Monthly Archives: December 2012

Cliff Diving: Sequestration and A New Year’s Resolution for Nonprofits and Local Public Agencies Worried About the Fiscal Cliff and Grants

EDIT: It looks like we’re not going over the supposed cliff. But much of the analysis below will remain relevant in the coming years, as political fights about debt, spending, and taxation continue.

EDIT 2: The analysis below has been augmented with “Sequestration Still Looms Over the Grant World: Two Months and Counting.”

I find it hard to believe, but as I write this post in the waning hours of Sunday in the waning days of 2012, it seems that the President and Congress are actually going to do a Thelma and Louise and send us collectively off the dubiously named “fiscal cliff.”

If this happens, we may see sequestration. As I understand the implications of sequestration on domestic discretionary spending, including funding for block granted and competitive grant programs, this would mean at least an 8.8% haircut across the federal spending board. Since we’re now already three months into the FY ’13 budget year, however, there are only nine months left, meaning that the cutbacks could be as high as 15%.

Now, what “across the board” means is still subject to interpretation, as this has not actually been done before. One assumes current grantees would get an immediate budget reduction notice, while open RFP competitions might be scaled back. There would also significant impacts for federal sub-grantees for such locally administered block granted programs as CDBG, CSBG, OAA, and so on. The mechanics of sequestration are subject to murky federal regulations and a cadre of anonymous GS-12 and GS-13 budget officers spread across the departments, who are going to be in particularly bad moods coming back after their Christmas holidays to this morass.

The short-term impact of sequestration for garden-variety nonprofits and public agencies that have direct or indirect federal contracts, or are vying for discretionary grant funds, is sure to be confusion in the short term and chaos over the medium term. But—and this is big “but” (so to speak)—it’s not the end of the world. To quote REM, “It’s the end of the world as we know it and I feel fine.” While media pundits and trade association/advocacy groups will make a lot of noise, the grant world will return to normalcy once the temporary Federal crisis passes.

Despite sequestration and ongoing budget battles, I think significant cutbacks in federal funding for discretionary grants are unlikely, as least for the next few years. What is more likely is a slowing of the increase in federal spending, or as it is more popularly called in a phrase I’m beginning to intensely dislike, “bending of the cost curve.” Keep in mind that we have not had a federal budget in four years and probably won’t have one anytime soon, as the feds will continue to operate with continuing resolutions and baseline budgeting. Thus, unless there is a sudden come to Jesus moment among Democrats and Republicans, it will be the same as it ever was.

This brings me to my suggested New Year’s resolution for nonprofits and local public agencies–take a hard look at your current programs and new initiatives in the planning stages. While there will still be plenty of RFPs available, the competition for government grants is sure to be more intense as the nation stares down its tax and spending challenges.* Seek foundation grants too; as the economy has staggered out of the Great Recession, foundations have recovered investment losses and are going full steam in grant making.

For those nonprofits that survive mostly on donations, a bigger issue is the potential of limits on the charitable tax deduction, which we wrote about recently in “Nonprofit ‘Whales’ May Face Extinction with Potential Tax Law Changes.” In other words, diversify and your organization will thrive in the exciting new year.

* Free proposal word here. In grant writing, there are never any problems, only challenges.

The Feds dumped RFPs right before Christmas

I have the misfortune of reading the Federal Register each day, which is every bit as scintillating as it sounds.* This week I noticed that at least two dozen RFPs were released on December 23—the Friday before Christmas.

The timing probably isn’t coincidence—much of the nonprofit world effectively shuts down between Christmas and New Year’s every year (although we usually get a couple of calls from unusual nonprofits who are thinking about their next moves as the year winds down). The various agencies who issued RFPs know as much. They might have some internal reason for issuing RFPs when they did. But I’m skeptical and suspect that they wanted to bury some of these notices.

Which means you should take a closer-than-usual look. If you do, you’ll find some very interesting RFPs, like the Community Development Financial Institutions Program (CDFI; it has has $123,000,000 available with more than 100 grants to be made) or the Assistance to Firefighters Grant Program Fire Prevention and Safety Grants (AFG; it has $35,000,000 available and more than 200 grants to be made).**

Government entities, corporations, and other organizations routinely release bad news on Friday afternoons, when they know the bad news will get less press. We’re likely seeing a similar dynamic here, especially because you can just about guarantee that program officers contacts won’t be available until after the New Year. Incidentally, if you’re looking for politically unpalatable regulations, this is also an excellent time of year to be studying the Federal Register.

