Nonprofits concerned about potential shift in funding
Date posted: May 20, 2014
SHERIDAN — City officials are re-thinking the way the Optional One-Cent Sales Tax will be distributed in the future and the possible change in the way the funds are requested and distributed has caused some concerns among groups that depend on the contributions for operational expenses.
Most recently, one-cent taxes were distributed to nonprofit organizations via lump sum allotments, largely for use “as needed.” This time around, tax allocators are thinking of distributing funds via a “community chest” model of allocation.
An integral part of the possible new procedure of funding distribution is that instead of blanket money given to a nonprofit for use as needed, organizations would apply for funding of more narrowly defined projects. In this scenario, allocation of the taxes collected occurs similar to a grant process. While most nonprofits have ongoing special projects for their respective causes, others don’t know how much funds will be needed until they set out to address a specific issue.
The goal of creating a “community chest” method would be to transition the groups’ reliance on operational funding toward specific project funding. The implication is that along with the careful consideration of each project that receives one-cent funds, more resources would be available for other projects, including possible vocational training at Sheridan College, economic development efforts, contributing toward an air service subsidy and upgrading infrastructure.
Advocacy and Resource Center Executive Director Bonnie Young was forthright in stating that her organization counts on one-cent funds.
“One of my immediate reactions is that we always need operational funds,” she said. “When we’re given unrestricted monies, it helps us stay open and operate.”
Young added that identifying specific projects as they come up can be a time-consuming endeavor to write a request, wait for approval and then have the money delivered.
“Where does this come from that we are able to operate and do the jobs we’re supposed to be doing rather than spending excessive time to find money to do new projects?” she asked.
Another major concern Young had centered around the perception of other granting agencies regarding how much “buy-in” the local community had for the services offered by any agency.
“We get a lot of state and federal funds also, and they are specific to the service we want to offer,” Young explained. “In order to get those funds, you need to show local support.”
Sheridan Senior Center Executive Director Carmen Rideout shared Young’s concern about having local support to use as leverage when approaching other granting agencies.
“I have mixed feeling as far as the Senior Center goes because we do count on Optional One-Cent help with our operational support,” Rideout said. “Our federal and state grants require there to be a local contribution so I wouldn’t want that to go away.”
Rideout added that while one-cent funding is only about 5 percent of the center’s overall budget, it would be a significant financial hit if the money were taken away.
“Because we run on such a tight budget, we don’t have a lot of extra funds available. Any kind of hit to operational support, we’ll have to find it elsewhere or it will affect our services,” Rideout said. “It wouldn’t shut us down, but there would be consequences.”
Rideout added that research indicates demand for services at the Senior Center will likely grow in the coming years, but budget cuts could mean fewer services offered to the community if the funds are not found elsewhere.
Young agreed her organization would have to find other funding if operational considerations were taken out of one-cent allocations.
“If we lose a part of that, it’s something we’ll have to find somewhere else,” Young said. “With all the nonprofits in Sheridan — it gets you out, beating the street trying to find money and competing with each other for money in a fairly small community.
“We have a very strong partnering with the majority of our nonprofits, so we try to make our services as wrap-around as possible. The more we have to compete with each other, the more we lose local funding, the more difficult it becomes,” she added.
One of the key components of the Optional One-Cent Sales Tax is that in the past, voters have known in advance how much funding would go to each nonprofit within the community. Under the current system, that kind of foresight would be impossible to achieve.
If the method of allocating the optional tax is to be changed, state statute dictates the public must be made aware of the changes at least 70 days before the November election.