How sustainable will Nevada's nonprofits be when ARPA funding ends?

That's this week on Nevada Week.

♪♪♪♪♪ Support for Nevada Week is provided by Senator William H. Hernstadt.

-Welcome to Nevada Week.

I'm Amber Renee Dixon.

During the pandemic, Nevada relied on several of its nonprofits to deliver critical resources and services to communities.

And in order to meet the increased need that COVID created, several of those nonprofits utilized American Rescue Plan dollars.

But now that that federal funding has ended, how will they continue operating?

It's a significant concern for the state, and here to discuss it are Zach Conine, Treasurer of the State of Nevada; Miles Dickson, Founder and President of Nevada Grant Lab; and Fuilala Riley, CEO of HELP of Southern Nevada.

Thank you all for joining us.

And I want to start out with you, Zach.

Will you elaborate on why this is a significant concern for the state.

(Zach Conine) Well, we have always known in Nevada that nonprofits play an absolutely vital role in the provision of services to Nevadans who are most in need.

And during the pandemic, nonprofits really stepped up.

They grew.

They took on responsibilities they had never taken on before.

They helped the state administer dozens of new programs coming through the federal government that were intended to keep people safe: rental assistance programs, food assistance programs, additional mental health needs for students, for seniors, for everyone in the community.

But all of that funding that came in was one-time funding, and many of those nonprofits grew during that period in order to take on new responsibilities or to expand existing responsibilities.

Now we need to make sure those nonprofits have the resources, the tools, the scale that they need in order to continue being effective.

We're trying not-- and this was a big discussion.

We've talked about this before, the big concern about not creating a fiscal cliff for the government.

But it's a similar concern when it comes to nonprofits making sure that they can still be successful.

-Miles, will you add on to the aspect of how important are nonprofits in Nevada versus how important nonprofits are in other states.

(Miles Dickson) Nonprofits in every community around the country play this really critical role in creating economic opportunity, building more inclusive and stronger communities, and improving quality of life.

So that's nonprofits all around the country.

What I think is really different about Nevada's nonprofit sector and Southern Nevada's nonprofit sector, in particular, is while it has all of those same attributes and all of those same capabilities, the reality is this sector is much smaller than it should be.

Our nonprofit sector in Southern Nevada and throughout the state is significantly less funded, it has less employees, there are fewer organizations.

So I think on one hand, what we can say is this sector is accomplishing an extraordinary lot with a relatively little.

And on the other hand, I think as a community and as a state, especially as ARPA dollars wind down and having seen how impactful nonprofits have been, especially in the last four years, I think it's incumbent on all of us to ask, how do we keep progress going?

-Fuilala, tell me how HELP of Southern Nevada utilized ARPA funds.

You provide so many social services, and how will you fare without those ARPA dollars?

(Fuilala Riley) So we utilized ARPA dollars to prevent a lot of evictions happening.

We also increased and expanded our street outreach teams as we were seeing more and more folks come on to being unhoused on the streets.

And then we, additionally, because of the housing market situation, we expanded our housing navigation services because it was taking more and more resources to find units for the unhoused to be able to move into.

So that was what we utilized ARPA-- also with Shannon West, we increased staffing so that we could go to the max capacity of 100.

-Shannon West is?

-Shannon West Homeless Youth Center.

It's a facility for 16- to 24-year-old unhoused individuals.

And we have 150 beds, and the ARPA funds allowed us to go to max capacity during the duration of the funding.

-Now that that funding has ended, how will that impact HELP of Southern Nevada?

-Well, we've already started to reduce the number of beds available, because we have to have the appropriate amount of staff-to-residents ratio.

And then we've also reduced our street outreach team members for that.

And then we've already reduced our housing navigation services.

-Significant reductions, would you say?

-Enough that it will, it will affect how soon folks get those services.

-Okay.

Miles, is this the case for a lot of nonprofits you work with, that they have been preparing for this, or what are you anticipating once that money does, finally-- because it has to be obligated by the end of this year.

And will you talk about those guidelines.

-First, I have to say I think Fuilala and her team at HELP do an extraordinary job planning ahead.

