Tag: HUD

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Processes and Outcomes: The Shape of Another Grant Wave, featuring HUD’s Choice Neighborhoods Initiative

Social and human service proposals are usually geared toward outcomes: you’re going to get a grant to provide after school services to at-risk youth, which will reduce the number of them who drop out of high school or get unfortunate tattoos they’ll later regret by 25%. To apply, you’re going to write a proposal based loosely on the same format discussed in “Project NUTRIA: A Study in Project Concept Development,” except you’re going to give academic enrichment and life skills training to at-risk youth instead of having them hunt nutria.

But you’ll sometimes face RFPs that don’t want you to provide direct services: they want you to improve your organization’s process, evaluate community needs, or otherwise do something to that effect. You’ll get RFPs that ask you to primarily engage in process: developing curricula, engaging in social change, running planning charettes, and so forth. Process grants are designed to further the organization’s capability—they might be for training staff, for coordinating development, or community engagement.

We’ve seen more of those RFPs lately. For example, the Promise Neighborhoods Program doesn’t require you to provide services—it requires you to evaluate your neighborhood and see what kinds of services it might need. The RFP is almost all needs section and very little project description.

This is also true of its more recent cousins. You can expect RFPs that emphasize things like “planning” to be mostly process oriented. This week’s Grant Alert e-newsletter, for example, contains the Choice Neighborhoods Initiative–Planning Grants, which certainly means “planning” as opposed to “implementation.”

In process grants, you should remember that activities, outcomes, and objectives are often all the same: you’re planning what to do later, not what’s going to happen now. Your “outcome” is whether you planned successfully. Part of your job, as a grant writer, is to realize which you’re doing. Outcome-oriented programs are far more common than process-oriented ones, but if you’re applying for a process-oriented program, don’t write it like you’re focused on outcomes. Sure, you might want to mention ultimate outcomes, but you primarily want to discuss the journey to get there.

EDIT: For another example, consider the USDA’s 2010 program, Hunger-Free Communities Grants:

There are two models of grants: planning and assessment grants and implementation grants. A community may only apply for one model of grant as part of this grant solicitation; however, those communities receiving a planning and assessment grant may apply for an implementation grant in a future year if additional funds are made available to continue this program.

The difference between this USDA RFP and many others is that this one makes explicit what many others assume the grant writer knows.

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A Question for Talmudists and Lawyers Regarding HUD’s Healthy Homes NOFA

I’m working on a HUD Healthy Homes proposal, and sections b and c of “Rating Factor 1: Capacity of the Applicant and Relevant Organizational Experience” requires responses to these sentences:

Relevant Organization Experience (6 points). Describe your recent, relevant, and successfully demonstrated experience in undertaking eligible program activities.

and:

Past Performance of the Organization (6 points). Applicants will be rated on documenting previous experience in successfully operating similar grant programs.

The exam question: What is the difference between the information being requested in each section?

Bonus section: How can you answer both while also staying within the 20-page limit for the narrative?

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HUD’s Lead-Based Paint Hazard Control Program (LBPHC) Program Explained

HUD’s FY 2010 NOFA for the Lead-Based Paint Hazard Control Program (LBPHC) confuses many applicants. We’ve written at least six funded LBPHC grants, so we’re familiar with it. The program is actually simple: it funds the remediation (not necessarily removal) of lead-based paint in privately owned housing occupied by low-income folks.

Applicants, however, often have trouble figuring out how to efficiently spend the grant funds. Lead-based paint remediation usually costs about $15,000 per unit remediated. To make a LBPHC program work, applicants should propose using the LBPHC funds in conjunction with their housing rehabilitation program.

That’s the real secret of the program. Virtually every city has had some form of housing rehab program since the Nixon administration, using a combination of HUD HOME formula grants, CDBG entitlements, state funds, or who knows what. The rehab programs usually entice homeowners and landlords to fix up the housing units by offering small grants for the very low-income (below 50% of area median income or “AMI”) and subsidized loans for low-income and moderate-income (50% to 120% of AMI, depending on the jurisdiction).

The real problem for lead-based paint programs is invariably that the City of Owatonna wants Mrs. Smith the homeowner to fix code violations, remediate lead paint, etc., while Mrs. Jones wants granite countertops, stainless steel appliances, and maybe faster Internet access. The city has trouble spending its rehab funds because Mrs. Smith doesn’t want to borrow money to do things that won’t impress her friends and neighbors.

