Cuts to Federal discretionary spending are coming, whether at the larger percentages proposed by congressional Republicans, more modest levels offered by the Obama administration or more likely somewhere in between. An opinion piece in today’s New York Times highlights this new reality: “The Easy Cuts Are Behind Us” by Jacob Lew, director of the White House Office of Management and Budget (OMB). Between the political euphemisms and doublespeak, Mr. Lew actually lifts the curtain to offer several specific cuts to be proposed in the administration’s soon-to-appear FY 2012 budget, including the following two which have significant implications for thousands of nonprofit and public agencies across America:
* Community Services Block Grant (CSBG) Program: The CSBG Program has been around since 1981 and provides formula grants for the nation’s 1,086 Community Action Agencies (CAAs)—AKA “Community Action Programs” (CAPs) for those of us old enough to remember their inception in the original 1965 War on Poverty. States also receive CSBG funds, which are distributed in areas not served by a CAA.
In most states, CAAs are nonprofit organizations, although in California many cities and counties have absorbed the CAA into their bureaucracies. CSBG formula grants are the lifeblood of CAAs because the CAA only has to exist and file reports to get the money. While most CAAs receive a plenitude of other nominally competitive grants (e.g., Head Start, the Low Income Home Energy Assistance Program (LIHEAP), Weatherization, etc.), CSBG forms their financial bedrock. In larger cities and urban counties, CSBG block grant funds are sometimes made available to nonprofits through local RFP processes. Thus, CSBG funding is a big deal, albeit somewhat hidden from popular consciousness because most civilians and all reporters don’t have a clue that it exists. Here’s what Mr. Lew said about the administration’s plan for CSBG:
The president is proposing to cut financing for this grant program in half, saving $350 million, and to reform the remaining half into a competitive grant program, so that funds are spent to give communities the most effective help.
That’s right, a 50% cut—and making the CAAs compete for what’s left! Instantly, every CAA will be fighting with each other for the scraps of the CSBG program. This means that each CAA will have to get a lot better at grant writing, not only to get their piece of the shrunken CSBG pie, but to find other funding sources to make up the slack. The local nonprofits at bottom of the CSBG food chain will be in even in more dire straights, as many will lose a sure source of annual funding. As Snagglepuss says, Heavens to Murgatroyd!.
* Community Development Block Grant (CDBG) Program: The CDBG Program was created in 1974 and consolidated a slew of then-existing HUD discretionary grant programs into a single formula block grant to “entitlement communities,” which are more or less mid- to large-size cities and urban counties. Like CSBG, states also receive CDBG funds for use in smaller cities and rural counties. While entitlement cities and counties use CDBG funds for all kinds of public programs, most also make sub-grants to local nonprofits through annual RFP processes. The mechanics for all of this organizational walking-around money are five-year Consolidated Plans and their daughter Annual Action Plans, prepared by entitlement entities. CDBG funds not only pay for a lot of municipal and county administrative overhead and pet programs but also fund thousands of nonprofits. Although somewhat competitive through the Annual Action Plan process, lots of nonprofits have come to view their annual slice of CDBG pie as automatic.
Back to Mr. Lew, who has this to say about CDBG funding:
While we know from mayors and county leaders how important these [CDBG] grants are for their communities, and are very aware of the financial difficulties many of them face, the sacrifices needed to begin putting our fiscal house in order must be broadly shared, and we are proposing to cut this program [CDBG] by 7.5 percent, or $300 million.
Uh oh, there goes $300,000,000 in CDBG funds. Heavens to Murgatroyd redux!
I’ve been blogging about impending budget cuts and/or rescissions for about a year and some specific proposed cuts are now evident. More will emerge in the coming weeks as the budget battle unfolds in anticipation of the need to increase the federal debt ceiling in March or April.
If your agency receives CSBG, CDBG or most any other federal grants, it’s time to ramp up your grant writing efforts, as I have been advising for months. Don’t wait until the cuts take place. If you think grant seeking is competitive, wait a few months, and you will experience what those of us working with grants went through in early days of the Reagan administration, when wholesale cuts in federal funding were made. That round of cutbacks culminated with the demise of the ultimate free federal grant ride: General Revenue Sharing, which started in 1972 and ended with a thud in 1987. Today is Super Bowl Sunday, and like every player on the Packers and Steelers, all we can say is “put me in, Coach.” We’re tanned, fit and ready for the grant writing frenzy that is about to unfold.