You know, some nonprofits who have a lot more experience with government funding previous to the emergency, or the pandemic, I think had a better practice and a lot more infrastructure and understanding of what managing federal funds or local and state government funds would mean for their organization and the need to plan ahead.

I think one of the really positive things that came out of ARPA spending was more nonprofits than ever before saw government funding, so really getting more dollars in the hands of more organizations doing more work.

So for some who may be newer to federal grants or government funding, you know, there is a tough reality ahead, which is that if lots of the funding over the last handful of years that an organization has been relying on is set to sunset, that's a pretty scary prospect, both for the organization--and I think all of us in the nonprofit sector would agree--more importantly, for the people we serve and the communities we serve.

And so thinking about what it means to extend services, keep staffing on as much as possible, keep vital programs going is important.

The obligation deadline, essentially, U.S. Treasury requires all those funds that were deployed over the last three years to be fully committed by the end of this year and fully spent by the end of 2026.

So I think we're going to start seeing the impact of those obligation expenditure deadlines soon.

You know, at the end of the day, lots of money has already been spent.

Rental assistance has been distributed, food assistance has been distributed, health care access has been increased, housing access has been increased.

So lots of the money has already been spent, too.

So it's a challenging road ahead, I think, for lots of organizations in our community.

-And why should-- I imagine there are some viewers out there who are thinking, hey, this was one-time use money that was meant for the pandemic.

The pandemic is over.

Shouldn't these nonprofits be able to just go back to how they operated before?

What's, what do you think about that line of thinking, Fuilala?

-So the pandemic is over, but the effects of it, you know, is not.

We're still dealing with folks that were really detrimentally affected.

And so homelessness doesn't necessarily happen overnight for some people.

Yes, you know, like that one incident where they're put out of their home, that happens.

But there's usually like an instability in their life that is happening for months up until that point.

And so we can't-- we have to provide the support in a longer sense than-- so our community members have not recovered completely from COVID.

So I think that's the thing that folks need to understand is that we, our community and our neighbors, haven't completely recovered.

And so they still need a lot of support.

-Let me add that every dollar can only be spent once.

Doesn't matter the source.

Doesn't matter if it's private philanthropy or government grants or a customer that comes into a business.

Every dollar only gets spent once.

So in the nonprofit sector, whether it's from public or private, we're all trying to braid together all of these different sources on any given day to try to provide the best level of services we can to the community.

So I think it's particularly large right now because of the amount of money we're talking about as a result of ARPA, but these are the same questions that existed in 2000, you know, 2019 and 2009 and 1999, which is every dollar only gets spent once.

It's part of the industry, the nonprofit industry's job to figure out.

And I think many of us do it very, very well.

How to braid together all these different funding sources to try to create continuity of service and also predictability for our own teams, our donors, our broader stakeholders.

-Talk about it from the state perspective.

Where is the state with its use of ARPA dollars, as far as how many have been obligated and how much has been spent?

-So as of relatively recently, every dollar that the state has gotten in has been obligated, right?

We still have about $1.4 billion in state coffers that are going to go out between here and the end of '26.

A lot of that is in our Home Means Nevada housing program.

Some of that are in individual capital expenditures, and some of those are reimbursements for nonprofits who are doing work on behalf of the ARPA dollars, whatever their specific thing is, getting paid out over time in a reimbursement manner.

So that money is still going to hit and matters.

But the other thing I think is important here is that ARPA helped us realize some of the problems that we'd known about for quite some time when it comes to the state mechanics of getting dollars.

Nevada is one of those states that actually sends more tax dollars to Washington than we get back.

We actually lose money.

The other states who do that are places like California and New York that have massive tax bases.

Nevada doesn't have a massive tax base.

And so that deficit in us getting dollars back has more to do with the fact that we as a state generally have been very bad at getting dollars back.

-Why is that?

-A thousand reasons.

The show is not long enough.

But they all generally come back to, in my opinion, friction points that exist because of government bureaucracy.

And so we have been focused in the last few years, both under Governor Sisolak and now under Governor Lombardo.

This is a bipartisan effort to remove those friction points and make it a little bit more effective for us to get those federal dollars.