What to do? The City (or other applicant) gets a LBPHC grant and bungie cords it to their existing rehab program. Now Mrs. Smith can get $15,000 or so in LBPHC sub-grant funds to remediate the lead hazards that the city inspector wants her to do and can use the rehab loan to buy her granite countertops.

The lead remediation grant can be used to entice Mrs. Smith to take the rehab loan. Now everyone is happy, including the local contractors who have some work while waiting around for the economy to improve. As long as a city doesn’t try to run LBPHC as a standalone program, but instead combines it with their rehab effort, HUD will love it. So will everyone in town. It’s remarkable to me how many calls I’ve had over the years from city officials who do not get this idea until I explain it. The ones who follow our direction usually get funded and have great success with the program.

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Here They Come: RFPs Are Thundering Down the Plain, So Look out for the Carol M. White Physical Education Program (PEP), Upward Bound, Choice Neighborhoods, REACH CORE and More

In the somewhat interminable but occasionally engaging Dances with Wolves, Kevin Costner finally ingratiates himself with his Sioux neighbors by telling them that the “tatonka” (buffalo) are suddenly thundering nearby. Last February, I asked Where Have All the RFPs Gone? Well, the FY ’10 grant tatonka are finally here and the distant noise you hear is the sound of federal grant opportunities. Work fast, because this herd will have come and gone by the end of the federal fiscal year on September 30.

For example, the Department of Education finally issued RFPs for the Carol M. White Physical Education Program (PEP), the High School Graduation Initiative, Personnel Development To Improve Services and Results for Children With Disabilities, and the Fund for the Improvement of Secondary Education (FIPSE) last week.

In 2008, the FIPSE RFP was issued on March 21. This year, it was issued on June 14. Under normal circumstances, this could be chalked up to random variation in funders. This year, that’s much less likely because of the stimulus madness that continues to work through the federal system. The good news about FIPSE: in 2008 it had $2,584,000 for seven grants. This year it has $27,307,000 for 37 grants. This isn’t the only program that’s seen a massive money increase: Personnel Development To Improve Services and Results for Children With Disabilities has gone from $1,500,000 in total funding to $22,900,000.

We heard from a client recently (we wrote their funded Upward Bound proposal in the last funding round about four years ago) that RFPs for both Upward Bound and Talent Search will soon be issued by the Department of Education. It is unusual for RFPs for two “TRIO” programs to be issued in one fiscal year, but this is no usual year.

On the community development front, HUD has about 35 or so competitive grant programs, but only one or two NOFAs (HUD-speak for “RFP”) have been issued this year, which means there are more than 30 to go. Another client, for whom we wrote a funded Lead-Based Paint Hazard Control (LBPHC) Program proposal last year, was just at the grantee meeting. The HUD program officer told the group that all of the NOFAs are late this year (duh!) but would be issued with short turnarounds—just like the Department of Education RFPs listed above. Expect to hear HUD hooves in the distance for such old faves LBPHC, Healthy Homes, various Housing Choice Voucher—formerly called Section 8— programs and lots more soon. There will be a HUD NOFA stampede.

In a tease of goodies to come, HUD just released a “Pre-NOFA” for an entirely new competitive program, Choice Neighborhoods. This is not to be confused the Department of Education’s Promise Neighborhood Program, for which the RFP process concludes next week, even though both are new programs that can be used to fund more or less the same activities. Choice Neighborhoods will have $65,000,000 up for grabs once the HUD program officers can shovel the NOFA out the door, which should be within a few weeks. I’ve never seen a “Pre-NOFA” before, but once again this is an unusual year with strange portents in the grant world. I guess a Pre-NOFA is like getting one of those annoying “Save May 12, 2018 for Hershel Himmelfarb’s Bar Mitzvah” in the mail. This is HUD’s way of saying, “Stay tuned––MONEY COMING, MONEY COMING.”

I love the Promise Neighborhoods and Choice Neighborhoods programs because both offer planning and implementation grants, so grantees can keep the party going for years. Not to be outdone, HRSA also just issued an announcement for the wonderfully named Racial and Ethnic Approaches to Community Health for Communities Organized to Respond and Evaluate (REACH CORE) Program. REACH CORE grantees get two-year, $400,000 planning grants followed by multi-million dollar five-year implementation grants. Seven year grants! Now this is worth competing for.

