Category Archives: Government

Funders sometimes force grantees to provide services they don’t want to: FQHCs and Medication Assisted Treatment (MAT)

We often remind clients that those with the gold make the rules. Accepting a government grant means the applicant must sign a grant agreement, in which the applicant agrees not only to provide wherever services were specified in the proposal, but also abide by a myriad of regulations and laws. While many applicants will tussle with a funder over the budget, there’s rarely any point in trying to modify the boiler plate agreement—just like one can’t modify Apple or Facebook’s Terms of Service.

In addition to the specific terms of the grant agreement, grantees quickly become subject to other influences from the funder—when the Godfather makes you an offer you can’t refuse, you know that eventually you’ll be told to do something you’d otherwise not much want to do. While a federal agency is unlikely to place a horse’s head in a nonprofit Executive Director’s bed, the grantee might end up having to provide an unpalatable service.

A case in point is HRSA’s relatively recent (and divisive) endorsement of Medication Assisted Treatment (MAT) for treating opioid use disorder (OUD). Since HRSA is the primary FQHC funder, it is essentially their Godfather and has great influence over FQHCs. In the past few years, HRSA has strongly encouraged FQHCs to provide MAT. The CEOs of our FQHC clients have told us about HRSA pressure to start offering MAT. It seems that, even after several years of cajoling, only about half of our FQHC clients provide MAT, and, for many of these, MAT is only nominally offered. Other clients see offering MAT as a moral imperative, and we’ll sometimes get off the phone with one client who hates MAT and then on the phone with another client who sees not providing MAT as cruel.

“MAT” generically refers to the use of medications, usually in combination with counseling and behavioral therapies, for the treatment of substance use disorders (SUD). For OUD, this usually means prescribing and monitoring a medication like Suboxone, in which the active ingredients are buprenorphine and naloxone. While Suboxone typically reduces the cravings of people with OUD for prescribed and street opioids (e.g., oxycontin, heroin, etc.), it is itself a synthetic opioid. While MAT replaces a “bad opioid” with a “good opioid,” the patient remains addicted. Many FQHC managers and clinicians object to offering MAT for OUD, for a variety of medical, ethical, and practical reasons:

  • Like its older cousin methadone, as an opioid, Suboxone can produce euphoria and induce dependency, although its effects are milder. Still, it’s possible to overdose on Suboxone, particularly when combined with alcohol and street drugs. So it can still be deadly.
  • While MAT is supposed to be combined with some form of talking or other therapy, few FQHCs have the resources to actually provide extensive individual or group therapy, so the reality is that FQHC MAT patients will likely need Suboxone prescribed over the long term, leaving them effectively addicted. We’re aware that there’s often a wide gap here between the real world and the proposal world.
  • Unless it’s combined with some kind talking therapy that proves effective, MAT is not a short-term approach, meaning that, once an FQHC physician starts a patient on Suboxone, the patient is likely to need the prescription over a very long time—perhaps for the rest of their life. This makes the patient not only dependent on Suboxone, but also dependent on the prescriber and the FQHC, since few other local providers are likely to accept the patient and have clinicians who have obtained the necessary waiver to prescribe it. Suboxone users must be regularly monitored and seen by their prescriber, making for frequent health center visits.
  • As noted above, prescribed Suboxone can, and is often, re-sold by patients on the street.
  • Lastly, but perhaps most importantly, most FQHC health centers prefer to look like a standard group practice facility with a single waiting room/reception area. Unlike a specialized methadone or other addiction clinic, FQHC patients of all kinds are jumbled together. That means a mom bringing her five-year old in for a school physical could end up sitting between a couple of MAT users, who may look a little wild-eyed and ragged, making her and her kid uncomfortable. Since FQHCs usually lack the resources for anything beyond minor paint-up/fix up repairs, there is simply no way around this potential conflict.

