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A Matter of Accountability

From: Kathleen Rutherford, Executive Director of A Better Delaware

We trust the relationship between governmental and nonprofit organizations to be good because they help with Delaware’s most important functions: uplifting the needy, educating our citizens, and protecting our health and safety. This is evident in the FY22 Grant-in-Aid budget of $63.2 million passed by Delaware legislators without question.

However, when a system like Grant-in-Aid has gaps in oversight, how can we expect our legislators and non-profit agencies to collectively utilize taxpayer dollars in the most efficient manner?

Delaware corporate law treats nonprofits the same as private businesses, allowing entities to incorporate with few restrictions or regulations. Our state requires only one director to form a new non-profit as compared to New York, which requires at least three directors.  Currently, there are no specific requirements for auditing or ethics policies, leaving those decisions and oversight to the nonprofit itself.  In April 2021, Connections Community Support Programs, a non-profit health care and drug treatment contractor for the state of Delaware, was sued for defrauding the federal government out of more than $4.5 million by submitting false claims to Medicaid and Medicare for reimbursement of mental health services while receiving $60 million  in funds from the state of Delaware!

Like the Community Re-development funding process, there are some improvements in the Grant-in Aid process for the FY23 cycle. For example, now all organizations applying must benefit Delaware residents. In the past, some grants have been awarded to out-of-state groups. However, there is no way for the public to view which organizations have applied for grants. This is important to note as each Grant-in-Aid category is assigned a team of legislators from the Committee. These teams review the applications and make funding recommendations sometimes communicating on such matters via email. An amendment to a 2009 FOIA bill crafted by Rep. Pete Schwarzkopf prevents public access to any emails from the General Assembly, or their staff under current FOIA law.

Currently there are no requirements for grant recipients to submit a year-end-evaluation, self-reported or otherwise. This year, an Act was proposed (HB 93), that would create a Grants-In-Aid (GIA) Committee to review requests for GIA and develop and recommend the GIA appropriations bill to the Joint Finance Committee. The Act would require additional financial reporting and documentation, as well as performance and financial reviews of GIA applicants. The bill never made it to the floor for a vote in the General Assembly.

A year-end evaluation report would hold non-profit organizations accountable for performance and outcome and serve as a resource for legislators when considering the allocation of Grant-In Aid funds to an organization. Currently all non-profits with $100k in annual contributions or over $250k in assets are required to file an IRS 990 form. This form is publicly available and can be found on the organizations website or a non-profit database such as GuideStar. A system as such should be made available on the Delaware General Assembly’s website so that the public can check any Delaware non-profit’s financials.

Nonprofits in conjunction with governmental agencies support the most important aspects of our lives. Lack of accountability within these institutions and its governing agencies affects not only the bottom line, but it can also impact outcomes for our neediest citizens and waste taxpayers’ hard-earned money. We must demand that our elected officials pass legislation that requires transparency and accountability in the Grant-in Aid system.