Top Takeaway: Nonprofits call for increased flexibility in state grant payment methods, and MCN submits feedback to the state.
The Minnesota Council of Nonprofits (MCN) recently submitted nonprofit community feedback to the Minnesota Office of Grants Management (OGM) as part of the state’s review of several grantmaking policies, including OGM Policies 08-08, 08-09, and 08-10.
To ensure nonprofit voices were represented in the process, MCN convened a listening session on OGM Policy 08-08, the state’s grant payment policy, among 121 registrants representing nonprofit, government, and community leaders across Minnesota. This policy directly affects how and when grantees receive state grant funds, making it a critical issue for organizations delivering services in communities statewide.
Executive Summary
Participants overwhelmingly called for increased flexibility in how the state makes payments to grantees as a strategy for better meeting the state’s goals around equity in grantmaking and mitigating harm toward grantees.
The current policy defaults to reimbursements as the preferred payment method and only allows advanced payments on a case-by-case basis, which many expressed is too rigid. Reimbursement as a payment method also creates significant cash flow burdens for grantees, forcing organizations, especially smaller and community-based nonprofits, to unsustainably front costs and sometimes take out loans to bridge funding gaps driven by state payment delays. This situation limits participation and shrinks the pool of organizations the state can work with, which results in access to state funding being skewed toward larger organizations with reserves and undermines equity in state grant contracting.
Participants offered ideas for a more nuanced approach to advanced payments, seeking a middle ground between grantee cash flow needs and state oversight.
MCN’s feedback to OGM focused on practical reforms that would strengthen nonprofit sustainability while maintaining accountability for public funds.
1. MCN recommends that the state develop a range of models for expanding state agencies’ ability to incorporate partial advance funding in grant contracts. Nonprofit grantees can provide valuable insight into operational and cash flow challenges, helping inform approaches that are practical, equitable, and effective.
2. MCN recommends that Policy 08-08 references Minn. Stat. § 16A.124, Subdivisions 3, 4, and 5, and clearly directs state agencies to pay interest of 1.5% per month on bills not paid within 30 days. Policy 08-08 should require that agency grant contracts include instructions for grantees on how to bill the state for interest when necessary. Policy 08-08 should also allow budget category-level reimbursement.
3. MCN recommends that, after requesting community feedback and creating guidance for what are “necessary and reasonable” costs under the newly-worded Minn. Stat. § 16B.98, Subdivision 1(a), OGM continue the conversation with advocates and consider how a minimum administrative rate could benefit the state.