The Federal Register offers useful insights into the federal process at work, and the minds behind this process. This aspect of our business helps us build weird bits of insight that we’d otherwise lack and that we’re happy to share with you.

* If that weren’t enough, I’m also on all sorts of foundation and state e-mail lists. The result is usually tedium, intermixed with the occasional major grant opportunity.

** AFG is a program of special interest to me for reasons explained in “FEMA Tardiness,, and Dealing with Recalcitrant Bureaucrats” and its sequels. As those posts describe, Seliger + Associates is doing its part to bring YOU better government.

Sandy Hook School Shootings Tragedy Likely to Lead to New Grant Opportunities for School Security, After School and Mental Health Project Concepts

The recent tragic shootings at Sandy Hook Elementary in Newtown, CT will likely lead to new grant opportunities in school safety, safer facilities, and safety training, as well as mental health and at-risk youth services. It is a sad reality that shocking events often result in new grant programs and increased funding for existing programs, largely because politicians are chronically infected with “do something disease.” Even when the “something” will not necessarily change the dynamic leading to the problem, people feel better when something is being done and politicians are more than happy to oblige.

In the area of gun violence, we last saw this basic phenomenon following the Columbine School School Massacre in 1999. This was the first of what turned out to be a so-far unending series of similar school-based mass shootings. Most Americans were stunned by Columbine, particularly since it occurred in an upper-middle-class community with few obvious social problems facing youth.

Nonetheless, two teens decided to attack their peers because, as Dave Cullen describes in Columbine, one was a violent sociopath and the other was essentially in his thrall. Suddenly, it became clear that more or less all American youth were “at-risk” and the grant floodgates opened for nonprofits and schools interested in trying new approaches to reaching kids, even middle and upper middle class kids, with a variety of approaches.

The 21 Century Community Learning Centers (21st CCLC) program was one beneficiary of the national debate following Columbine. Funding for the 21st CCLC program, which was new at the time, was dramatically increased following Columbine. Even more importantly for many applicants, the Department of Education became very interested in funding 21st CCLC projects in relatively affluent areas, so much so that a special funding category for “suburban” schools was established.

While it later evolved to have an academic enrichment focus, the original idea behind the 21st CCLC program was essentially to keep kids in the school setting longer each day. The concept was to provide a safe place for them after school, while making sure they didn’t have enough unsupervised free time to build bombs and steal guns to bring back to school the next day. When the program was block granted to the states about seven years ago, a veneer of academic support was emphasized to both glam up the program and respond to the No Child Left Behind Act’s academic requirements.

We’ve written dozens of funded 21st CCLC grant proposals over the years, including one for a very affluent school district in Colorado not too far from Columbine. Yes, we shamelessly invoked Columbine in this proposal, as well as in other 21st CCLC and other at-risk youth proposals—particularly for projects in middle and middle upper class communities. We continue to do so, but now will add Sandy Hook as another example that even affluent kids face a daunting gantlet* of problems that make them at-risk and in need of wraparound supportive services.** This doesn’t diminish the enormity of the tragedy, but it does provide context and a salient example that reviewers will recognize.

In addition to 21st CCLC, many other federal and state grant programs were created after Columbine to fund such project concepts as hardened school security systems, disaster planning, school resource officers (cops that work in schools) and the like. When Congress returns in January, I expect to see new funding emerge for school safety and at-risk youth programs.

This is because there is a qualitative difference between Sandy Hook and other recent school shootings–in this case, not only were the victims from affluent families, but they were also mostly children. Citizens will demand action and about the only politically neutral and easy action governments can take is to expand funding for services that might help prevent other similar tragedies. “Politically neutral and easy” leaves aside the political minefield of more stringent gun control laws, a subject which is beyond the scope of this post and this blog.

If your nonprofit is concerned with these issues and has the capacity to make a local difference, use your holiday downtime to get your staff and board members together to brainstorm an innovative project concepts that might be relevant to upcoming grant opportunities. As Rahm Emanuel famously said, “You never want a serious crisis to go to waste.”***

* Free proposal phrase here. I know you think it should be daunting “gauntlet,” but that would make it a challenging glove. The word you’re looking for is gantlet. EDIT: Actually, as this commenter points out, either has become correct.