Given the above, many FQHC CEOs remain resistant to adding the challenges of MAT to the many struggles they already face. Still, the ongoing pressure from HRSA means that most FQHCs will eventually be forced to provide at least a nominal MAT program to keep their HRSA Program Officer at bay. The tension between a typical mom and her five-year old against a full-fledged behavioral and mental health program is likely to remain, however. Before you leave scorching comments, however, remember that we’re trying to describe some of the real-world trade-offs here, not prescribe a course of action. What people really want in the physical space they occupy and what they say they want in the abstract are often quite different. You can see this in the relentless noise around issues like homeless service centers; everyone is in favor of them in someone else’s neighborhood and against them in their own neighborhood. Always pay attention to what a person actually does over a person’s rhetoric.

The movement towards a $15 minimum hourly wage and the Pre-K For All program in NYC


Over the last few years, the highly marketed $15/hour minimum wage has had remarkable success: it, along with the recent economic boom and historically low unemployment rates, have increased wages for some unskilled/low skill workers in some areas. Last week, though, I was developing a budget for a federal grant proposal on behalf of a large nonprofit in NYC. The federal program requires the use of “Parent Mentors”, which is another way of saying “Peer Outreach Worker.” So two full-time equivalent (FTE) Parent Mentors went into the budget.

“Peer” staff are not professionals—college degrees or formal work experience aren’t typically required. Instead, the peer is supposed to have life experience similar to the target population (e.g., African American persons in recovery for a substance abuse disorder treatment project in an African American neighborhood) or street credentials (“street cred”) to relate to the target population (e.g., ex-gang-bangers to engage current gang-bangers). In most human services programs, the peer staff are supervised by a professional staff person with a BA, MSW, LCSW, or similar degree. While the peer staff are at the bottom of the org chart, in many cases, they’re much more important to getting funded and operating a successful program than the 24-year-old recent Columbia grad with a degree in urban studies or psychology, as the “supervisor” is often afraid to go out into the community without a peer staff person riding shotgun. The situation is analogous to a first-year military officer who is technically superior to a 15-year enlisted veteran sergeant.

There are 2,080 person hours in a person year, so, at $15/hour, one FTE peer worker is budgeted at $31,200/year. If a nonprofit operates in an area with a $15/hour minimum wage, that’s the lowest salary that can be legally proposed. For many nonprofits, actual salaries for entry-level professional staff are about $30,000 to $35,000 per year. One might say, “No problem, just raise the professional salaries to $40,000.” This is, however, not easily done, as the maximum grants for most federal and state programs have not been adjusted to reflect minimum wages in places like New York or Seattle. If the nonprofit has been running a grant-funded program for five years, they’ve probably been paying the peer workers around $10/hour, and the new RFP very likely has the same maximum grant—say, $200,000—as the one from five years ago. That means one-third fewer peer workers.

If a Dairy Queen (I’m quite fond of DQ, like Warren Buffet) is suddenly confronted by the much higher minimum wage, they can try making the Blizzards one ounce smaller, skipping the pickles on the DQ Burgers, or buying a Flippy Burger Robot, and laying off a couple of 17-year olds. Nonprofits can’t generally deploy any of these strategies, as the service targets in the RPF are the the same as they ever were. For “capitated programs” like foster care, the nonprofit has to absorb rising costs, because they have a fixed reimbursement from the funder (e.g., $1,000/month/foster kid to cover all program expenses); we’re also unlikely to see robot outreach workers any time soon.

Most nonprofits also depend to some extent on fundraisers and donations. It’s hard enough to extract coin from your board and volunteers, so having a “New Minimum Wage Gala” is not likely to be a winning approach. Some higher-end restaurants in LA have added surcharges for higher minimum wages and employee health insurance, a practice I find annoying (just raise the damn pasta price from $20 to $22 and stop trying to virtue signal—or make me feel guilty). That avenue is typically closed to nonprofits, because the whole point is to provide no-cost services, or, in cases like Boys and Girls Clubs, very low-cost fees ($20 to play in the basketball league). Some organizations charge nominal membership fees, which are often waived anyway.

The nonprofit and grant worlds move much slower than the business world, and I guess we’ll just have to wait for the funders to catch up with rising minimum wages. In the meantime, some nonprofits are going to go under, just like this US News and World Report article that reports, “76.5 percent of full-service restaurant respondents said they had to reduce employee hours and 36 percent said they eliminated jobs in 2018 in response to the mandated wage increase” in New York City. More grants will also likely end up going to lower-cost cities and states, where it’s possible to hire three outreach workers instead of two outreach workers.