Looks to me like it is a fine grant hunting season this summer. Get out your virtual Sharps 50 Caliber Buffalo Rifle in the form of a trusty iMac or MacBook out and start plinking. You’ll be exhausted, but you’ll have a week or two at the start of October before the FY ’11 RFPs start down the chute.

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A WSJ Article Illustrates the Program Officer Problem

I just posted “Where Have All the RFPs Gone?,” in which I speculated that the lateness of federal RFPs this fiscal year is probably due to the fact that overworked program officers are still chewing through last year’s proposals. Imagine my surprise when I read “Staffing Woes Hinder Job-Boosting Program” by Michael Aneiro in this morning’s Wall Street Journal. He discovered a HUD program that is way behind in reviewing applications because of a lack of staff to do the reviews.

Even better, while HUD has more money than usual for this Federal Housing Administration (FHA) program, an appropriation for additional staff was not made, so the same number of program officers, fiscal officers and lawyers have to do vastly more work. Since federal employees do not work by the piece, the same number of reviewers have to review more applications, which means they get stuck in the system. All of this will eventually be digested, even as hundreds of new FY ’10 RFPs are published in the coming months.

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The Stimulus Bill Enters the Bizarro World

We’ve been up to our elbows writing Stimulus Bill proposals for a couple of months now with no end in sight and the oddities are beginning to pile up. Here are a few:

* We’re working on a HUD Neighborhood Stabilization Program 2 (NSP 2) proposal for a California city. Nothing is particularly unusual about the 194 page NOFA—except that no budget forms are required. For the last ten years or so, HUD has required a mind numbing coterie of complex budget forms, including SF424A, HUD CB and HUD CBW, along with a detailed budget narrative. While NSP2 provides grant awards with a minimum of $5,000,000, a simple “blob” table, with no line item detail or justification, is the only required budget document. Better still, HUD is allowing applicants to take a 10% administrative rake off the top, so a grantee can pocket $500,000 on a $5,000,000 grant without any explanation. When we couldn’t find budget instructions or forms in the NOFA, we sent an inquiry to the NSP2 Program Officer, Jessi Molinengo, and received the following response:

On page 24, IV.3.a, The NOFA states that you will indicate how you will use NSP2 funds by providing a list or table showing the amount of funds budgeted for each eligible use and CDBG eligible activity.

Duh. We’d already figured that out and were incredulous that HUD would give up on any pretense of accountability and transparency, but apparently HUD has contracted ARRA-flu and entered the Bizarro World.* But if that’s all they want, that’s all we’ll give them. After all, one of Seliger + Associates’ grant writing rules is the Golden Rule: “The folks with gold make the rules.”

* We just finished a proposal for the Tribal Title IV-E Plan Development Grant Program on behalf of an Indian Tribe. Through a series of mishaps, our client, who had decided to send in the finished proposal themselves, wanted to FedEx the submission package on the day it was due in D.C. We told them to save the cost, as the Administration for Children and Families (ACF) would reject it for being late. Our contact person was very unhappy, so I told him to try calling ACF. He did, and they agreed to take the proposal late. Once again, we’re in the Bizarro World, as I have never seen this happen in 37 years of grant writing.

* We wrote four funded Department of Labor YouthBuild proposals for the most recent RPF cycle that completed last January. This is nothing new, as we’ve written lots of funded YouthBuild proposals over the years. What is surprising is that one of our clients sent us a email blast he received from the DOL YouthBuild Program Officer, Anne Stom, breathlessly announcing an avalanche of new Stimulus Bill grants pouring out of D.C.:

Today, the US Department of Labor – Employment and Training Administration announced an exciting new grant opportunity – five distinct Green Jobs Workforce Development grant solicitations. As a current or new Youthbuild grantee, you are eligible to seek funding for green jobs training, capacity building, and other programs under these SGAs, and we encourage you to go for it!