** Another free proposal phrase here.

*** It’s also possible that we’ll start to see changes in the mental health system, since so many shooters have been involved with the mental health system prior to committing their crimes. As Liza Long writes in Thinking the Unthinkable, “When I asked my son’s social worker about my options, he said that the only thing I could do was to get Michael charged with a crime.” That needs to change.

December Links: HUD, Emergency Solutions Grants, Boating Safety Grants, What’s Wrong with Liking Quiet Time, Real Dangers, Parents in Prison, Happy Porn Stars and More

* In a very important announcement, HUD has decided to

revise the regulations for the Emergency Shelter Grants program by establishing the regulations for the Emergency Solutions Grants program, which replaces the Emergency Shelter Grants program. The change in the program’s name, from Emergency Shelter Grants to Emergency Solutions Grants, reflects the change in the program’s focus from addressing the needs of homeless people in emergency or transitional shelters to assisting people to quickly regain stability in permanent housing after experiencing a housing crisis and/or homelessness.

Some observations:

1. The name change doesn’t matter.

2. This is only going to confuse people further.

3. This isn’t going to help people who actually need services, but:

4. It will certainly create more work for HUD bureaucrats.

* The Water Boating Safety Grants are out, and they’re now being provided under the Department of Homeland Security (DHS). Aren’t they supposed to be catching terrorists, not checking for life vests on dinghies?

* “The Quiet Ones.” This describes me, and wanting quiet sometimes makes me feel increasingly out of place, or out of time. The Hacker News discussion is also good, and Paul Graham said this:

I think the fundamental problem with noisy people is not that they’re inconsiderate, but that they don’t have any train of thought to interrupt, and they thus don’t realize the havoc they’re wreaking.

When I was living in Providence, working on On Lisp, I told my loud but well-meaning neighbors that I was writing a hard computer book, and that made them be quiet. Ordinary people can understand that you need quiet if you’re working on some specific, hard task, like doing math homework. What they don’t grasp is that someone would want their mind to work that way all the time, as a matter of course.

* “The attention paid to terrorism in the U.S. is considerably out of proportion to the relative threat it presents. That’s especially true when it comes to Islamic-extremist terror. Of the 150,000 murders in the U.S. between 9/11 and the end of 2010, Islamic extremism accounted for fewer than three dozen.” My favorite question when I hear people discussing the contemporary impact of terrorism is this: About how many Americans die in car accidents every year? If they don’t know the answer, they probably aren’t all that serious about evaluating real dangers and priorities.

* Coping with parents in prison.

* “Efforts to Curb Social Spending Face Resistance.”

* “The Real Estate Deal That Could Change the Future of Everything:” letting local people invest small amounts in local projects. The barriers are primarily regulatory.

* “Study: Porn stars aren’t ‘damaged:’ A report finds adult actresses are happier than the rest of us — and that being naked might lead to self-esteem.” This leads to the obvious question: Why do these stereotypes persist?

* Immigrants lead plunge in U.S. birth rate. This is actually a bigger problem than many people realize.

* “Cirque du Soleil’s extravagant ‘Iris’ will close Jan. 19.” We wrote a funded $4 million HUD UDAG about ten years ago for the parking for the theater component of this mixed use project in Hollywood for the now-defunct Los Angeles Community Redevelopment Agency. It wasn’t a very well designed project then and still isn’t.

* Guy Kawasaki’s APE: Author, Publisher, Entrepreneur–How to Publish a Book describes what I’m going to be doing and what you might be thinking about doing.

* Awesome: Soaring Rents Drive a Boom in Apartments.

* “Michigan Goes Right-to-Work.” As Yglesias says, “It’s only going to have a modest impact in the short-term, but far and away the biggest economic news of the week from a long-term perspective has got to be Michigan’s rather sudden transformation into a right-to-work state.”

* If Peter Thiel And Garry Kasparov Are Right, Then We’re In Trouble. I pre-ordered their book, The Blueprint.

* Related to the above link: “Teach U.S. kids to write code.” I would add, however, that we should teach it better than we teach, say, English, math and physics.

* My favorite recent weird RFP is the Black Duck Joint Venture Competitive Grant Program (BDJV). There are grants up to $120,000 and up to four available awards.