We write lots of Universal Pre-K (UPK) and Pre-K For All proposals in NYC and few, if any, of our early childhood education clients over the years have paid their “teachers” or “assistant teachers”—who are mostly peer workers with at most a 12-week certificate—$15/hour. There’s a new NYC Pre-K For All RFP on the street, and, if we’re hired to write any this year, the budgeting process will be interesting, as the City has minimum staffing levels for these classrooms, so staff cannot be cut.

Some organizations will get around the rules. Many religious communities are already “familiar,” you might say, with ways of getting around conventional taxation and regulatory rules. Their unusual social bonds enable them to do things other organizations can’t do. Many religious communities also vote as blocks and consequently get special dispensation in local and state grants and contracts. We’ll also likely end up seeing strategies like offering “stipends” to “parent volunteers” to get around the “wage” problem. For most nonprofits in high-minimum-wage areas, however, the simple reality is that fewer services will be provided per dollar spent.

The weakness of the Community Development Financial Institutions (CDFI) Program, in a paragraph

We’re fans of the Community Development Financial Institutions Program (CDFI), which usually has tens (or hundreds) of millions of dollars available annually “to promote economic revitalization and community development” through investment in local startups and businesses. The CDFI Program—notice the capital “P”—is separate from the CDFIs themselves, which are local organizations that offer loans and investments in local companies and are certified as CDFIs by the Department of the Treasury.

I was thinking about CDFIs when I read “How the 22-year-old founders of Brex built a billion-dollar business in less than 2 years,” which is an interesting story in its own right but also says this:

As founders themselves, Dubugras and Franceschi were hyper-aware of a huge problem entrepreneurs face: access to credit. Big banks see small businesses as a risk they aren’t willing to take, so founders are often left at a dead-end. Dubugras and Franceschi not only had a big network of startup entrepreneurs in their Rolodex, but they had the fintech acumen necessary to build a credit card business designed specifically for founders.

Those “Big banks” are exactly who CDFIs are supposed to compete with. Yet the CDFI program has been operating since 1994 and was a much-ballyhooed part of President Clinton’s domestic policy agenda. Over the years, the CDFI Program has largely faded from view, although we still write CDFI proposals every couple years. Still, access to credit remains a massive problem—and one that the Brex founders have tackled, even though CDFIs were (and are) well-placed to do exactly what Brex did.

It’s distressing that, even after decades of CDFI, high-quality entrepreneurs are still struggling to get capital out of existing financial institutions. If I were a CDFI manager in charge of the next program application, I would both cite this article and describe how my CDFI will avoid the traditional Catch-22 of banking and loans: the only entities that can get the loan are the ones that don’t really need it. Venture capital is one way to break that Catch-22. But there ought to be others.

CDFIs have potential. The “weakness” in the title of this post is not meant to be a sign of just another person on the Internet, calling names. It’s meant to be addressed by CDFIs themselves in the next funding round.

I’ve never heard of a startup applying for funding from a CDFI. Doesn’t mean it hasn’t happened, but it is notable. If you know of any that have, please leave a not in the comments.

In addition, it’s notable that most corporate credit cards are still… not very friendly, to speak euphemistically. We know from experience. Maybe we’ll be applying for a Brex card in the near future.

No rush: the NSF “Accelerating Discovery: Educating the Future STEM Workforce” program

The National Science Foundation (NSF) just issued the “Accelerating Discovery: Educating the Future STEM Workforce” RFP, and it looks like a promising grant source for community colleges and four-year schools interested in STEM education, since the program targets undergrad education. But the grants.gov posting omits two key pieces information: how much money is available and how many grants will be made. Applicants likely won’t be able to decide whether they should apply they know the answer to those two key questions.

Two contact people are listed on the program website: Ellen M. Carpenter, Ph.D., and Laura B. Regassa. I sent an email to both asking about the total amount of funding available and the number of awards that’ll be made. Carpenter wrote back:

We plan to publish a set of FAQs associated with the “Accelerating Discovery” program description (NSF PD 18-1998). We do not plan to respond to individual questions until that FAQ document has been published, since we anticipate that it will answer most of the questions.