Note Anne’s giddy enthusiasm. Communiques from federal officials are usually written in the droll style of Ben Stein, but this one could have been delivered by Vince Shlomi, the ShamWow Guy.**

The Stimulus Bill is distorting the Federal grant making process and is apparently also taking its toll on grant writers. I received the following email from a faithful GWC reader who wishes to remain anonymous:

I was wondering if you would consider writing about how to handle the increased load and stress of the grant writing related to the stimulus funding, and people’s desire for grant writers to go after every available prospect no matter the health and well being of their staff. What have you found over the years about this issue? I am working at a Settlement House and my staff is dropping like flies, and I recently had a doc tell me I have to reduce the stress. I am not sure how that is even possible in this career.

The short answer to the problem of stress and grant writing is that there is no answer. If one cannot handle the stress of endlessly recurring deadlines, then this is the wrong career choice. Personally, endless deadlines are what I like most about grant writing, because there is a finite aspect to completing grant proposals. When we’ve finished yet another proposal and the deadline has arrived, we can turn off the proposal extruding machine, leave the office, go home and retire to the pool to gaze at ever-changing Catalina Mountains and enjoy an Aviation cocktail or three.***

On the serious side, an agency shouldn’t wildly apply for grants just because the money is there, since you might get funded and actually have to run the program. Although the Stimulus Bill is like a smorgasbord for applicants, try not to overload your plate, even if Program Officers like Anne Stom are screaming at you, “Eat, eat, you’re so thin!”

Last February, I predicted this Stimulus madness in Stimulus Bill Passes: Time for Fast and Furious Grant Writing. At Seliger + Associates, we are writing faster and furiouser, but we handle the stress by not accepting assignments we cannot complete, even if it means we turn down work. At the moment we’re not taking assignments with deadlines before early to mid August and it has been that way for months. We keep our eye on the prize, which is to prepare well written, technically correct proposals that put our clients in the running to be funded. If you’re an applicant, remember that it is better to submit one or two carefully crafted proposals than a dozen half-baked ones. You’ll get more grant funds and your grant writer will not run away to become a circus clown.

* Like Jerry Seinfeld, I was a big fan of Superman comics (Batman who?) when I was a kid and loved that he resurrected the Bizarro World in his TV series.

** My daughter bought me a box of ShamWows for my birthday and they work great. Now, if one of the kids will buy me a Slap Chop, I’ll have it all. To quote Vince, “Are you following me, camera guy?” [Editor Jake’s note: this is not going to come from me.]

*** To make serious cocktails like The Aviation, one needs exotic ingredients like Maraschino Liqueur and Creme de Violette, which means one needs a great liquor store. After years of putting up with state owned liquor stores in the hopelessly provincial Washington, I was delighted to be introduced to the exceptional Rum Runner by Jake after arriving in Tucson, which is well-stocked and run by pros who will track down any spirit you need to lift your spirits after a hard day slaving over hot proposals.

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The Department of Housing and Urban Development’s (HUD) Neighborhood Stabilization Program (NSP) Appears at Last

Subscribers to the Seliger Funding Report saw that the Neighborhood Stabilization Program (NSP) is this week’s featured grant. The program is significant and worth examining for a few reasons, including the massive amount of money available (nearly $2 billion) and how it illustrates some of the problems with disseminating and spending stimulus money in a timely manner.

The idea behind the stimulus funding is that it’s supposed to happen quickly. Last December, Isaac wrote a post on the subject:

Our client has been going to endless meetings to discuss the NSP program and is still waiting around for the amended action plans to be approved. […]

This sad tale of woe does not make me optimistic about the really big stimulus programs that will emerge from Congress shortly. While it will be Fat City for grant writers and lots of grants will be available for frisky nonprofit and public agencies, don’t expect the funds to fix many problems.

It’s now six months later, and the RFP has finally hit the street. The deadline is July 17, which is sweet for the agencies applying but not so good on the timeliness front. Once awards are made, contracts are signed, and programs begin operating in earnest, it could well be December again. Isaac also quoted a Wall Street Journal article from December that’s as timely today as it was then, which should demonstrate the sense of urgency emanating from HUD.