Nonprofit “Whales” May Face Extinction with Potential Tax Law Changes

I’ve about had it with the endless blathering about the so called fiscal cliff.* There is one nugget in the story, however, that should strike fear and loathing into the hearts of nonprofit executive directors: Whether or not President Obama and Speaker Boehner hold hands as they jump off the cliff, America faces an enormous fiscal challenge that will have to be addressed in the coming years, because we spend more than we take in and have for about the last ten years. As Herb Stein’s Law states, “If something cannot go on forever, it will stop.” The inevitable tax reform that will result is likely to include significant limits on the charitable tax deduction.

While nobody knows what form changes to the charitable tax deduction “loophole” might take, it’s a good bet that the annual total for all deductions, including the charitable tax deduction, will be capped at some number—say $25,000. “So what?” you say. “I’ve got lots of donors and there’ll probably be a minimum gross income, like the currently popular $250,000 per year, that is somehow supposed to equate to ‘millionaires and billionaires.’ And it’s time we stick it to the one percenters.”

But many donation-supported nonprofits have lots of supporters who make small, albeit regular, donations to the cause. As any executive director knows, however, these donors take lots of care and feeding to extract money. As a result, the return on the time investment in getting these donations is fairly small. Instead, for many if not most donor-supported nonprofits, a relatively few large donors actually keep the doors open and the lights on.

Like Las Vegas casinos who depend on high rollers, these donor “whales” are critical to many nonprofits. Just like their casino counterparts, who are charmed by private jets and fancy suites, nonprofit whales also demand perks like a seat on the board, constant phone calls and ego stroking. It’s worth it, though, because the return can be enormous. Thus, executive directors spend a lot of time whale watching, while their underlings curry favor with the everyday donors and volunteers.

Restrictions on the charitable tax deduction will probably make whale herding much more challenging. A typical donor whale might support four or five charities generously. When the tax benefit is capped, as it likely will be, that might drop to two or three. Your nonprofit could be left on the whale watching cruise with nary a fluke in sight.

The good news in all of this is that increased tax revenues from tax reform will mean there will be more government grant dollars up for grabs, or at least fewer extensive cuts.

EDIT: The WSJ ran “Should We End the Tax Deduction for Charitable Donations?“, which engages the same questions as the post above. If the WSJ and other major media outlets are debating this issue, you can bet there’s a real chance of actual changes.

* Or to quote the inimitable Samuel L. Jackson in Snakes on a Plane, “Enough is enough! I have had it with these motherfucking snakes on this motherfucking plane!”.

Why HUD Hasn’t Released the Total Funding Amount for the Lead-Based Paint Hazard Control (LBPHC) and Demonstration Program NOFAs?

HUD just announced the Lead-Based Paint Hazard Control (LBPHC) Program and its sister program, Lead Hazard Reduction Demonstration Grant (LHRD) Program NOFA. The NOFA, however, doesn’t list how much money is available or the maximum grant amounts for either program—instead, it has highlighted “XX” and “XXX” variables:

I sent a note to Michelle Miller, the Director of HUD’s Programs Division, noting the absence of the funding amount and maximum grant amount, under the assumption that it was a mistake. She promptly (always a pleasant surprise) wrote back:

Actually it is correct Jake. Since federal budgets have not been appropriated we do not know the total dollars available. That will be announced as soon as we know. However, does affect anyone putting in an application since the award amounts are listed

And now we’re sharing her answers with those of you who are wondering the same thing I was. As of this writing,* Congress hasn’t passed a FY ’13 budget or yet another Continuing Resolution, so HUD is stuck in budgetary limbo. But HUD assumes, probably correctly, that Congress will eventually authorize LBPHC and LHRD money.

Smart organizations are going to start their applications now, since the NOFA has been published.

In past years, the two programs have had more than $100 million available, which makes them an excellent source of funding for cities and community development agencies; we’ve written seven funded LBPHC grants over the years and so are very familiar with the program. For a primer, see Isaac’s post, “HUD’s Lead-Based Paint Hazard Control Program (LBPHC) Program Explained.”

Despite the frustration of not knowing exactly how much money will be allocated to these programs, we have to give HUD credit for two things: first, it’s breaking the increasingly common pattern of offering only thirty-day deadlines; very short deadlines make it much harder for nonprofits to prepare their best application. Second, Michelle replied to my e-mail. I know we’ve written many posts that castigate bureaucrats for various misdemeanors and kinds of incompetence, but we do want to praise responsive bureaucrats who do come through.

* Free proposal phrase.