Federal Funds Gave Group a Chance to Expand but Came With Lots of Rules

At the end of 2008, the Community Action Partnership of Mid-Nebraska considered itself fortunate that in one of the worst economic years in American history, its fiscal position was almost exactly the same as it had been at the start of the year. Revenue, expenses, and donations all stayed the same, as most other charities were facing sharp declines and escalating demand for services.

But in 2009, clients’ needs were rising so fast that the group started spending a lot more just to keep up, increasing its budget by 35 percent to a peak of $15.3-million in 2011, according to its tax forms filed with the Internal Revenue Service.

However, unlike some nonprofits, it didn’t need to go into a deficit or dip into its reserves to meet demand. It received $13-million in extra money from 2009 to 2012 as the federal government approved an economic stimulus to jump-start the nation’s economy.

“We’ve been very lucky,” says Meredith Collins, the group’s deputy director.

Help, With Strings

The partnership would have faced more serious problems if the stimulus had not come through, since the group gets 86 percent of its income from government sources. Meanwhile, private contributions—provided mostly by United Way—remained relatively flat. It also faced a 34-percent decline in the money it raised from fees it charges for services such as immunizations at clinics, meals at centers for the elderly, and transportation services for the needy.

The stimulus money came with many strings imposed by Congress. The Nebraska group could use the money only for programs such as Early Head Start, homelessness prevention, job placement and training, and programs that provide food to women, children, and the elderly. Some $6-million had to be used for programs to help needy people insulate their homes to make them more energy efficient.

The money helped the group open a job-placement program and an apprentice program that supported 13 full-time positions. It also provided $4.6-million to help pay for a new transit facility the Community Action Partnership built to expand its fleet of buses and vans to provide low-cost transportation to the disabled and elderly.

While the stimulus was a big boost to the group, it didn’t cover all of its needs. The federal money could not be used to replace the $113,000 the state government cut, forcing the group to close two health clinics and a program that recruits older people to volunteer to help others. Nor could the funds make up for $13,000 the state eliminated for a woman’s support group. Those state spending cuts also forced the nonprofit to eliminate a position, require a full-time employee to go part-time, and withhold pay raises.

And once most of the stimulus money ran out last year, the Community Action Partnership had to close or trim programs those dollars had supported. The job-placement program it financed is now closed, and six of the 13 employees who ran the apprentice program were laid off.

Onerous Reporting Rules

The stimulus money also had other costs for the partnership.

The government added reporting rules designed to make sure the stimulus money was not wasted. But, says Ms. Collins, “The amount of monitoring with [stimulus funds] was remarkable. It seemed excessive at times.”

That stretched an organization that already covers quite a bit of ground: The Community Action Partnership of Mid-Nebraska serves people in 29 counties (two in Kansas) that span 21,000 square miles.

Requests for help have been on the rise ever since the economy soured, especially as Nebraska closed job-training centers. “Many times in rural communities, our offices are the only one in town,” Ms. Collins says.

The demand continues to spike. Nearly 4,100 people requested emergency help with food, fuel, rent, or medical or transportation needs in the entire fiscal year that ended in September. In the seven months since then, 4,700 people have already requested assistance, says Ms. Collins.

“We see a lot of people come through our doors that need help with a variety of needs, and we do our best to assist them,” she says. “However, when you don’t have the funding or the staffing, it makes things very challenging.”

The biggest challenge depends on how Congress handles the federal budget, including steps taken to end or reduce the sting of the automatic spending cuts that took effect in March.

Block Grants

The organization and others like it around the country are most worried about the potential cuts to the U.S. Department of Health and Human Services’ Community Services Block Grant program.

The fiscal 2014 budget that President Obama released last month would cut the community-services grants by $350-million, down from $677-million in 2012.

Money from the block grants provides about 4 percent of the group’s budget. Already, the group expects to lose $15,000 because of the automatic cuts that started in March.

The block grants are prized because organizations have flexibility in how to use them, says Ms. Collins.

“Without that money, it eliminates our outreach workers serving the rural counties. It will also reduce the partial salaries for the senior centers’ staff, the food-rescue staff. It will have this tremendous ripple effect,” Ms. Collins says.

And if Congress doesn’t come up with a way to avoid the automatic cuts for the rest of the fiscal year, 2013 could be the group’s most difficult since the recession ended nearly four years ago.

“As we look to the future,” says Ms. Collins, “we’re not seeing a lot of answers from Congress on how it’s all going to work out.”