Two new reports from the National Council on Nonprofits (NCNA) and the Urban Institute identify and address serious problems with state government contracting practices with nonprofits.  The Urban Institute conducted a survey of nonprofits across the U.S. They found that about 40% of all surveyed continue to struggle in the wake of the Great Recession, ending the 2012 survey year with a deficit. This is an indication that nonprofits continue to face financial difficulties after the recession officially ended. The study found that the nonprofit sector’s ability to provide effective community services was also hampered by a number of ineffective contracting practices seen in multiple states. These included late payments, failure to pay full costs of services, changes to written agreements in mid-stream, and unnecessarily burdensome application and reporting requirements.

NCNA and the Urban Institute are identifying effective state-nonprofit contracting practices through an applied demonstration project partnership where nonprofit associations in nine states are working in partnership with state governments to identify contracting problems and poor practices, develop benchmarks and improve the contracting systems in these states so that they adhere more closely to standards based on effective practices. These may become the norm for other states.

I will be tracking and reporting on this important work, and encourage colleagues to discuss these issues with other nonprofit and government leaders.