In Shelby County, Tenn., a Case Study in Government Grant Choices

February 5, 2013; Source: WREG-TV

Like yesterday’s report about the thinking of some city officials in Flagstaff, Ariz., in Tennessee, the Shelby County Commission is looking at that body’s $1 million grant pool for nonprofits and considering some major cutbacks. Citing a projected county government budget deficit of between $90 and $140 million, Commissioner Heidi Shafer suggests, in the words of WREG reporter Adam Hammond, that “it’s time to get back to the basics and only fund what they are required to by law, because that’s all they can afford.” For Shafer, that means K-12 education, the jails, police and fire, but all other functions in the county that includes Memphis are up for grabs.

Among the 13 nonprofits that received money last year is Big Brothers Big Sisters of Memphis, which got $100,000. The organization says that amount enabled it to add 100 mentored children to its program. The fundamental question posed by Shafer is implied in her concern that the county shouldn’t be giving out grants to nonprofits when it can’t pay for necessities.

To what extent are nonprofits providing services a governmental necessity? Historically, the reason that Shelby County and other local governments have provided grant support to nonprofits (not just from state or federal pass-through funds such as Community Development Block Grants but from their general funds) is that they viewed the functions carried out by nonprofits as important, or perhaps necessary, to provide a good quality of life for their citizens.

NPQ looked at the FY2013 Shelby County budget to see exactly which 501(c)(3) groups received county grants. Some of them seem to be carrying out all-but-essential functions of government (i.e., services that would have to be delivered by the county if the nonprofit wasn’t delivering them). Let’s take a look:

Shelby County provides an interesting case study for nonprofit advocates concerned about the programs and services provided by local nonprofits, which are frequently dependent not on big donations from wealthy donors, but state, county, or municipal grants and contracts that are decided by sometimes mercurial councils and legislatures. Looking at the Shelby County list, do NPQ readers think that these nonprofit grants represent functions that the county government should support with general funds? Let us know by posting a comment below.

As you consider that question, here are some points of context drawn from the grant descriptions in the Shelby County budget:

*The total Shelby County budget is $363,538,031. The nonprofit grants are 0.37 percent of the county’s FY2013 budget. None of the nonprofit grants in the list above are legally mandated.

*Shelby County gave $1 million in both FY2011 and 2012 to a program called Fast Forward. In each year, that grant represented about two-thirds of the county’s nonprofit grant allocation, but didn’t give it any money in FY2013. Fast Forward is a city/county economic development collaboration largely working with the region’s business leadership, including a healthy complement of hospital CEOs.

*The Community Alliance is the product of two homeless organizations that merged as a result of a “continuum of care” planning process required for the city and county to draw homeless services funding from the U.S. Department of Housing and Urban Development.

*Former National Basketball Association player Penny Hardaway’s Fast Break Courts is a plan for building a multi-court basketball complex that will be a facility for youth teams as well as a venue to attract regional and national tournaments. The county’s approval description says that the 100,000 square foot complex will be part of the Gameday Healthy Kids Foundation.

*The Exchange Club focuses on child abuse by teaching parents effective parenting skills and the Family Safety Center works to help victims of family violence.

*Please note that we do not mean to imply that these are the only grants to nonprofits in the entire Shelby County budget. For example, the Division of Community Services provides grant funds to programs and organizations working on weatherization, Head Start, supportive housing for the chronically homeless, and assistance to crime victims. 

So think of this as a public administration case study. Can you make the case for continuing the county’s grants to some or all of these 13 nonprofits? Are they legitimate and important functions for government to support, or extra activities that, while good to support, do not necessarily fit into the rubric of what a municipal or county government should be expected to provide?—Rick Cohen