I asked when the FAQ will be published. Answer: “I’ve been told ‘soon’, so I’m guessing by the end of the month is a reasonable estimate.” At that point I gave up. As we’ve written before, there’s little point in attempting to get bureaucrats of any kind, but especially federal bureaucrats, to do anything expeditiously—or that they just don’t want to do. Also, irony is often not the strong suit of bureaucrats.

You may think I’m being overly harsh on Carpenter, and maybe I am. But she is listed publicly as a contact person for this program and prospective applicants need to be able to plan their applications. They can’t effectively do so unless they know how much is available. The NSF, meanwhile, is denying timely access to that information for an entire month. The announcement for the “Accelerating Discovery: Educating the Future STEM Workforce” is presently just a tease because it doesn’t include key information.

Nonprofit royalty exist, but you’re unlikely to be the next Duchess of At-Risk Youth Services

I had coffee with a friend who was in LA from NYC, and he’s the development director of a huge arts organization in NYC that raises $50M annually, mostly from large foundations, “whale” donors, ticket sales, and a soupçon of grants (not one of our clients). Over our iced macadamia milk lattes (this is LA after all) at Go Get Em Tiger, he told me he’s making his annual trek to LA to meet and show the flag with a big entertainment-related foundation that funds his agency. He was invited to various “industry events” that us mere mortals read about in TMZ. I said he’s a member of the nonprofit royalty.

“What’s that?” he asked.

Imagine you’re looking down on a vast savanna. Roaming are the 1.5 million 501(c)(3) US nonprofits (thousands of new ones bubble into existence every year, while some starve to death). Let’s deduct two-thirds of these as either being very small or too inert to be of interest. That leaves maybe 500K active nonprofits scurrying around the plain looking for donation and grant grubs, mice, rabbits, and the occasional elk. Most of these nonprofits are doing good works in primary health care, at-risk youth services, workforce development, other human services, the arts, and so on. While most have relatively modest annual operating budgets, say less than $5M, some, like big FQHCs, have annual operating budgets north of $50M. No matter how large, however, these are still commoners, battling with one another for donations, grants, third-party payers, and the like.

Among the nonprofit herd, however, stride a very smaller number of nonprofit royalty, like my friend’s agency in NYC. Royal nonprofits are funded by fawning large foundations, public agencies, and donations from the carriage trade (in LA, this means entertainment and tech folk, while in NYC this means hedge-fund types).* For the nonprofit royals, much of their revenue is derived from relationships, individual and organizational. Management staff and board members of the royals go to the same events as their target funders, probably went to the same colleges, and send their kids to the same private schools. Royals have access to celebrities at galas that they can dangle in front of potential funders—pssssst, Meryl Streep and Al Gore will be at the VIP party after our annual gala, and a donation of only $50K gets you in the VIP door.

A nonprofit does not have to be “born” royal, although it helps if the founder is a royal herself, can sweet talk some royals to serve on the board, or arrives at the the right moment to address a suddenly attractive cause. Examples of fortuitous nonprofit start-ups include Komen for the Cure, Wounded Warriors Project, Mothers Against Drunk Driving, and the like. Nonprofit royals usually grow into their status, rise above the nonprofit herd through hard work, relentless PR, providing great services, and more than a bit of luck.

The “luck” element is important, and you’re likely familiar with analogous stories from the movie biz. Meghan Markle was just another beautiful actress, one of thousands in LA, when she was auditioning for bit parts 15 years ago, and now she’s set to marry Prince Harry. Grace Kelly from Philly had only been acting for six years when she married Prince Rainier in 1956. Both became literal royals.

The same process can unfold with nonprofits. Geoffrey Canada took the rather mundane work of helping at-risk kids and their families to nonprofit royaldom with the Harlem Children’s Zone over 30 years (he’s also not a client). Like in Hollywood, only a tiny percent of. nonprofits start with or ever achieve this rarefied status—and they must work incredibly hard to maintain that position, albeit in ways different than conventional nonprofits. For most aspiring actors, it’s best to have a fallback career plan, and for nonprofits, it’s best to assume you’re part of the herd, not the royalty.

