June 9, 2003 Sandra Swab, Office of Federal Financial Management Office of Management and Budget Room 6025 New Executive Office Building Washington, D.C. 20503 Via E Mail to sswab@omb.eop.gov Re: Standard Data Elements Comments, Volume 8 Fed. Reg. No. 67, Pages 17090-17097 Dear Ms. Swab, OMB Watch and the National Council of Nonprofit Associations (NCNA) are submitting these comments on the proposed requirement for standard data elements in federal grant applications based on input from nonprofits at the state and local level that wrestle with the complexity of the current system on a daily basis, and look to this process for relief. As Wendy Hobbs, Executive Director of Habitat for Humanity of Warrick Co., Inc in Indiana put it, "Having uniform grant applications and guidelines would be a welcome relief for understaffed and underpaid non-profits such as ours. Most of the time spent preparing grant applications is spent on understanding the instructions and trying to decipher what material the grantor is seeking. Relying on previous experience from other grant experiences is absolutely foolhardy, considering each grantor is seeking distinctive information known only to them and what may be required and scored highly on one grant may be inconsequential on the next. Streamlining the process and the format can only help those applying, as well as those trying to score and underwrite the grants." The issue of grant streamlining has been a priority of OMB Watch for some time. We worked with former Sen. John Glenn of Ohio to develop the Federal Financial Assistance Management Improvement Act of 1999 (FFAMIA) after co-sponsoring a series of physical and online conferences with the Ohio Association of Nonprofit Organizations, a NCNA member, that included recommendations leading to the legislation. Since that time we have joined with The Urban Institute and GuideStar to give nonprofits information on implementation of FFAMIA and a vehicle for input into how the federal government implements FFAMIA’s mandates. Focus Groups Provided Guidance for These Comments Our comments and recommendations were derived from two sources: responses from individual nonprofits to information we provided on this Request for Comments, and two focus groups of state and local nonprofits that reviewed the questions in detail. The focus groups were sponsored by OMB Watch and the National Council of Nonprofit Associations, and included 15 nonprofits and one state highway patrol. All participants are federal grantees and also get funds from state or local government. They represent social service providers, educational institutions, museums, literacy efforts, safety and research programs and technical assistance providers for faith-based and community organizations. Participants also were geographically diverse, hailing from Arizona, California, Florida, Georgia, Massachusetts, Nebraska, New York, North Carolina, North Dakota, Puerto Rico, Texas, Utah and Virginia. General Observations EGrants Are a Positive Step Forward, But Simplification Must Be the Priority 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. Identical items of information must be submitted multiple times or inconsistent definitions require “slicing and dicing” the same information in different ways. The inconsistencies are multiplied at the state and local level. As a result nonprofits feel it “will be wonderful to get away from hard copy once the bugs in the EGrants system are worked out.” However, nonprofits feel that the benefits of EGrants will be limited if the online forms are not standardized across all agencies. Automation alone is not enough- we need true simplification as well. Nonprofits at the state and local level feel strongly that implementation of the FFAMIA, including EGrants, include dropping unnecessary information items, and require all information items to share a common definition used by all agencies. 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. A Common Application Form Should Be Used By All Agencies The nonprofits in our focus groups recommended that the uniform application form for federal grants use a model similar to the common application process used for college admissions. A College Data website developed by 1st Financial Bank notes, “The beauty of the Common Application is that you only have to complete it once, regardless of how many colleges you apply to.” Under this system, a nonprofit could fill out the application form once online, and then check which agencies and funding opportunities the application could be forwarded to. Agency Grants Clearinghouse Recommended Basic information about a grantee, including information required for an application and assurances, should be stored in a password protected site that grantees can access to update their information annually or when major changes occur, such as identity of a contact person. This should be possible, since standard information is required with every application, but rarely changes from application to application. Once the standard application is submitted to the clearinghouse, a nonprofit could access it and direct a new grant application be submitted without having to fill out another form with the same information. The inefficiencies of filling in the same information on the same form remain in an online system if such a clearinghouse is not established. Standardization Will Result in Fairer Review of Grants Nonprofits believe that if the recommendations above are implemented and information is standardized, the grant application review and evaluation process can also be standardized, with corresponding savings in cost and administrative burden. Ideally, there should be one organizational review for all funding agencies rather than multiple reviews of the same organizational information. OMB’s