Comments on General Administrative Requirements for Assistance Programs: EPA Administrative Capability Questionnaire EPA ICR Number 0938.10, OMB Control Number 2030-0020 Docket ID Number OARM-2004-0001 January 3, 2005 By Kay Guinane, Counsel, Nonprofit Advocacy Introduction OMB Watch is a national nonprofit organization dedicated to promoting government accountability and civic participation. Our long-standing interest in the grantor-grantee relationship between government agencies and nonprofit organizations has brought us into contact with many nonprofits, especially smaller organizations at the state and local level. Simplification of the federal grants process has been an ongoing concern of these groups. As a result, we were active in the formulation of the Federal Financial Assistance Management Improvement Act of 1999 (FFAMIA), which requires federal agencies to develop and implement uniform procedures and definitions in the grants process. Former Sen. John Glenn of Ohio developed it after participating in a series of briefings sponsored by the Ohio Association of Nonprofits and OMB Watch. Since passage of FFAMIA we have joined with The Urban Institute and the National Council of Nonprofit Associations to give nonprofits information on implementation of the act and a vehicle for input into how the federal government implements its mandates. In the course of this work we have provided extensive input, via comments and meetings, to the E Grants initiative and the overall streamlining process. General Comments Nonprofits at the state and local level feel strongly that implementation of FFAMIA should include dropping unnecessary and duplicative administrative steps in the grants process. Information collection items must share common definitions used by all agencies and be centralized whenever possible. Exceptions to this rule should be rare and require approval from OMB that can only be granted by a showing of statutory mandate or unique and unusual circumstances. The Environmental Protection Agency is proposing to require all nonprofit grant applicants to complete a questionnaire for the purpose of assessing their capacity to administer a federal grant. Supporting documentation must accompany the complete questionnaire. Groups that demonstrate adequate administrative capacity will be "certified" for the next four years, making it unnecessary to re-submit the questionnaire with subsequent grant applications within that time. The concept behind this proposal makes sense. However, it does not make sense for EPA to undertake this effort on its own. The proposed process should be part of a larger, government wide effort to streamline the grants process. If the EPA goes forward on its own, a "stovepipe" situation will be created. Other agencies, such as the Dept. of Health and Human Services (HHS) or the Dept. of Labor (DOL), may decide to do something similar. In that case, nonprofits would have to complete similar but non-identical surveys for multiple agencies, defeating the purpose of FFAMIA. The federal government has already made great strides in streamlining and simplifying the grants process. All grant opportunities must be posted on a www.grants.gov, the web portal managed by HHS and serving all federal agencies. These announcements must be in a common format. A standard grant application form has been developed, and efforts to standardize financial reporting definitions are well underway. The E Grants portal also makes it possible for nonprofit organizations to apply for grants online. This process includes a feature that could be a government wide model for efforts such as the EPA's administrative capacity questionnaire. In order to apply online nonprofits must complete a process that includes registration with the Central Contractor Registry (CCR). (See http://www.grants.gov/CCRRegister.) The CCR validates applicant information and makes electronic financial transactions possible. Once an organization has gone through this process the resulting identification numbers will be usable for grant applications with all federal agencies, and they will not need to go through the process every time they apply for a grant. Our survey data indicates that most programs run by nonprofits are funded by multiple government agencies from a combination of state, local and federal programs. For example, an environmental education program funded by the EPA may also get funds from the Dept. of Education (DOE) and a city government. When this happens identical items of information often must be submitted multiple times, or inconsistent definitions require “slicing and dicing” the same information in different ways. The EPA proposal, if done in isolation and not as part of a wider government effort to streamline the grants process, will only make this problem worse. Specific Comments 1. We do not believe it should be necessary for the federal government to collect supporting documents relating to administrative capacity from grant applicants. All applicants could be required to certify their responses, and then successful applicants could be required to submit supporting documents before a grant is released. This would avoid hours of work for unsuccessful organizations, save paper and relieve the EPA of the administrative burden of checking documents for many groups that will not get grants. 2. The following items in the questionnaire may be overly burdensome for small organizations:

• Financial Position and Cash Management-Item 2: Budgeted and Actual Expenditures. Comparisons between budgeted and actual expenditures may not need to be conducted each month. A quarterly reconciliation should be sufficient to ensure accountability, while avoiding extra work created by unforeseen circumstances.
• Financial Position and Cash Management-Item3: Annual Audits. This requirement is vague. What specifically is being sought?
• Internal Controls-Item a Cash Receipts and b Bank Reconciliation: Small nonprofits may not have sufficiently large staffs to have different people opening mail and going to the bank. In addition, it should not be necessary to require that all incoming mail be logged. For example, junk mail, conference announcements, magazines subscriptions and business communications should not need to be logged in the same way as incoming checks.
• Internal Controls-Item h: Procurement: Some thresholds for the size of purchases should be established for this requirement. It could be burdensome for small organizations.

Conclusion and Recommendation Currently more than 50,000 nonprofit 501(c)(3) organizations receive federal grants, and they spend an enormous amount of time and money seeking them. In addition, thousands of small community and faith-based organizations are in the process of forming and are interested in competing for these funds. While the level of overall dollars available for grants is shrinking, it is more important than ever that nonprofits not be forced to waste time and effort on duplicative or unnecessary procedures. The EPA should not seek to implement this information collection until it has worked with the FFAMIA team at the Office of Management and Budget to ensure that its efforts are consistent with similar efforts in other agencies. In addition, once a nonprofit becomes "certified" through this process, the certification should apply government wide, and not just at the EPA.