Commentary: Seize The Moment: Tap Into Remaining American Rescue Plan Act Funds

Today, March 11, marks the third anniversary of the American Rescue Plan Act, a cornerstone in the Biden Administration’s response to the Covid-19 pandemic, allocating a substantial $1.9 trillion to governments, individuals, nonprofits, and businesses. Our focus today isn’t on anniversary festivities but on mobilizing charitable nonprofits. A critical aspect of this legislation presents a unique opportunity for charitable organizations to secure special funding from state and local governments before it expires.

There’s a tight deadline; any funds those governments don’t allocate by the end of 2024 must revert to federal coffers. Nonprofit professionals, particularly those in development and public policy, need to take decisive action.

Our focal point centers on the allocation of funds under the $350 billion State and Local Fiscal Recovery Fund (SLFRF), distributing specific amounts to every state, county, and municipality in the United States. The statute, coupled with Treasury Department regulations, make clear that governments have the discretion to use their SLFRF allocations on nonprofits in two significant ways: (1) providing direct assistance to nonprofits as beneficiaries to help with post-pandemic recovery, and (2) hiring nonprofits as service providers on behalf of the government.  However, eligibility is just the first step, not a guaranteed entitlement. Nonprofits must actively engage with state and local governments, strategically positioning themselves to access any remaining SLFRF funds.

Looking at it from a development standpoint, the SLFRF program is a double-edged sword—it’s both a blessing and a curse. Given its purpose (pandemic recovery) and breadth (every state, county, and municipality), federal officials intended it to offer maximum flexibility, which is refreshing.  Yet because it’s uncharted territory and the restrictions on usage are either vague or confusing, it brings extra layers of complexity. Particularly for smaller governments, this marks the inaugural instance of direct funding from the federal government. Typically, funds flow to them through the states as “pass-through” entities. Any seasoned nonprofit development professional knows that a first-time grant, whether from a government or a foundation, brings along new obligations, unknown paperwork, and a touch of anxiety.

That last item — anxiety — initially was the overriding reaction of many well-meaning, but ill-informed officials in smaller jurisdictions. As a result, things announced in the early years may not be true today. Opportunities for nonprofits may be as great now as initially intended.

Let’s address some basic questions before getting into how nonprofits can tap into these resources.

• I heard it was all spent. Is there still money available? This is a common concern, especially at the local level. The answer is a resounding yes. Significant amounts of SLFRF funds remain unspent, awaiting allocation before the end of 2024. As many local governments reassess their SLFRF compliance, they’ve discovered that a portion of their SLFRF allocation initially designated for “revenue replacement” may exceed what’s allowed, so now they must redirect funds to address the ongoing impacts of Covid. Many jurisdictions, in their efforts to structure grant programs, inadvertently imposed overly stringent eligibility criteria, resulting in unspent funds. These situations underscore the necessity to revisit initial spending decisions, with the unallocated funds requiring a new commitment by December 31, 2024.

• How do I find out how much money is left? Governments generally aren’t announcing that they still have some SLFRF funds, so how do you find out what money is available? You ask. You show up at council or committee meetings and participate. You watch government websites for news. You pick up the phone and ask. Calling the city or county finance office, the mayor’s office, or even the central switchboard can be a very productive first step. Reaching out to local governments now is paramount, as any hesitation or delay could result in missing out on these funds forever.

Crafting and Making the Pitch

The following steps to access SLFRF funds are quite like strategies nonprofits use both for their fundraising and policy advocacy efforts.  In this case, a sense of urgency and the recognition of these funds going away soon require a targeted strategy.

1. Research and Understand Eligibility Criteria

Once you’ve pinpointed available funds and the key contacts, the next strategic move is understanding what the government has previously funded. This involves a proactive approach — ask questions to discern what has proven successful, what hasn’t, and what aspects were overlooked in previous spending plans. An effective tactic is gaining insights by tapping into the strategic plans of local governments or even exploring any unmet campaign promises from the local politicians. Many nonprofits have discovered valuable ideas through these channels, providing a solid foundation for navigating the funding landscape. This resource from the National Council of Nonprofits provides scores of examples of nonprofit programs that have successfully secured SLFRF funding.

2. Engage with Local Government Officials

Relationship building, like with any fundraising effort, is essential. Establishing open lines of communication with local government officials is crucial. Schedule meetings, share your stories, listen to the government’s needs and priorities, and emphasize the positive outcomes that SLFRF funding can achieve in collaboration with the government.

3. Craft a Compelling Narrative

In most cases, there is no request for proposals (RFP) or application form that makes the process easy. Instead, nonprofits must sell both themselves and a spending plan at the same time. Effective storytelling is a powerful tool in fundraising and in advocacy. Craft a compelling narrative that highlights your mission, impact, and how SLFRF funds will contribute to overcoming challenges created by the pandemic.  Also, include how your organization has the capacity to use the dollars and the mechanisms to meet any reporting requirements. For example, Colleen Robinson of the Clallam County (WA) Habitat for Humanity shared on a recent nationwide webinar that she found success using an executive summary that defined the problem the local Habitat had identified, explained how the money would be used, and described how it would positively impact the community.

4. Highlight Community Impact

This is worth emphasizing again. Most state and local government have identified goals they want to achieve. Emphasize how your use of the funds will address their goals. Whether it’s supporting vulnerable populations, enhancing education initiatives, or fostering economic recovery, showcasing the benefits to the community strengthens your case for funding.

5. Act Promptly

Time is of the essence. Nonprofits must act promptly and efficiently to navigate any bureaucratic processes and secure commitments from local governments. The clock is ticking, and delays could result in missed opportunities.

Seize the current opportunity to ensure nonprofits remain beacons of hope and catalysts for positive transformation post-pandemic; let’s not let this lifeline slip away.

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Donna Murray-Brown is Vice President of Strategy and Development, and David L. Thompson is Vice President of Public Policy at the National Council of Nonprofits.