Town stepping up oversight of its non-profit funding

With revised policy requirements
Thu, 02/14/2019 - 6:30pm

The Town of New Shoreham is stepping up its oversight of non-profit groups that it funds through grants and low-interest loans. Non-profit entities that receive town funding will now need to submit an annual performance report documenting the use of those funds and may be required to conduct an examination of their financial statements.

At its Feb. 4 meeting, the Town Council voted unanimously to adopt changes to its non-profit funding policy. First Warden Ken Lacoste made the motion that was seconded by Councilor Chris Willi. The policy draft reviewed during the meeting is attached to the council’s Feb. 4 agenda on the town’s website.

Finance Director Amy Land noted that non-profits that receive “in excess of $100,000” from the town shall comply with additional requirements, and those larger non-profit organizations “must have their financial statements reviewed by a Certified Public Accountant, a Public Accountant, or a licensed, registered, or qualified accountant, which we think covers all of the bases for all the different state licensures.”

Land said she “didn’t want the policy [pertaining to accountants] to be so restrictive” that it would be difficult for the organizations to have their financial statements reviewed.

She said the town’s revised policy would be subject to review to ensure that it’s working properly.

The policy stipulates that non-profit entities that receive town funding must provide a vital, cost effective service that the town itself does not provide, or fill a gap between government services and community needs.

It notes that, “Each agency will enter into an agreement with the town for the delivery of services, including the scope of services to be provided and payment arrangements.” The policy also states that, “Failure to comply with any of the town’s requirements may result in suspension of current funding and/or elimination of future funding.”

“Just to understand the idea here; each non-profit agency will enter into an agreement, and there will be an annual performance report that may require examination” of a nonprofit’s financial statements during the funding year, said resident Pat Tengwall, Treasurer of the Block Island affiliate of the National Alliance on Mental Illness. “Those requirements apply to any non-profit organization (that receives town funding) regardless of the funding amount, correct?” he asked.

“Correct,” said Land.

“What sort of performance report would the town require?” asked Tengwall.

Land said, as an example, it would be similar to the report that is issued by the Block Island chapter of the National Alliance on Mental Illness. It would be an overview of a nonprofit’s “activities over the year, and how they relate to the Block Island population.”

“Is this policy, once adopted, going to be enforced for budget requests for the funding year beginning this coming July, and ending June 30, 2020?” asked Tengwall, who noted that the policy says that non-profit applications should be submitted by the council’s first scheduled meeting in February.

“Yes. We will start right away,” said Land.

Lacoste said non-profit budget requests would be enforced beginning in July.

“So, to the extent possible, this new procedure will apply for the current budget season?” asked Tengwall.

“Exactly,” said Land.