Another point: HUD has apparently abandoned Grants.gov. You won’t find the actual RFP on Grants.gov—you’ll only find a link to hud.gov/recovery. Even then, the RFP is still difficult to find because you’ll find a giant scrolling banner, a link to a press release, and a news story about NSP, which is why we always include links, like the the one in the first paragraph of this post, that go straight to the RFP. In addition, HUD will only accept paper submissions:

Deadline for Receipt of Application: July 17, 2009. Applications must be received via paper submission to the Robert C. Weaver HUD Headquarters building by 5:00 p.m. Eastern Daylight Time. […]

Timely submission shall be evidenced via a delivery service receipt or a postal receipt with date and time stamp indicating that the application was delivered to a carrier service at least 48 hours prior to the application deadline…

Those of you with a sense of history and irony will find this amusing because was among the first (if not the first) agencies to require Grants.gov submissions. That HUD won’t even accept them anymore might tell you something about the Grants.gov problems we’ve discussed extensively.

Finally, this application is an example of HUD going both ways with funding distribution: some NSP funds are being passed through to states and counties via block grant, as described in Getting Your Piece of the Infrastructure Pie: A How-To Guide for the Perplexed, while this program notice says that “NSP2 funds will be awarded through competitions whose eligible applicants include states, units of general local government, nonprofits, and consortia of nonprofits. Any applicant may apply with a for-profit entity as its partner.” Sounds good to us!

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Stimulus Bill Passes: Time for Fast and Furious Grant Writing

The passage of the Stimulus Bill corresponded almost perfectly with Valentine’s Day, a perhaps unintended but still humorous outcome. While I have not had time to dig through the 1,100 page bill, I know that funding for enough grant programs, new and old, survived to keep grant writers busy, busy, busy. But my topic today is not to peek into the candy store to drool over the tasty funding treats, but rather to consider how the Feds are going to actually shovel $800,000,000,000 out the door.

Since the bill was first proposed, I have been concerned about the logistics of funding distribution and have fired off numerous emails to reporters at the Wall Street Journal, New York Times and Washington Post to try to get them to cover the “how” of the 5 W’s and the H. While I am unsure whether it was a result of my emails, Stephen Power and Neil King, Jr., finally did so with an illustrative piece in the February 13, 2009 issues of the WSJ called “Next Challenge on Stimulus: Spending All That Money.” The reporters take the reader through the tortured process of a Minnesota company trying to access a large Department of Energy (DOE) Loan Guarantee.

Although this company applied during a previous funding round, the Stimulus Bill includes billions more for this initiative, which is supposed to fund the kind of “green, energy-efficient” businesses and jobs that President Obama heralds. As of today, the DOE actually has an open competition for this program. What’s particularly fun is that we happen to be writing a proposal for the DOE Loan Guarantee program. While a non-disclosure agreement prevents me from discussing the project on which we are working, I am very familiar with RFP, which was originally issued on September 22, 2008 with a deadline of December 31—but it was extended to the end of February. I guess the DOE hasn’t gotten the memo from the White House about how growing green jobs helps solve the economic crisis. But I digress.

This RFP is one of the most complicated RFPs I have ever encountered and is filled with confusing directions, references to obscure regulations that are not included in the package, bizarre questions, and so on. It also requires the applicant to produce a dizzying array of attachments, certifications, etc. In other words, the DOE has made it about as difficult as they can to get loan funds, which makes great work for grant writers but presumably discourages applicants. And, remember, these are loans that have to be repaid, not grant funds.

The WSJ story recounts the sad tale of Sage Electrochromatics’ attempts to get its hands on the loan proceeds. Although the loan guarantee was long ago approved, the company won’t see the money until the end of this year at the earliest. The reporters use Sage’s experience to discuss the challenge to be faced by applicants for Stimulus Bill funds. As one who wrote his first funded Department of Energy grant in 1979 during the last energy crisis for the long gone Electric Vehicle Demonstration Program, I know this is not a new situation, as Federal bureaucrats are usually in no mood to work quickly. But the story does raise the specter of what is going to happen, or more likely not happen, when the ink dries on the Stimulus Bill.

Most folks don’t understand and the press rarely covers how, in most cases funds have to be appropriated, regs written, RFPs issued, applications submitted, applications reviewed and ranked, award letters sent out, final budgets negotiated and contracts signed to spend money. The key personnel in this folderol are the small number of Program Officers in the various Federal departments who manage the process. Unfortunately, we don’t have a National Guard of Program Officers who train one weekend a month shuffling papers to be ready to answer the call. That means Federal agencies will find themselves up to their eyeballs in spending authority with existing staff levels pegged at much smaller budgets.