The last estimate, and Miles will keep me honest, but the last estimate is around $500 million a year of federal dollars that we would get to if we just got to the average per capita for dollars that should be coming in from the federal government.

We know the need is more than that, and so our work has been-- and this is deeply unsexy government work, Amber, like this is super boring.

-That's what this show is about.

-Perfect.

Well, then, we're about to bull's-eye it.

This is about making sure that the process for agencies to go and get those federal grants is as easy as possible, that we don't take time duplicating processes with the executive branch and then with the legislative branch, that we focus on the work at hand and Nevadans at hand.

And to do that, we created a new grants office, the Office of Federal Assistance, which reports directly to the Governor.

We have a working group through the Nevada Advisory Council of Federal Assistance, which I chair, that has legislative leadership and love from Assemblywoman Monroe-Moreno, Daniele Monroe-Moreno, who has been an absolute champion in this space; the controller, who's a Republican, Andy Matthews, is working on this work; Amy Stephensen, who's the head of the Governor's Finance Office, is working on it.

Everyone is rowing in the same direction to try and fix problems that have been happening in Nevada since 1864 or so, right?

We know what the work is.

We know how to do the work.

What we're grateful for is that we have nonprofits like Grant Lab, who are helping other nonprofits get ready for those dollars to be there, so that they're able to go after federal grants, because federal grants require a lot of work, a lot of scalability, a lot of paperwork, and a lot of compliance that can be very difficult for nonprofits to scale into.

-But is that the primary reason?

And let's paint this for viewers who may not be familiar with this.

So federal income tax, that's what we're talking about, is going to the federal government, but Nevada does not get its fair share back in the form of?

-Anything.

We pay in more money to the federal government than Nevada gets back.

There are approximately 10 or 11 states that pay more than they get back, and we're one of them.

-But some people may be thinking, why would we get any money back?

We're talking about-- -Because it's our money.

-Okay.

-Yeah, so sure.

Look at the way that federal taxes work, in a nutshell, is we're all paying into a federal system.

That federal system delivers services.

In some cases, services are things like U.S. defense, right?

And in other cases, they are dollars that build roads and bridges, dollars that build energy grids, dollars that build affordable housing and support social services, especially for individuals and families who really need a hand to get back up on their feet and move forward in life.

That's part of our federal system.

That's been part of our federal system, really, since the beginning.

The first big federal grant program was to fund what is now the National Guard.

And so the challenges here in Nevada for really the last several decades, dating to about the mid '70s, we've been really hostile as a state towards federal money, and that has permeated policies and practices from how we pay nonprofits to how we promote federal grant opportunities.

It's impacted nonprofits.

When we look at the overall funding mix for nonprofits, we need more philanthropy.

We need more local and state investment, too, but one of the biggest missing components is federal funding.

At the end of the day, it makes no sense for taxpayers in any state, but especially in Nevada, where there's so many needs and so much opportunity to effectively be paying for better education, better health care, more affordable housing in virtually every single community in this country but their own.

So I think the treasurer and partners across the nonprofit sector and local government, we're all going to work really hard and continue the work that started over the last several years to fight for Nevadans to get their fair share.

-What does this fight look like for you, Fuilala?

-So for nonprofits and HELP particularly, one of the things about federal funding and just government funding as a whole is that it's on a reimbursement practice.

And so basically, if you get a 1.2 million dollar grant, the, whoever the government funder is, you, nonprofits are kind of burdened with the cash flow, because we're probably going to expend 300,000 before we get that first 100,000 back in reimbursements.

And so some nonprofits have to look at cash flow.

And so for ARPA, there were several opportunities that we passed up and we didn't even apply for because we laid over that cash flow like, Hey, we're already receiving $7 million.

You know, if you break that up, I don't think our organization can handle holding on to 3 or 4 million dollars in receivables.

And so sometimes that is an issue.

-You're turning down money?

-Yeah.

Yeah, we are.

-Because?

-Because we can't afford to front the money for the reimbursement process to happen.

And so we'd like to change that, because I think our organization is primed and probably very ready, compared to a lot of other nonprofits, to take on more federal funding.

But we have to figure out that cash flow issue.

-Small nonprofits, how can they even compete then if they don't have any reserves?