This is why we advise our clients to forget about trying to get foundation and government grants based on relationships (unless they already have preexisting relationships). All large foundations have frontline program officers whose main job is to talk nicely with nonprofits seeking grants and point them to their guidelines. It’s pretty hard to schmooze your way to big foundation grants, as the program officers have heard it all before. The only real way to achieve this is via relationships that already exist. For example, there’s an organization called Cancer for College that offers scholarships to childhood cancer survivors. The founder was a college frat buddy of Will Farrell. That’s not going to be true of the vast majority of nonprofits.

Most government grant officers, meanwhile, are bureaucrats with little, if any, interest in which applicant get funded—the system is actively designed to be impersonal in order to prevent corruption. Also, virtually every politician, and their field deputies, will wholeheartedly gush over any idea you bring to them, pat you on the head, tell you you that you have to wait for an RFP, like everyone else, as they show you the door (and likely invite you to a fundraiser). This is why there’s little point in getting support letters from politicians for proposals, as they will generally provide them to any agency that asks.

There are exceptions in the government grant world, especially at the local level, where patronage and cronyism is evident. Many NYC and LA City and County RFPs are not entirely competitive, as the pols, and the program officers, know that favored constituency groups (e.g., African Americans, Hispanics, Orthodox Jews, etc.) and a few connected applicants need to be funded.

Since seeking grants through relationships and royalty status is not going to work for most nonprofits, what’s an agency to do? It’s not complex, but it is hard to execute: select services that are needed and your organization can plausibly deliver, conduct detailed grant source research, and submit compelling and technically correct proposals on time. It you do that often enough, who knows, your agency might become the Duchess of At-Risk Youth Services, joining the royal court with Duke Geoffrey Canada.


* Amazon’s pretty good series, Mozart in the Jungle about a fictional version of the NY Philharmonic, has some storylines that fairly accurately depict how nonprofit royals use relationships to snare big donors (everyone in NYC wants to drink mate tea with Maestro Rodrigo). The series is based on the eponymous but very different memoir by Blair Tindall.

Seliger + Associates’ 25th Anniversary: A quarter century of grant writing

My first post, on Nov. 29, 2007, “They Say a Fella Never Forgets His First Grant Proposal,” tells the story of how I became a grant writer (when dinosaurs walked the earth); 500 posts later, this one covers some of the highs and lows of grant writing over the past 25 years, since I founded Seliger + Associates.

Let me take you back to March 1993 . . . President Clinton’s first year in office, Branch Davidians are going wild in Waco, Roy Rogers dies, Intel ships its first Pentium chips, Unforgiven wins the Oscar for Best Picture, and Seliger + Associates is founded. The last item caused no disturbances in the Force or media and was hardly noticed. Still, we’ve created a unique approach to grant writing—although we’re not true believers, I like to think we’ve made a difference for hundreds of clients and their clients in turn.

When I started this business, the Internet existed, but one had to know how to use long forgotten tech tools like text-based FTP servers, “Gopher,” dial-up modems, and so on. While I taught myself how to use these tools, they weren’t helpful for the early years, even though the first graphical web browser, Mosaic, was launched in late 1993. I used a primitive application, HotMTML Pro, to write the HTML code for our first web site around the same time. I didn’t understand how to size the text, however, so on the common 12″ to 14″ monitors of the day, it displayed as “Seliger + Ass”. It didn’t much matter, since few of our clients had computers, let alone Internet access.

Using the Wayback Machine, I found the first, achieved view of our website on December 28, 1996, about two years after we first had a Web presence. If this looks silly, check out Apple.com’s first web archive on October 22, 1996. You could get a new PowerBook 1400 with 12 MB of RAM and a 750 MB hard drive for only $1,400, while we were offering a foundation appeal for $3,000!