As a result—and despite the best intentions of our President and Congress—it’s going to take quite a while to get the money to the streets. Most Federal agencies usually take anywhere from three to six months to select grantees and probably another three months to sign contracts. My experience with Federal employees is that they work slower, not faster, under pressure, and there is no incentive whatsoever for a GS-10* to burn the midnight oil. Federal staffers are just employees who likely don’t share the passion of the policy wonks in the West Wing or the grant applicants. They just do their jobs, and, since there are protected by Civil Service, they cannot be speeded up. Also, there are no bonuses in the Federal system for work above and beyond the call of duty.

Let’s take my old friend YouthBuild in the Department of Labor, which was transferred out of HUD a few years ago. The deadline for the FY ’09 YouthBuild program was January 15, so there are hundreds of applications sitting under half-filled coffee cups and stale donuts in the sub-basement of the DOL building in various stages of review for the $59,000,000 – $70,000,000 then available (the range comes from Senate/House conflicts in the original appropriations bill). Along comes the Stimulus Bill, which adds $50,000,000. Now we’re talking as much as $120,000,000 for YouthBuild, or well over twice the amount awarded in the last funding cycle in FY ’07.

The question is, what is DOL going to do? It has two choices: (1) more applications that were submitted in January could be funded; or (2) there could be another funding round, opening up the competition and allowing new applications. Logic says door number one, but if I know my federal bureaucrats correctly, door number two will be picked, because this will spread out the work load for the Program Officers and will give DOL time to hire more staff, so that existing Program Officers don’t end up with twice the grantee caseload. Too few Program Officers also increases the potential for fraud, which will already be heightened because of the unprecedented money flood. I’ll let readers know if I am right or wrong.

Of course in addition to more money for YouthBuild and other existing programs, there is funding for lots of entirely new programs, such as the HUD $2,000,000,000 Neighborhood Stabilization Program (NSP), which no one knows how to implement, and $500,000,000 to provide job training through the “Green Jobs Act” under DOL auspices. NSP is in HUD, which means they will have to take staff from the dozens of other competitive HUD grant programs, which are about to issue FY ’09 NOFAs, to hasten this one. When last I visited NSP in December, ‘Tis the Season for Government Folly, Fa La La La La La La La L.A.!, not a single NSP dollar had been spent since the program’s original “emergency” passage in August, and I believe no dollar has yet been spent.

For grant applicants, this means that agencies should apply for as many grants as they can, taking great care to make sure that the applications are technically correct. Since many applicants will believe the stimulus hype and assume that everything will be funded, the majority of applications are likely to be incomplete or incoherent. Because federal reviewers will be told to get the money out as fast as possible, the review is likely to be primarily checklist-oriented, with the Program Officers throwing the garbage proposals over their shoulders. Thus, this is not the time for amateur hour submissions. While it is always important to fly speck your submissions, it will be essential if you want to “have it all.” As the inimitable Vin Diesel says to heart throb Paul Walker in The Fast and the Furious, “If you have what it takes . . . you can have it ALL!”**

* GS refers to “General Schedule” pay grades for Federal employees, which range from GS-1 to GS-15. Most Program Officers are probably GS-8s to GS-11s. Here’s a fun site for calculating GS pay grades. For example, in 2004, a GS-10 working in DC would have made $46,000 to $59,000. The GS-10 is probably stuck in a cubical with a 14″ CRT and Pentium II, along with mismatched furniture, since it is unlikely that any federal managers read about the tools of the trade. This is not exactly a princely sum and probably less than wonderful working conditions—so how likely is it that they will suddenly spring to life to spend the Stimulus package quickly?

** As luck would have it, the original cast has gathered for Fast & Furious, which opens in April. One can only hope that the plot involves Paul Walker getting a Department of Energy grant to build the “ten second car” he owes Vin. After all, electrics have lots of low end torque and street racers only have to go 1/4 mile, so the 40 mile range wouldn’t be a problem. The tag line for the new movie is, “New Model. Original Parts.” This could also be used to describe the somewhat less than successful attempts at changing Washington evident in the Stimulus Bill passage.

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The Secrets of Matching Funds Exposed: Release the Hounds and Let the Scavenger Hunt Begin

This is YouthBuild season at Seliger + Associates, so I spent most of the weekend slaving over a hot YouthBuild proposal. YouthBuild has a curious take on the somewhat mysterious concept of “matching funds.” Newly minted grant writers will soon learn that there are two basic types of matching funds: in-kind and cash. The former can be anything from the value of food given to clients to volunteer time,* while the latter is just as it sounds, real money, which most agencies are as likely to encounter as a unicorn.

