrative requirements
- Requiring pre-award consideration of each proposal’s merit and each applicant’s financial risk
- Requiring agencies to provide 90-day notice of funding opportunities in an updated Catalog of Federal Financial Assistance that would replace the current Catalog of Federal Domestic Assistance [NOTE: This would not affect the requirement to post actual notices of funding opportunities on Grants.gov]
- Providing a standard format for announcements of funding opportunities
- Reiterating that information collections are subject to Paperwork Reduction Act approval
These proposed reforms are of importance to social enterprises currently receiving federal grants and contracts– or looking to diversify resources by exploring federal financial assistance options.
Attention to regulations and policy matters must increase as more social enterprise, community benefit, and hybrid entities connect federal government resources to their work. Public input during this initial comment period will play a crucial role in the eventual development and implementation of a formal set of rule changes.
Our thanks to the National Council of Nonprofits for providing background information on the following activity of potential interest to nonprofit organizations and social entrepreneurs focused on community-based services.
