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First-in-the-Nation "Real Cost" Funding Approved

Monday, November 9, 2015

Last week Los Angeles County nonprofits received some ground-breaking newsthe Board of Supervisors approved support for the administrative costs of nonprofits that are contracted for government services. The action follows the release of a report by the Urban Institute that highlights the significant problems California nonprofits face when managing multiple government and private contracts and grants, including routine underpayment of the full cost of the work. The new federal rules were released in December 2014 by the Federal Office of Management and Budget, following a lengthy review of federal contracting and grantmaking practices. The Nonprofit Times reports that the motion will "Strengthen nonprofit service in the county by supporting the implementation of new federal fules governing how government agencies reimburse nonprofits for the full cost of their work." 

The President and CEO of the National Council of Nonprofits Tim Delaney said, "Research shows that for too long, governments at all levels that hire nonprofits to perform services have been shortchanging nonprofits, forcing foundations and individuals to subsidize the funding gaps when governments fail to pay their fair share. We applaud the LA County Supervisors for their leadership in being the first local officials in the nation to formally declare that all governments entering into written agreements with nonprofits to deliver services to the public have an affirmative duty to pay their fair share of the costs that those nonprofits incur."

This movement was supported by the Weingart Foundation as part of an ongoing effort by NCG in partnership with Southern California Grantmakers and San Deigo Grantmakers called The Real Cost Project. Over the last year, the three California regionals have brought experts together in order to find a solution to "real cost" funding for nonprofits. Learn more about The Real Cost Project from its Program Manager David Greco in his blog It's a New World and find resources here.