In working with matching funds, the following concepts are essential to understand, particularly for federal proposals:

  • Matching funds can be calculated in two ways: as a percentage of the grant amount or of the project cost. If the RFP specifies 25% of the grant and the maximum grant is $100,000, the required match is $25,000. But, if the RFP specifies 25% of the project cost and you have a match of $25,000, the project cost is $125,000 and the required match is $31,250, so get your tin cup out and look for more match.
  • Previously received funds, along with already expended funds, usually cannot be used as matches.
  • Estimated values for in-kind resources should be included in commitment letters and should be realistic. Several years ago, we wrote a proposal for a small school district in Illinois that claimed (against our advice) the value of its high school, about $5 million or so, as a match. The proposal was not funded.
  • Keep in mind that, if you are funded, you will have to track and account for all matching funds. If you don’t and you are unlucky enough to get a program audit, any matching funds for which you cannot account will be disallowed and you will have to pay an equivalent amount back to the feds. This is likely to ruin your day and maybe put your agency out of business, so be prepared to track those matching funds!
  • Unless the RFP says that you will receive additional points for a match above the minimum, there is no reason to go over the minimum. Similarly, if there is no matching requirement, don’t waste time getting match letters. Savor a fine single malt scotch instead (I like 18-Year-Old or Nadurra Cask Strength Glenlivet).
  • When your agency cannot come up with enough matching funds, be creative. You can try to claim indirect costs as a match. For example, if you have an approved or imagined indirect cost rate of 25% and the required match is 20%, voilà: you have your match. While not strictly in keeping with federal regulations, I’ve made this work lots of times, because federal program officers are often not exactly up to speed on their own regs and grant reviewers almost never are. A strong argument can be made that this counts—unlike in the example of the hapless school district above. Another strategy is to imagine in-kind support from the applicant (e.g., use of facilities, equipment, training et al), which usually does not require a letter, since applicants can self-certify their own support.

Confused yet? For YouthBuild, the Department of Labor has managed to take this fairly convoluted concept and add yet more knots. In the YouthBuild SGA*, there are actually two kinds of matching funds: “match” and “leveraged funds.” The “match” is more or less as described above, except that you can only use funds as a match that is “an allowable charge for Federal grant funds.” So you can’t count those free escort services that have been offered to your trainees by the local branch of the Emperors Club VIP, unless you’re Eliot Spitzer.

“Leveraged funds,” however, can be pretty much anything you can dream up, so you may want to visit the local Porsche dealer to see if they will donate a 911 for use in transporting clients. After the grant award, one only has to account for the claimed match, not leveraged funds, so YouthBuild applicants often come up with tons of leveraged funds. But, what the DOL gives, the DOL also taketh away by effectively limiting the number of match/leveraging letters to 16 pages. In YouthBuild proposals, the real fun is in trying to decide which letters should be designated as match and which as leveraged funds, a process that usually takes place under extreme pressure right before the deadline. After this process, it’s a good time to return to the Glenlivet.

When planning a proposal, look at the matching requirements at the start of the process and line up your letters. It is a time honored tradition for nonprofits to “trade” match letters with each other for the same or different submissions, so feel free to engage in some creative mutual back scratching. Think of matching funds as an elaborate scavenger hunt game and you’ll be fine.

One other important point: make the match realistic relative to the size of grant. Claim to leverage $3 million for a $150,000 application is silly. If you do something like that, the reviewer will pop up like a prairie dog and say, “Look at this guy!”, so all her colleagues can laugh at your expense. There isn’t a hard and fast limit to this, but leveraging more than $1:$1 is very uncommon.

* Unless your volunteer is a physician or has just won the Nobel Prize in physics, it is standard to value volunteer time at $10/hour, so a FTE volunteer is worth $20,800 @ 2,080 hours in a person year.

** For reasons that are not clear, the Department of Labor uses the cryptic phrase, “Solicitation for Grant Applications” (SGA) instead of the much more commonly used “Request for Proposals” (RFP). Whatever they call it, DOL SGAs are still mostly gobbledygook.

