On August 9th, the State of Vermont dispersed $29 million in American Rescue Plan Act (ARPA) Local Fiscal Recovery Funds (LFRF) to 274 cities, towns and villages. Thanks to advocacy by Vermont’s Congressional Delegation, ARPA funds originally designated for county level governments (which Vermont would not have qualified for) may now be reallocated to local governments. The impact will be an additional $60 million LFRF for cities and towns in 2021 that will be dispersed by Labor Day. Local governments will receive a second round of equivalent payments in 2022 and have until December 2024 to allocate the funds which must be spent by the end of 2026.
You can view the breakdown of payments by county and municipality from the VT Department of Finance and Management here.
Local governments have a fair amount of flexibility in how they spend these funds, but guidance from the Treasury specifies broad categories of allowable uses:
- Support public health expenditures
- Address negative economic impacts caused by the public health emergency
- Replace lost public sector revenue
- Provide premium pay for essential workers
- Invest in water, sewer, and broadband infrastructure
So, what does all this money mean for nonprofits?
Nonprofits can access LFRF in a couple of ways:
✔COVID RELIEF – The Interim Final Rule issued by the Treasure in April offers the following guidance in regards to providing assistance to small businesses and nonprofits:
State, local, and Tribal governments may provide assistance to small businesses to adopt safer operating procedures, weather periods of closure, or mitigate financial hardship resulting from the COVID–19 public health emergency, including:
- Loans or grants to mitigate financial hardship such as declines in revenues or impacts of periods of business closure, for example by supporting payroll and benefits costs, costs to retain employees, mortgage, rent, or utilities costs, and other operating costs;
- Loans, grants, or in-kind assistance to implement COVID–19 prevention or mitigation tactics, such as physical plant changes to enable social distancing, enhanced cleaning efforts, barriers or partitions, or COVID–19 vaccination, testing, or contact tracing programs; and
- Technical assistance, counseling, or other services to assist with business planning needs. As discussed above, these services should respond to the negative economic impacts of COVID–19.
✔PROVIDING SERVICES – Beyond providing assistance to nonprofits, local governments may transfer funds to nonprofit organizations to provide services that address the negative economic impacts of the pandemic (see Treasury FAQ). It is important to note that any organizations who receive a fund transfer will be considered subrecipients and need to comply with reporting requirements, though the recipients (local governments) are responsible for ensuring compliance and reporting on the use of funds to the treasury. More details about being a subrecipient can be found on page 28 of the Interim Final Rule.
While State Fiscal Recovery Funds may also be accessed by nonprofits, LFRF funds are not subject to the traditional state budgeting process, providing organizations with the opportunity to partner with local governments in creative ways and seek assistance in a less competitive environment.
At this point, many municipalities are still in the early stages of strategizing how to leverage the funds and understanding the guidance. Some, however, have already started community discussions or identified projects that may fit within the allowable uses.
In a recent article, Katie Buckley, the Director of the Vermont League of Cities and Towns’ ARPA assistance and coordination program, advises towns to “Take the money first and then get the structure in place, and then you can talk to residents and voters about what they want the money spent for. There are real opportunities for communities that wanted to do projects in water, sewer and broadband to move them from an idea to an actual project. Our advice to towns is to be patient, be strategic and thoughtful, and put a good plan in place. You do have a use for this money. Let’s talk this through. Let’s brainstorm.”
Now is the time for nonprofits to think strategically about their needs and ability to serve as they begin to engage with policy makers, community members, and other organizations during the financial planning process. How can your organization partner with local governments to provide contracted services to meet community needs? What operational support does your organization require to carry out its work? Are there opportunities to collaborate with other entities on a larger scale project? This document outlining allowable LFRF uses may be helpful in this process. Keep in mind, while we know the value nonprofits organizations provide to the communities they serve, it will be critical to make your impact clear to those making decisions. Advocacy efforts can also go beyond funding for programs and operational expenses – nonprofits should urge their governments to adopt policies that maximize the impact of each federal dollar by applying principles such as these identified by the National Council of Nonprofits.
We will continue to update this information as things evolve. In the meantime, here are some resources to work with:
- VT Digger Article: Vermont communities to receive millions in federal Covid-19 relief this week
- National Council of Nonprofits:
- Investing ARPA Funds in the Work of Charitable Nonprofits Webinar Recording
- Vermont League of Cities and Towns: ARPA Info
- State of Vermont Coronavirus Relief Fund Transparency Dashboards
- Press Release from the Governor: Governor Phil Scott Announces Distribution of American Rescue Plan Act Local Fiscal Recovery Funds
- Towns await federal guidelines on spending ARPA funds (Valley Reporter)