City delays leave Baltimore nonprofits waiting up to two years for needed funds

Published on: August 12, 2022 at 6:00 am EDT

Baltimore City Hall sits between neighborhoods and grant money

Baltimore City’s backlog of payments to local nonprofits for federal housing grants ballooned during the pandemic, leaving many organizations to wait between 18 months and two years to receive their promised funds.

It’s a delay that advocates for Baltimore nonprofits say can hobble organizations, especially those with shoestring staffs, who rely on the federal grant funding to meet basic needs such as paying employees and providing them with health care benefits.

“The problem really goes to the heart of an organization’s ability to deliver critical services,” said Heather Iliff, the president of Maryland Nonprofits, who said the housing funds are just the most extreme point in broader grant processing issues for the city. “Nonprofits have had to cut programs, lay off staff, even go out of business because of these problems.”

Community Development Block Grants, known as CDBG, is a decades-old program administered by the U.S. Department of Housing and Urban Development that funds nonprofits around the country performing myriad services, from homelessness support to housing assistance to food banks to mentorship for at-risk youth. The federal grants are processed through Baltimore City government and paid out to local organizations as a reimbursement, meaning the groups spend before they actually receive their awarded funds.

Alice Kennedy, the city’s Department of Housing and Community Development commissioner, told The Banner that something like “a perfect storm” of factors coinciding with the start of the pandemic led to a pileup of federal block grant contracts in 2020, leaving many organizations unpaid for as long as a year and a half to two years. But she added that her department is in the final stretch of resolving the backlog and has winnowed down outstanding grant payments to three from the fiscal year ending in the summer of 2020, five from 2021 and 12 from the recently closed fiscal year.

The department has made “significant strides” to resolve the problem, said Kennedy, who added that what remains doesn’t constitute a “significant backlog” and should be cleared within the next two months.

Kennedy said the bulk of the timing for processing the federal grants is in the lead up to approval by the city’s top spending board, after which nonprofits can access their funding within a matter of weeks.

Before money can get into the hands of grantees, funding must receive the spending board’s stamp of approval. The period from the public announcement of a CDBG award to the point of spending board approval takes 14 months on average, according to an analysis by the Baltimore City comptroller’s office, a delay partly due to response times from nonprofits and federal compliance issues.

Beth Benner is the executive director of the Women’s Housing Coalition, a nonprofit that is waiting on a CDBG reimbursement for a contract that ended in June.

“It feels like each year the contracts have been arriving later and later,” she said. While CDBG isn’t her organization’s largest funding channel, she said these are tough times for the nonprofit world, “so delays in funding present significant challenges.”

In May, Maryland Nonprofits and the Community Development Network of Maryland, which both support nonprofits, sent a letter to Mayor Brandon Scott pushing for the city to move bottlenecked funds. A process that once took three to six months now requires up to two years, the letter said, adding that “the difficulty in working with City agencies may be unintentional, but it disproportionately harms Black-led nonprofits and the communities they serve.”

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And Iliff said the issue hasn’t been treated by Scott’s administration as the emergency it is, calling for “extraordinary” executive action to move money to nonprofits as quickly as possible. Her organization’s letter requested numerous urgent actions from Scott to clear the backlog, among them expediting outstanding grants from the 2020 and 2021 fiscal years to the spending board for immediate approval.

In a statement, Scott said his administration is aware of the CDBG payment backlog and “shares the urgency felt by our nonprofit partners.”

“I understand the invaluable services Baltimore’s nonprofit community provides to our communities and am deeply committed to ensuring that they have the resources they need to carry out this critical work,” he said. “Since the initial complaint in May, we have moved the large majority of these contracts and will continue to work with grantees to resolve the remaining delays in a timely fashion and reform the systems at play to develop a long-term solution to this issue.”