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‘Tis the Season for Government Folly, Fa La La La La La La La L.A.!

Christmas comes but once a year, but there is no end to misguided federal efforts to solve the crisis of the day. Leaving aside the collapsing financial sector, doomed US car industry, etc., the crisis de jure is the housing meltdown.* Lost in the current hysteria is the $4 billion Neighborhood Stabilization Program (NSP) passed by Congress in July to address the boatloads of vacant and abandoned housing caused by the subprime lending mess.** “Housing-Crisis Grants Force Cities to Make Tough Choices,” a December 5, 2008 Wall Street Journal article by Michael M. Phillips and Bobby White, highlights some of the problems with NSP while also illustrating the folderol that always emerges when the feds try to solve a problem quickly.

NSP funds are awarded on a “formula” basis, which means that HUD used some sort of alchemy to divvy up the $4 billion, probably to CDBG-eligible cities and counties. Of course, when tons of jurisdictions dip their cup in into the same punch bowl, it’s not surprising that some only get a sip. And, unlike competitive programs in which applicants actually have to demonstrate real need and workable solutions, the cities and counties just have to prepare a so called “action plan” for the NSP. As Hamlet so eloquently said, “ay, there’s the rub“.

The WSJ article tells the tale of Avondale, AZ, which “got” $2.5 million in NSP funds. So far, so good. The city is thinking about using 25% of these funds to rehab two vacant townhouses, fill in an abandoned pool and build two units on the site. That only leaves about 2,600 other vacant, foreclosed or nearly foreclosed housing units in the city to take care of. If I’ve done my math right, at this rate Avondale only needs $1.625 billion to solve their problem. Better still, despite the obvious crisis, no jurisdictions have been able to spend their NSP money because they have to have an approved action plan to get the funds, and HUD recently announced that all the submitted action plans required “substantial amendments,” which were due December 1. Who knows when the action plans, which are sounding more like inaction plans, will be approved, since even HUD drones have to take time off for a little shopping and egg nog this time of year.

Avondale’s start and stop efforts are playing out all across America. I was talking to one of our clients in South Central Los Angeles on Friday about the WSJ article and the slow motion Danse Macabre going on with public and private efforts to address the housing problems in L.A. Our client has been going to endless meetings to discuss the NSP program and is still waiting around for the amended action plans to be approved. When the plans are finally approved, the City and County will have to run RFP processes to select nonprofits like his to spend the money and do the work. In the meantime, this agency, which is an experienced YouthBuild provider that has built and rehabilitated hundreds of houses over the years, is doing nothing.

One irony of the housing crisis is that HUD has a perfectly good program, Section 203(k), to recycle vacant HUD houses by letting nonprofits, like our South Central client, buy them for a nominal amount, rehab them, and resell them to low-income buyers. Since there are thousands of vacant and foreclosed houses in LA, one would think the 203(k) program would be booming. Not so according to our client, who told me that virtually no 203(k) houses are available in LA. To use the 203(k) program, HUD must own the vacant house, meaning that the house must have been originally financed through the Federal Housing Administration (FHA). Due to the huge housing price increases in L.A. during the boom years, as a practical matter FHA financing could not be used because its loan limits were too low. So subprime private sector loans, sold to Fannie Mae and Freddie Mac, were used to finance the transactions, with the vacant foreclosed houses ending up owned by a gaggle of private lenders and investors, not HUD. Despite the established infrastructure for the 203(k) program, it is not being used to recycle the tsunami of vacant houses in L.A. and other cities, leaving our client and thousands of other similar nonprofit housing rehab organizations sitting on the sidelines.

This sad tale of woe does not make me optimistic about the really big stimulus programs that will emerge from Congress shortly. While it will be Fat City for grant writers and lots of grants will be available for frisky nonprofit and public agencies, don’t expect the funds to fix many problems.

Now that I’ve depressed you sufficiently, how about joining me in a Mai Tai or three, as I’ve recently reacquired a taste for aged rum. A fine Mai Tai helps pass the time waiting for action plans to be approved.

* For an earlier post on the current housing fiasco, see Déjà vu All Over Again—Vacant Houses and What Not to Do About Them.

**After the financial industry $700 billion October bailout and up to $35 billion possible for the auto industry, doesn’t $4 billion seem like a trifle only six months later?