-I was just going to say, they don't.

-They don't.

The majority of nonprofits in this state, when you peel away all the file nonprofits, folks often think that there's so many nonprofits in Nevada, there's so much duplication.

I understand where some people are coming from, because they hear, Oh, my gosh, there's 14,000 nonprofits in the state.

But when you actually look at the number of nonprofits that have one full-time employee and $1 of expense, that 14,000 number shrinks to just about 650.

So about 1 in 20 nonprofits that exist in this state actually have an employee or $1 of expense.

So even zooming in on that 650, the majority of them don't have more than 90 days' cash on hand.

So if you have to wait 91 days, or in some cases, problematically, a lot longer, those nonprofits literally don't have the cash to tap into the very federal money or, in some cases, local and state money that is intended to support their missions.

We have a business infrastructure problem that we need to start addressing.

We've made some good progress.

We saw different grant administrators, especially at the local government level, create more flexibility in terms of advance payment, try to expedite prompt payments for these reimbursements.

We need the state to fully embrace that position, too, so that organizations that are incredibly capable of doing this work, who get great impact for the dollars that they do receive have the opportunity to actually take in those dollars, get Nevadans' federal tax dollars working in their communities, and really supporting our neighbors.

-I was able to speak with Nevada Assemblywoman Tracy Brown-May, and she created the nonprofit caucus that is part of the legislature now.

But just last year, just 2023, and she told me that that's exactly what she has been working for is quicker access to these funds.

What else do you see as an issue at the state level?

-I think quicker access to funds is a real one, making sure that the rules don't change along the way is a real one, helping-- -Does that happen?

-For sure.

Sometimes that's a federal government thing, and sometimes that's a state government thing.

Sometimes we learn something around the way.

But making sure that there is some predictability, or more predictability, would absolutely be necessary.

But most of that work at the state level, as we see it, is speeding up processes that are already in place, removing duplication, creating incentives for state agencies to actually go after federal grants, because functionally, structurally, state agencies are disincentivized to do the work to do federal grants.

If they are successful in getting the grant, the dollars get removed out of their budget.

And if the grant goes away at some point in the future, they simply won't be able to continue doing the work.

And so they're incented not to go get federal money.

-I mean, that seems like a smart business plan, though, right?

I mean, if you know this money is not for sure, then why would you be pursuing it?

Isn't it fiscally responsible, or... -I don't know.

I think you miss 100% of the shots you don't take, right?

And a lot of times in Nevada, there's been a conversation of, well, we shouldn't start doing this work, because at some point in the future, we may have to stop doing this work.

We don't know if the funding is-- and what has always been frustrating, I think to me and I expect to Miles and everybody else in the nonprofit space, is this concept that we shouldn't do good work for some period of time because we might not be able to do good work perpetually, that incremental progress is somehow anathema to Nevada; that it's either we do it forever or we never start it.

I mean, we live in a community that very frequently blows up the temples of our past to make the temples of our future.

We are very comfortable removing a building because it is no longer serving its purpose.

Why in the world would we not provide dollars that help folks find a place to lay their head or find a way to feed their kids because we think at some point we might not be able to do it?

Of course, hard things are hard.

And I think for too long Nevada has said, that's going to be too hard.

That might be a problem at some point, and so we're just not going to take any of the opportunity on the way there.

-Fuilala, when you talked about reducing services, that came with layoffs, correct?

-Yeah.

-And that's-- how typical is that in the nonprofit sector?

-So the nonprofit sector usually expands and contracts with funding that's available.

So over my 21 years at HELP, I have sunsetted quite a few funding sources or programs and whatnot.

So I have a lot of experience at that.

One of the things that is really important, I think, that the nonprofit sector should do more of is when I sunset a program, if I don't have positions in my own organization for those employees to be absorbed into, I usually sit down with them, have a conversation, tell them, Please, you're going to need to start looking for employment; but when you find something that's really intriguing to you and you think you fit that bill, please let me know where it's at so I can pick up the phone and call that organization.

And so I have had some experience with doing that.

I wish that we would do more of that.

There was times where, when programs were sunsetting and I would hear that, Oh, this nonprofit closed that program you know, because funding didn't get renewed, I was like, Well, what happened to those employees?

