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Elevating the Role of Community Based Organizations in Federal Funding

Last week Congress passed a $1.5 trillion spending bill that was signed into law by President Biden this week. This comes on the heels of the $1.2 trillion infrastructure bill signed into law last November. While these bills contain funding for very worthwhile programming and resources, these funds often don’t make it to the organizations who are doing the work on the ground in our communities like community based organizations (CBOs).

There is no one definition of CBOs but generally they are organizations with an average annual operating budget of $500,000, a median operating budget of $280,000, 10 or fewer employees, and often rely on volunteers to support programming and operations. They often address our most pressing issues including healthcare, job training, economic development, mutual aid and helping families find or purchase housing and in many cases, avoid evictions.

Despite their generally small size they have a significant community impact especially in minority and underserved areas. 

The process for allocating dollars from the federal level is often slow and opaque with funds having to pass through state and local entities before they get to where they are most needed. For CBOs, navigating this process can be the difference between surviving and thriving. 

So how do we elevate the work of these CBOs so the government recognizes the need to provide resources that make funding streams more accessible to these organizations? SPARCC has made it part of their mission to tackle this issue.

In our Pathways to Community Prosperity Report, SPARCC articulated the need for public agencies to provide funding to CBOs to help guide local changes needed in communities in both the planning and implementation stages.  Last year, Enterprise Advisors conducted 18 interviews in July and August 2021 with small and large CBOs, thought leaders, and subject matter experts to examine how to better serve these organizations in accessing federal funds. 

Break it Down…

Through our interviews we found that CBOs face a lot of barriers when searching for federal dollars. Federal grant applications are complex, with heavy documentation requirements that are challenging for CBOs with small staffs to manage. Additionally, requirements are often put in place at the state or local level further complicating application, awarding, and oversight processes. All this red tape and hoops leave a CBO wondering if the juice is even worth the squeeze, even if they are eligible. Yet, from these interviews we gathered some key takeaways that can close the gap and provide greater access for federal dollars for CBOs.

Share the Wealth

The more you know, the more you grow; but you can’t grow if you don’t know. CBOs face challenges in receiving information about funding opportunities and are often unaware of eligible funding sources. Providing accessible venues for information exchange about funding opportunities, mentorship, and peer-to-peer exchange will support CBOs through the federal funding application process. For smaller CBOs it is best to form direct lines of dialogue to inform them of potential funding resources and deadlines. 

If You Build It, They will Come…

CBOs will benefit from a shared supportive infrastructure that can guide them through the  federal application process. Regionally scaled organizations are more approachable, especially for smaller CBOs that have limited resources and bandwidth. A regional entity could provide back office and administrative support including application support, legal review, finance and administrative needs, and other tasks related to  compliance reporting requirements. This frees up smaller CBOs to focus on direct work with the communities they serve. 

Gimme A Break

Federal funding is given to organizations that meet compliance requirements designed to avoid risk, fraud, and abuse of federal funds. While compliance is necessary it creates cumbersome reporting or insurance requirements for small and locally based CBOs. Trying to comply with all the regulations can often offset the positive impact the federal investment may have provided. A CBO may get federal funding to develop and disseminate materials but have to use thousands of dollars of their own money for postage – these kinds of expenses can break an organization. Streamlining contracting processes and reporting requirements, waiving some federal requirements, and removing provisional regulations and sub-government requirements will all lend to a more accessible process for CBOs.

Size Matters

Larger nonprofits often receive funding because of their existing  connections with government and ability to meet the administrative support necessary to fulfill compliance requirements. Yet, larger nonprofits don’t always have the local networks or community context understanding that smaller CBOs bring. Funding opportunities must be segmented based on size, capacity, and/or tenure so that small and medium-sized CBOs are not competing for the same opportunities as larger nonprofits. Funding set-asides  for groups such as small, rural, and underserved communities already exist and provide the blueprint for doing the same for CBOs that represent and/or are better positioned to meet the needs of BIPOC communities in urban and rural areas. 

If our government is meant to be by the people and for the people, we must make sure that those community organizations that are working for the people have access to federal funding to create real, grassroots change. CBOs are crucial to that work. Breaking barriers to federal funding is necessary to ensure resources are making it to the organizations that will lift our most marginalized communities in these trying times.

See below for the full report.

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