How do nonprofits sign contracts

Governments at all levels depend on charitable nonprofits to provide efficient and effective services to residents that would be more costly if provided by others. Likewise, the nonprofit sector, as a whole, earns about a third of its total revenue by providing services under written agreements with governments. The National Council of Nonprofits and its network of state associations of nonprofits are committed to improving the government-nonprofit contracting relationships and fix broken and antiquated grant/contracting systems in order to promote efficient and effective programs and services. The Office of Management and Budget’s Uniform Guidance presents significant opportunities for nonprofits and governments to strengthen nonprofits and the services they provide.

Government-Nonprofit Contracting Reform

Since at least the 1960s, and accelerating considerably beginning in the 1980s, all levels of government have depended on charitable nonprofits to deliver a broad array of services to the public through the use of contracts and grants. After fifty years, these systems have become encumbered by the continual additions of new rules and requirements on top of the old. The result is inefficient and ineffective contracting systems throughout the country that needlessly waste the already limited resources of nonprofits and governments.

The National Council of Nonprofits works through its network of state associations of nonprofits to support partnerships with governments to reform “broken” contracting systems by sharing research, promising practices, analyzing and recommending pragmatic policy changes, and advocating for their implementation. Ultimately, everyone benefits—governments, nonprofits, and those we serve as well as all taxpayers by reducing unnecessary costs while enhancing accountability.

OMB Uniform Guidance

Governments at all levels – local, state, and federal – that hire nonprofits to deliver services are required to reimburse nonprofits for the reasonable indirect costs (sometimes called “overhead” or “administrative” costs) they incur on behalf of governments when federal dollars are part of the funding stream. This mandate is embedded in grantmaking rules that the federal Office of Management and Budget (OMB) put into effect at the end of 2014. In addition, the OMB Uniform Guidance streamlines and clarifies cost allocation and other rules related to government grants and contracts, removing some areas of confusion and inconsistency while treating more of a nonprofit’s expenses as direct (reimbursable) costs. The Uniform Guidance merged eight separate yet overlapping OMB circulars into the Code of Federal Regulations and is intended to ease administrative burdens, increase efficiency and effectiveness of federal awards, and strengthen the oversight of federal funds to reduce the risks of waste, fraud, and abuse.

The National Council of Nonprofits works directly with OMB and through its network of state associations of nonprofits to ensure that policy and practice changes are not only reasonable and purposeful, but consistently applied across all jurisdictions in the manner OMB intended.

Resources for Understanding Government Grants

Grants.gov is a government website where federal agencies post information about direct federal grants opportunities, referred to as "Funding Opportunity Announcements" (FOA) or "Request for Proposals" (RFP). Grants.gov is also a source for information about application packages, as well as required forms that nonprofits upload via the site, once completed.

Grants.gov also offers two other resources: Grants.gov Learning Center and Grants.gov Community Blog, that can help those new to government grants understand the policies and procedures of the grant lifecycle, proper grant management, and accurate terminology. The learning center and blog provide valuable information for nonprofits that do not have agreements directly with a federal agency, but are instead subrecipients of federal funds (which is the status of most nonprofits with government grants or contracts). Even those more experienced with government grants will benefit from information provided on these websites that report changes in policies and procedures established through the Office of Management and Budget (OMB) relating to the Uniform Guidance.