Those were the days of land line phones, big Xerox machines, fax machines, direct mail for marketing, FedEx to submit proposals, going to a public library to use microfiche for research data, waiting for the Federal Register to arrive by mail about a week after publication, and an IBM Selectric III to type in hard copy forms. Our first computer was a IMB PS 1 with an integrated 12″ monitor running DOS with Windows 3.1 operating very slowly as a “shell” inside DOS.

Despite its challenges, using DOS taught me about the importance of file management.

As our business rapidly in the mid to late 1990s, our office activities remained about the same, except for getting faster PCs, one with a revolutionary CD-ROM drive (albeit also with 5 1/14″ and 3.5″ floppy drives, which was how shrink-wrapped software was distributed); a peer-to-peer coax cable network I cobbled together; and eventually being able to get clients to hire us without me having to fly to them for in-person pitch meetings.

It wasn’t until around 2000 that the majority of our clients became computer literate and comfortable with email. Most of our drafts were still faxed back and forth between clients and all proposals went in as multiple hard-copy submissions by FedEx or Express Mail. For word processing, we used WordPro, then an IBM product, and one that, in some respects, was better than Word is today. We finally caved and switched to Macs and Office for Mac around 2005.

Among the many after shocks of 9/11, as well as the bizarre but unrelated anthrax scare, there were enormous disruptions to mail and Fedex delivery to government offices. Perhaps in recognition of this—or just the evolving digital world—the feds transitioned to digital uploads and the first incarnation of grants.gov appeared around 2005. It was incredibly unreliable and used an odd propriety file format “kit file,” which was downloaded to our computers, then proposal files would be attached, and then emailed to our clients for review and upload. This creaky system was prone to many errors. About five years ago, grants.gov switched to an Acrobat file format for the basket-like kit file, but the upload / download drill remained cumbersome. On January 1, 2018, grants.gov 3.0 finally appeared in the form of the cloud-based WorkSpace, which allows applications to be worked on and saved repeatedly until the upload button is pushed by our client (the actual applicant). But this is still not amazon.com, and the WorkSpace interface is unnecessarily convoluted and confusing.

Most state and local government funding agencies, along with many foundations, also moved away from hard copy submissions to digital uploads over the past decade. These, of course, are not standardized and each has its owns peccadilloes. Incredibly, some funders (mostly state and local governments and many foundations) still—still!—require dead tree submission packages sent in via FedEx or hand-delivered.

There have of course been many other changes, mostly for the better, to the way in which we complete proposals. We have fast computers and Internet connections, cloud-based software and file sharing, efficient peripherals, and the like. Grant writing, however, remains conceptually “the same as it ever was.” Whether I was writing a proposal long hand on a legal pad in 1978, using my PS 1 in 1993, or on my iMac today in 2018, I still have to develop a strong project concept, answer the 5 Ws and H within the context of the RFP structure, tell a compelling story, and work with our clients to enable them to submit a technically correct proposal in advance of the deadline.

Another aspect of my approach to grant writing also remains constant. I like to have a Golden Retriever handy to bounce ideas of of, even though they rarely talk back. My last Golden mix, Boogaloo Dude, had to go to the Rainbow Bridge in November. Now, my fourth companion is a very frisky four-month old Golden, Sedro-Woolley, named after the Cascades foothill town to which I used to take Jake and his siblings fishing when they were little and Seliger + Associates and myself were still young.

 

“Your methods are unorthodox”

As GWC readers know, getting information about state and local grants is often tricky. Every state and municipality is different, and, like foundations, few if any make any effort at standardization or the user experience; most just assume that the usual suspects will apply for grants, and consequently they end up forming de facto cartels. In theory, too, all government grant information is also public information, but that’s a little like the theory that DMV employees are public servants who work on behalf of taxpayers: connecting theory to practice can be hard or nonexistent—naive visitors to the DMV learn.

Anyway. I spent some time attempting to get into the Wisconsin “Division of Public Health Grants and Contracting (GAC) Application” page, which is stashed behind a password wall for no reason I can discern. In the process I ended up emailing “Yvette A Smith,” a contracting specialist, to request access, and in reply, she told me that “Your request is unorthodox.” While not quite as good as “Your methods are unsound,” I did actually laugh out loud; I do like to imagine I’m the grant-world equivalent of Captain Willard talking to Colonel Kurtz in Apocalypse Now.

