Pros and Cons of Receiving Government Funding

Pros and Cons of Receiving Government Funding

(Amy L. Sherman, Hudson Institute, 2004)

With all the attention President Bush’s “faith-based initiative” has received, many congregations and FBOs are considering whether to engage in financial relationships with government agencies. Here are some potential promises and pitfalls of receiving public funding that faith leaders should evaluate as they weigh the opportunities available to them.

Pros of Government Funding

• Increased money to underwrite programs.

• Receipt of public dollars may bring increased credibility to the FBO. When secular private foundations or other government agencies see a FBO winning tough competitions for public funding, their opinion of that FBO may be enhanced. As a result, they may become more interested in funding the FBO themselves.

• Government funding is sometimes accompanied by free technical assistance. The government agency providing the funding may offer workshops, seminars, or on-site consults to assist the FBO in growing either its programmatic or organizational capacity. The training received, for example, can strengthen the FBO’s ability to deliver services, monitor program participants’ progress, or track outcomes. At other times, the technical assistance may increase the technological capacity of the FBO, as new software programs are introduced.

• FBOs receiving public funding may be introduced to a broader network of resources or potential partners. Sometimes government agencies bring together all the recipients of a particular grant or contract fund. In this way, grantees can engage in peer-to-peer learning. Sometimes grantees meet others delivering similar services in the same city for the first time through such gatherings. And, as an FBO’s network of contacts increases, so too does its awareness of other potential funding or resource-sharing opportunities.

• FBOs partnering with the government may enjoy an increased ability to influence public policy. Government staff may view the FBO as being “at the table” and may be more open to receiving input and constructive criticism from faith leaders.

Cons of Government Funding

• Red tape! Participation in publicly funded programs inevitably involves paperwork, record-keeping, and potentially cumbersome reports. FBO leaders must recognize that keeping up with these administrative requirements will demand time and energy from the organization.

• Increased monitoring of program activities. It is not unreasonable for the government agency providing funds for the program to monitor the use of those funds. But the degree of monitoring will tend to vary from agency to agency, depending on the nature of the program and even the personalities of the government staff members. FBOs must be prepared for increased accountability. At times, the monitoring may feel intrusive or excessive—and FBO leaders need to know what level of accountability they believe is fair and reasonable, and what level is not.

• Slow reimbursements. Often government contracts operate on a reimbursement basis. The FBO is awarded a government contract, but actually spends its own money up front to cover program expenses. Then, after some delineated period of time (such as a month), the FBO submits expense reports and receipts for reimbursement. Some FBOs have horror stories of government agencies being notoriously slow in providing reimbursement. Some report having to wait six months or even longer. Small FBOs with limited cash flow especially need to be aware of this potential challenge if they enter into a contractual funding agreement with government.

• It is possible that the receipt of government dollars will displace donations from private sources. Imagine a scenario in which the FBO proudly announces in its monthly newsletter to volunteers and donors that it has just secured a $50,000 government grant to help underwrite its programs. It is possible that some individual donors will feel that their $50 per month support is no longer needed by the FBO, and stop giving.

Like many opportunities, the chance to become involved in government partnerships holds potential promise and potential dangers. FBO leaders without experience in receiving government funds may wish to consult with peers in the faith community who have partnered financially with public agencies, to hear more about those leaders’ experiences—the good, the bad, and the ugly. Faith leaders can also request appointments with local public officials to learn about the requirements of collaboration. Many FBOs have discovered that cooperating with public agencies can be an effective way of expanding and enhancing their social services. But it is best to approach such partnerships with “eyes wide open.”