Costly Delays: Diagnosing and addressing operational delays in Baltimore’s nonprofit contracting process
The Baltimore city government is a major economic engine in the Baltimore region, equaling nearly 10% of both the city’s Gross Domestic Product and its workforce. Through its $4.11 billion dollar FY 2023 budget, Baltimore supports the services of hundreds of nonprofit organizations that seek to be a force of equity for the city, providing essential services to residents facing housing insecurity, unemployment, and other pressing needs.
A reliable contract with the city can allow a nonprofit to expand, serve more residents, and build the employment base of the city. Small nonprofits in particular can use contracts to effectively reach residents experiencing housing and economic insecurity. And, the city depends on nonprofits to provide services, particularly in Black and low-income communities.
However, longstanding delays in contracting and payment of city partners leave some nonprofits asking if the barriers to accessing city funding are worth the effort. When nonprofits are unable to provide those services because of inefficiencies in grantmaking operations, it is more than a breakdown in business operations. It prevents government from supporting its most vulnerable and historically disenfranchised citizens.
In our latest report, researchers Brendan Hellweg and Jake Mills with the Harvard Kennedy School of Government aim to identify how the city’s contracting and payment process with nonprofit organizations can be improved.
Interviews with Baltimore nonprofit leaders and an analysis of city-funded grants revealed that Baltimore nonprofits experience delays of a year or more in receiving payment for services delivered through government grant agreements, with the largest delays occurring during the contracting stage. Some larger nonprofits with strong balance sheets are able to withstand these delays, but they disproportionately burden small organizations with lower access to credit.
While some delays are attributable to federal requirements or financial reporting best practices, and others are currently being resolved through ongoing reforms, this report identifies several significant challenges in the contracting process that present opportunities for Baltimore to improve its partnerships with nonprofits while ensuring accountability for public funds.
To help address these concerns, we identified several areas for improvement with actionable steps that could improve nonprofits’ ability to partner with the city:
- Authorize first quarter prepayment.
- Map, standardize, and digitize nonprofit contracting.
- Task a contracting improvement team.
- Encourage day-one invoicing.
- Expedite renewals and increase multiyear contracts.
Click here to read the report.
Source: Abell Foundation
Maryland Philanthropy Network and the Middendorf Foundation recently released a related report "Like Learning A Language: Bringing the Voices Behind Baltimore’s Permitting and Grantmaking Systems into Conversation". We encourage you to read that as well!
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