And Yvette is right: our methods are unorthodox and we do disturb the fabric of the grant/proposal world. That’s part of the reason we’re effective.

Still, I had no idea that there’s an orthodoxy in the State of Wisconsin. And if there is, what is that orthodoxy? Is it John 16:10 that describes how users should access GAC Application information? Or does orthodoxy emerge from other texts?

Alas, I didn’t inquire that far, and I also never quite got access to the GAC Application Page, but I was able to find the information I needed elsewhere. Still, I did learn just a little about the quality of governance in Wisconsin. A famous paper looks at “Cultures of Corruption: Evidence From Diplomatic Parking Tickets,” and the authors find that “diplomats from high corruption countries (based on existing survey-based indices) have significantly more parking violations, and these differences persist over time.” I wonder if my own experiences interacting with local and state governments are similar: the worse the quality of random bureaucrats, the worse the overall level of governance.

Earmarks could come back: That’s great news for governance and nonprofits

I was wrong about earmarks.

Like a lot of good-government types, I opposed earmarks (which are sole-recipient funds to specific organizations allocated by Congress) and thought earmarks were a sign of brazen corruption, like cash kickbacks from vendors to mayors. I didn’t oppose earmarks out of greed, although earmarks can be seen as bad for grant writers because any funding that’s earmarked isn’t available for grant-funded competitions—I saw them as basically immoral. Corruption is bad, so we should get rid of it, right?

But banning earmarks was (and is) a cure worse than the disease. Without earmarks, congressional leaders have limited tools to discipline members of their caucuses. Members are free to grandstand, vote on principle, and block useful legislation in order to pander to primary voters, rather than general election voters. You, dear reader, may initially think it’s good to vote on principle—as long as the principle is one you uphold. But when it isn’t one you uphold, you’ll likely be angry. You’ll also be angry when Congress seems incapable of acting. Because of the way the United States is structured, there are many intentional chokepoints for legislation, and it’s much easier to block than pass legislation. As parties have become more polarized, we’ve gotten increasing legislative gridlock.

Without earmarks, voters have no incentive to vote for pragmatists who will bring the pork their district. Instead, they can vote for extreme partisans who engage in a lot of symbolic talk and votes without considering what’s really good for the country. When congressional leaders have earmarking power, grandstanding has a real consequence. When congressional leaders don’t have earmarking power, they can’t keep their caucus together and it’s much harder to cobble together the 60 votes needed to pass most anything in the Senate. In Congress, pragmatism is actually better than purity, but we’ve seen increasing ideological purity at the expense of a functioning country.

This is a post, not a book, so I can’t go into great detail about why and how this happens, but The Myth of the Rational Voter is a good place to start. I can say, however, that earmarks improve the incentives on legislators to cut deals and make sure the government can do something—anything, really.

Beyond high-minded principles, some nonprofit and public agencies will also be able to receive earmarks again. Pursuing earmarks isn’t in the scope of our business practice, but it is a useful thing to note.

This article, from 2016, gives some more earmark context on earmarks. This article, gives more context. Here’s a good Tweetstorm.

Note that no one is arguing that earmarks are perfect or that the process is without defect. When I’ve argued the case for earmarks to politically minded friends, they’ve told me that I’m a craven tool of corporate interests (let’s ignore the logic of that for the time being and just view it as a signaling mechanism). But earmarks are better than no earmarks; sometimes bad is an improvement over even worse. We’ve seen what happens to the quality of federal governance without earmarks to discipline congresspeople. It isn’t good. Bring ’em back. I admit publicly that I was wrong.

Here is an argument against earmarks, which I don’t find persuasive for reasons listed in the paragraphs above, but it is a reasonable view.

SAMHSA’s Screening, Brief Intervention and Referral to Treatment (SBRIT) and FQHCs

The Substance Abuse and Mental Health Services Administration (SAMHSA) just issued the FY ’18 Screening, Brief Intervention and Referral to Treatment (SBIRT) Funding Opportunity Announcement (FOA): it has $35 million for five-year grants up to about $1 million per year for assessment/referral to substance abuse treatment—and, most interestingly for our discussion, FQHCs are listed among the laundry list of eligible applicants.

