Benchmarks for Contracting with State Governments

Like most nonprofit leaders, I believe that we can make our world a better place – by building communities that are healthy, sustainable and diverse. Our nonprofit organizations provide many of the services that build community. Much of the time, we are focused on those services: providing them, funding them and overseeing them. However, it is the policy frame in which we work that shapes what we can do, and what we can’t. Our federal, state and local policies, laws and regulations either facilitate community building – or impede it.

The National Council of Nonprofit Associations ( and the Urban Institute recently completed a study about state contracting practices. They have issued a report on how certain types of state contracting regulations impact nonprofits. The findings reported in the Executive Summary of the report include the following challenges and problems nonprofits find with state contracting:

  1. Cumbersome and time consuming application and reporting processes;
  2. Changes to the terms of the contact during the contract period;
  3. Failure to cover full program costs, leaving some costs for the nonprofit to cover even in fee-for-service contracts;
  4. Late payments.

If you’d like to share your experience with contracting, go to their website or email them. Their identification of effective and ineffective practices can help us establish benchmarks for contracting, and create better and more accountable state government contracting policies. The Urban Institute’s National Taxonomy for Exempt Entities (NTEE), established years ago has become the sector’s national standard for classifying nonprofit organizations by field and program. And it appears that their research in partnership with NCNA will result in a similar set of national and state benchmarks for contracting with state government.

NCNA has taken the findings from the study and developed pilot programs with nine different state nonprofit associations. These state associations are working collaboratively with state government leadership in each state to address contracting issues. The partnerships have been collaborative, and have been able to identify contracting problems and issues, benchmarks for effective contracting, and strategies for improving and streamlining state contracting in these states.

At the state level in New Mexico, we have a large number of policy issues that the legislature will address this session including behavioral health contracting problems, as well as other issues such as education, tax credits for working families, housing, land grant funds, community investment and others. This fall and winter, I have been part of New Mexicans Fighting to Save Behavioral Health, which has been dealing with state contracting problems in behavioral health. I look forward to the work we’ll see from this group, agencies, consumers and legislative committees to address problems created in the behavioral health system. Follow bills on the NM Legislature website, and by connecting with organizations involved in promoting specific initiatives.

At the local level, we can expect to see changes in the way that Health Care Assistance Funds (formerly Indigent Funds) are funded and managed. Sole Community Provider (SCP) hospital funding is also in flux.

Policy shapes so much of the framework of our community services, setting the scope, and shaping services through regulations and funding mechanisms. The importance of policy work cannot be stressed enough during a year when we see Medicaid expansion through the Affordable Care Act; policies and practices that have eroded and reshaped behavioral health in New Mexico; and changes in policies that affect local programs for those in need. In fact, this legislative session in may adopt bills that have a far reaching impact.

Please participate in shaping these important policies. Watch to see when committees meet to discuss bills, and talk with other nonprofit leaders about these issues and the importance of our collective voice.

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