Kennedy added that her department, the mayor’s office and others in the administration have prioritized the backlog, and intervention from Scott’s office isn’t necessary. “Now, our focus is on the future and how to continue to find ways to be efficient and effective in moving the contracts as fast as we can,” the housing commissioner said.

A ‘systemic’ problem

An unusual confluence of factors around the start of the pandemic helped to create the logjam, Kennedy said. The city’s housing department was disrupted by the COVID-19 shutdown and was managing an influx of federal pandemic funding; drafting a city five-year action plan; and dealing with numerous difficult-to-fill vacancies. The housing commissioner said her department brought on temporary staffers to help clear contracts and move funding to nonprofits.

Leaders in Baltimore’s nonprofit community noted that the backlog on CDBG payments is not unique. While the delays and magnitude of the CDBG funding may be the most severe, the problem is “systemic” to Baltimore City government, said Maggie Gunther Osborn, CEO of the Maryland Philanthropy Network.

Both Iliff and Osborn said the brunt of the problem falls hardest on small and Black-led organizations who don’t have the bandwidth to pay their staffs or sustain basic functions without the federal funding. In many cases, the timing of receiving these federal grant payments through the city is long and uncertain enough that these small organizations can’t risk counting on them, Osborn said.

“It’s like I say to my small groups: if you need this money from the city, then you can’t apply for it,” said Osborn. “So it automatically eliminates these small groups that are doing the (important) work on the ground.”

That was the experience for Laurence Campbell, chairman of the board for the nonprofit WBC Community Development Corporation, who said the delays in the CDBG process were long enough when his organization participated several years ago that they decided to stop applying altogether. At the time, Campbell said, delays could span up to 90 days, a fraction of the wait time that nonprofits have experienced since the onset of the pandemic.

The first time the WBC Community Development Corporation received the federal block grants, Campbell said they assumed the problem was on their end. After it happened again, the organization realized the delay was just part of the process.

“My old teacher said, the first time the dog bites you: that’s the dog’s fault. The second time the dog bites you: that’s your fault,” Campbell said. “So I said we aren’t gonna get bit a third time.”

Still other nonprofit leaders pointed to the complexity and miles of red tape involved in federal grants, and said the fact that Baltimore City is a middle man in the distribution doesn’t mean the process is straightforward.

Dan Ellis, executive director of Neighborhood Housing Services of Baltimore, said he has found the Scott administration to be easier to work with than other mayoral administrations, and added that he’s sympathetic to the onerous process the city undergoes to process federal grants. Many of the delays in CDBG funding likely stem from adjustments and bureaucratic requirements at the federal level, not because of problems within the city.

“I don’t think it’s an incompetence issue,” Ellis said. “I think too many people look at this and say it’s slow,” therefore it must be incompetence.

U.S. Department of Housing and Urban Development spokesperson Sean Callahan said Baltimore’s plans for CDBG funding have been submitted later than usual for the last three rounds, although in each case under federally-approved waivers that applied to all jurisdictions around the country. Delays in the submissions of these plans has been a significant problem nationwide since the start of the pandemic, Callahan said.

Callahan estimated that ideally it takes nonprofits around one to two months to receive their funding once a reimbursement request has been received, although he noted that many factors can contribute to further delays, especially under the strains of the pandemic.

Processing block grants depends on a “mutual” relationship between the city and nonprofits, Kennedy said, and in some cases delays have been the result of slow response times on the part of grantees, as is the case for one of the outstanding 2020 block grants.

Once the backlog is resolved and the federal government has approved Baltimore’s plan for the next year, Kennedy said she aims to slash the timeline it takes for nonprofits to receive their funding back to three months.

Still, Kennedy said that she has given nonprofits the heads up that the next round of federal block grants payments has already been delayed, the result of a late approval for this year’s budget by the federal government.

Osborn, the Maryland Philanthropy Network CEO, said the city’s insistence that it would soon be clear of the CDBG backlog came as news to her.

“If it’s true, that’s great,” she said. “Then they can start working with every other department that has this problem.”

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