Like, you know, before they're scattered out into unemployment land and whatnot, it would have been nice to like-- we had a dozen, the most recent one, we had a dozen openings, and we were like, What happened to those eight employees?

They've already been, you know, trained in the nonprofit sector.

They're already very familiar with the population and whatnot.

So I think that's something that should cost nothing for us.

Before you lay off your staff, make some phone calls, because I will definitely take those calls.

-Okay.

Before we run out of time, I want to ask you, Zach, about-- I sit on the board of a nonprofit who was a little bit surprised that there were no funds remaining from the state, no ARPA funds remaining.

And I believe you were expecting, Fuilala, as well, that maybe you would get some of those funds.

What happened to them?

-Yeah.

So at the end of the legislative session, there was a little excitement, conversation around a bill that we all colloquially referred to as the "pie" bill, which is why you shouldn't say goofy ideas out loud, because they end up basically being the name of programs.

But anyway, the idea of the pie bill was it was a self-executing bill written by Speaker Yeager, Assemblywoman Monroe-Moreno, and our team, with help from Miles and others in the nonprofit space.

And the goal there was to make sure that if the legislature and the Governor and the Interim Finance Committee was unable to obligate dollars, that those dollars would absolutely positively not go back to the federal government.

And so it was a bill that allowed the Governor to say, Hey, here are some dollars that aren't going to be obligated.

We'll put them in.

They'll become the filling for the pie, and then the slices of the pie would get divvied up to a group of about 300 nonprofits who we know had done exceptional work during the pandemic.

But it's important to remember that that was the structure of us having a legislature that meets for 120 days every two years.

We needed to pre-do the work in case those dollars came.

Those dollars didn't come.

They were allocated by the Governor and legislature to other very meaningful programs, and so there wasn't a need for a bill that basically existed as a parachute.

So that bill was a backup plan to the typical process, because we wanted to make sure no money went out the door and went back to the federal government.

-And the way that there was money left over was because some funds were deobligated.

They were set to go to certain programs, but then those didn't work out.

Could that happen again with whatever the Governor has decided to do with the remaining funds that have now been obligated?

-So the bill itself had a very specific date.

Dollars needed to be identified for that bill by the middle of August.

If they weren't identified for that to go through that, the pie bill structure, by the middle of August, they won't.

Now, the legislature could, if something else got deobligated between here and the end of the calendar year, the legislature and the Governor could say, we want to take those dollars and put them through a similar program through the Interim Finance Committee process, or they could say we want to move it from this nonprofit who's doing the work to that, or this housing project to that housing project.

Those cards are still up in the air, but I think we all feel generally pretty good about the obligations that are out there and the likelihood that those obligations are successful.

I know that the Governor's team and legislature have spent a ton of time making sure that those things are actually going to happen, and we've actually been able to use groups like the infrastructure bank to help fill in the gaps around some of those.

There was a nonprofit called Safenest that was doing a domestic violence shelter.

There were some dollars in ARPA that were going to enable them to expand their operations, but they weren't able to get all the way there to what they needed with the ARPA dollars we had left.

And so we used the infrastructure bank to effectively fill the gap and make sure that that project could get done.

-Miles, any parting words, any calls to action with the current state of philanthropy in Nevada and ARPA funding ending?

-So I think a lot of our conversation today is appropriately focused on government's role in nonprofits.

The reality is private funders, whether they're individuals or family foundations or corporations, play a giant role in this space, too.

I think for a long time, funders have thought about making impact, or their dollars making impact, primarily by investing in programming.

And of course, that makes sense.

We want dollars to go to programs.

The reality is that nonprofits are also corporations.

They have cash issues.

They have to think about human resources.

We really need IT upgrades.

We need to be able to actually pay for federal grant writers to write those very complicated applications, and then the accounting and finance teams to manage it.

We need private donors to get involved in helping build more resilient nonprofits by investing in the corporations themselves.

-Thank you so much for making the time for Nevada Week.

And thank you for watching.

For any of the resources discussed, go to vegaspbs.org/nevadaweek.

And I'll see you next week on Nevada Week.

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