Big changes are happening in the White House and on Capitol Hill, and the tremors can be felt in cities and towns across the United States. Federal spending reforms are impacting how taxpayer dollars are allocated, tracked and reported.
Nonprofit and public sector organizations that rely on federal funds must keep pace with such changes to remain compliant and competitive.
Below, we look at how recent executive and legislative changes at the federal level are foreshadowing a shift toward results-based funding distribution and accountability.
The Digital Accountability and Transparency Act
The DATA Act, passed unanimously in the House and Senate, and signed into law May 2014, increases federal spending transparency for better detection of waste and fraud. It does so by standardizing federal grant data collection, aggregation and reporting.
As a result, award recipients must have the infrastructure and processes to report spending data. Those that are unable to will be found non-compliant and are unlikely to be awarded funds once the standards are rolled out fully.
Federal grantees must be proactive in standardizing internal spending data. Identify current data gaps, and adapt information management processes in compliance with new reporting requirements.
OMB Uniform Grant Guidance
Interim requirements for the OMB Uniform Grant Guidance went into effect for new awards as of Dec. 26, 2014, to be followed by a final ruling later this year. A key section of the guidance focuses on performance for accountability, which shifts how recipients are held responsible for grant performance.
Under the guidance, grantees must demonstrate grant program performance and provide evidence of an internal performance management system that holds responsible parties accountable throughout the grant lifecycle.
In order to apply for federal funds, recipients will also be required to undergo a risk evaluation prior to award. In it, they must prove they have corrected past audit issues, or risk being ineligible for funds.
Treasury “Do Not Pay” Initiative
A push from the Executive branch, the "Do Not Pay" initiative stemmed from an Executive Order issued by President Obama in 2009. In it, he called for a reduction of improper payments and greater focus on eliminating payment error, waste, fraud and abuse in federal programs.
In 2010, the Do Not Pay Business Center was created to serve as a one-stop shop for federal agencies before making payments or awards. The center’s automated tools help grantors determine whether an individual or company is eligible to receive federal payments or engage in federal contracts.
By entering a social security number (SSN), employee identification number (EIN), taxpayer identification number (TIN), first and last name, business name or DUN, agencies can search past data. This gives them access to compliance history, eligibility, past performance metrics and more.
As a result, ineligible parties are flagged, and federal awards and contracts are awarded to the most deserving parties.
Impact on Grantees
These changes at the top levels of government are no coincidence; they are predictive of a comprehensive, cultural shift toward spending transparency and accountability.
As results-based funding standards are rolled out, grantees should keep the following in mind:
- Transparency is the new norm. People want to know where money is spent and that it’s being spent well. Widespread demand for accountability will be at the heart of these and future reforms.
- Data standardization is key. Standardized and centralized reporting will clarify spending and root out waste, fraud and abuse.
- Performance must be measurable. Once standardized, defined data is realized, it will create deeper questions around programmatic performance.
For a deeper dive into what to expect from these federal initiatives, download our free fact sheet.
How is your organization preparing for results-based funding?
Image Source: Alan O’Rourke via Flickr