SAMHSA is pointing the way forward for many substance abuse providers: become an FQHC. This may seem odd, because FQHCs are supposed to be primary health care providers, while substance abuse treatment is not considered primary healthcare and is usually provided by narrowly focused agencies. But the depth of the opioid epidemic, in tandem with the overall growth of healthcare funding, means that many substance abuse providers are being pushed towards becoming FQHCs—even as many FQHCs are also being encouraged to expand into substance abuse treatment. And we know that, when it comes to the Feds, “encouraged” is often a euphemism for “get ‘er done.”

Many FQHCs, of course, don’t want to be substance abuse providers—but, as programs like SBRIT show, the amount of money available may be too tempting to refuse. Right now, it’s also tough for FQHCs to stretch their Section 330 grants to provide fully integrated behavioral heath services, including substance abuse treatment. HRSA occasionally issues Notices of Funding Opportunities (NOFOs) for FQHCs to enhance behavioral health services, but the operative word is “occasionally,” and there’s not enough HRSA funding for behavioral health services.

Few, if any, of our FQHC clients, have had SAMSHA grants and most are reluctant to apply. This may be a case of grant “tunnel vision” in which FQHCs focus on HRSA in the same way that public housing authorities (PHAs) often tether themselves to HUD grants. The wider grant universe, however, provides opportunities for diversity that can help organizations weather shifts in funder priorities. And to paraphrase a salesman’s advice given to William Holden’s Joe Gillis in Billy Wilder’s Sunset Boulevard, “As long as the lady is paying for it, why not take the Vicuna?”

Bad news in new tax bill for nonprofits that depend on small- to medium-sized donations

I recently wrote about Bad and good news for FQHCs in the latest Republican tax bill, and last week, the Republican tax bill passed under its official title, “Tax Cuts and Jobs Act” (TCJA). Like it or not, the TCJA is now law and I’m continuing to look at its implications for nonprofits and grant seeking. As reported by the Washington Post, “Charities fear tax bill could turn philanthropy into a pursuit only for the rich.”

Why? The combination of doubling the standard deduction and limiting the deductibility state/local taxes and mortgage interest will likely significantly reduce charitable donations by middle and upper middle income Americans. Those people would need very high deductions to bother itemizing, so many won’t. That’s very bad news for smaller to mid-size nonprofits that depend on donations.

Unlike businesses, which can enter new markets and develop new products, nonprofits have relatively few revenue possibilities (the main ones they do have are listed at the link). In addition to grants and fee-for-service contracts (e.g., foster care, substance abuse treatment, homeless shelter beds, etc.), these are limited to membership dues (for member organizations like Boys & Girls Clubs, animal rescues, etc.), fundraisers, and donations. The latter three will be impacted by the TCJA.

While every nonprofit executive director dreams of landing a donor “whale,” mega-donors are not only rare but tend to give to larger and well-connected nonprofits (the rarely acknowledged “swamp” of philanthropy, if you will). The booming stock market and lowered corporate tax rate will likely to produce more whales, but many of these will donate to corporate or family foundations—not garden variety human services nonprofits toiling away in relative obscurity. We’ve had many conversations with executive directors whose nonprofits are doing good work but find it hard to translate “good work” into “increased donations.”

Nonprofit executive directors will have to make a choice that will become more acute in 2018: cast off in the whale boat to search for Moby-Dick or chase schools of small donation fish. The former strategy is usually pointless and the later is time consuming work that will become harder as many Americans realize that there won’t be a tax deduction reward because they won’t itemize.

The silver lining is that foundation portfolios are being engorged by the historically high bull market. They’ll also receive huge donations from corporations and the upper-income people, who will get much of the direct benefits from the TCJA. No matter what, foundations must distribute 5% of their assets every year, and we offer foundation appeals in part with that in mind to clients.

Also, federal spending on discretionary grant programs continues to rise and most states should see increased tax revenue, some of which will be allocated to grant programs. As budgetary chaos subsides, federal agencies will resume normal RFP patterns.