Questions 1. Are the proposed data elements found on the current SF-424 the essential ones needed to apply for Federal grants? In addition to specific line item comments below, the nonprofits participating in our focus group noted that, “Form 424 is the least of the problem.” Currently every granting agency has its own application form in addition to SF 424 that asks for different versions of the same information. A nonprofit that provides technical assistance to faith-based organizations said that this lack of consistency makes it impossible to develop effective course materials for teaching nonprofits how to apply for federal funds. The following specific comments were made regarding line items in SF-424: Line Item 1: Type of Submission � Since the federal government gives out very few construction grants, the need for this item was questioned. In addition, there is no clear definition of what is considered “construction.” Does it refer to capital investment? Technical infrastructure? Line Item 5: Legal Name � The definition of legal name should be specifically stated. � Since some organizations are known by a “doing business as” name, there should be a line if this applies. This information would facilitate greater transparency and better inform the public. � The application should include a box to indicate whether the applicant is acting as a fiscal agent for another organization, and if so, list the names of the organizations. Small community and faith-based organizations that do not have the administrative resources to handle federal grants are likely to use a fiscal agent in the application process. This information would better explain the nature of the application, facilitate greater transparency and better inform the public. � The SF-424 should inquire whether the application is being made on behalf of a partnership or consortium. If this is the case, the names of all partners should be provided. Many federal agencies are encouraging greater collaboration among nonprofits and service providers, so more applications representing consortiums are likely. To ensure proper accountability to government and the public, the identity of all partners should be disclosed at the outset. Line Item 5: Organizational Unit � There is no clear definition of “organizational unit,” and it is not a term commonly used by nonprofits. As a result, this item creates confusion. Line Item 5: Contact Person � Consistency is needed for the type of contact person that should be provided. Many focus group participants said variations in requirements for the contact person cause confusion down the line, as agencies follow up with questions about program or budget. For example, the National Science Foundation prefers the principal investigator to be the contact person, but that person is usually not able to answer questions about budget. Other agencies want the financial officer to be the contact person, but they cannot answer questions about program. Some agencies, such as the Department of Health and Human Services, do not allow more than one contact person to be listed. � Focus group participants recommended that this item provide the applicant with the option of providing both a program and financial contact. Line Item 6: Employer Identification Number (EIN) � Focus group participants strongly recommend that the SF-424 continue to require the EIN be listed. The EIN information can make grant information link to other data, such as the IRS Form 990, facilitating better public understanding of how federal dollars are being spent. � Although we are aware OMB has recently established a requirement for all grant applicants to have a DUNS number, we do not think this should substitute for the EIN. In fact, the focus group participants felt the DUNS number requirement adds an unnecessary and burdensome step to the application process. Line Item 7: Type of Applicant � OMB’s proposal to have nonprofits indicated by tax status could create confusion for private universities, which are separately listed and are also 501(c)(3) organizations. Either the box for universities should be eliminated, or if it remains, the box for 501(c)(3)s should specifically exclude them. (i.e. “other 501(c)(3)) Public universities could be listed separately. Line Item 9: Name of Federal Agency � Although Line 9 asks for the name of the federal agency, the 194 Data element name for electronic submission described in Table 2 of the Federal Register notice is “Organization Type.” This does not make any sense. Organization type is requested in Line 7. Line Item 11: Descriptive Title � Focus group participants noted that word limits (which vary across agencies) cause difficulty when partner or program names are long and acronyms cannot be used. A reasonable and consistent word limit is needed. Line Item 15: Estimated Funding � The instructions need to define “other” and “program income” so that applicants can clearly tell where such items as fees, private foundation grants, individual contributions, sales of items, and other revenue sources are to be shown. Both Tables 6 and 7 in the Federal Register notice include “budget item code” as a 194 Data element name for electronic submission. What does that refer to? Similarly, Table 7 refers to “budget item period” as a 194 Data element name of electronic submission. What does that refer to? Budget Information The proposed SF-424 and SF-424A do not contain any definitions for budget items, which is a serious shortcoming. Much of the wasted time and effort that goes into completing federal grant applications is the result of inconsistent definitions for budget items. For example, what is the difference between “personnel” and “contractual” expenses if part of the grant is used for consultants? This is also a problem in partnership situations, when the grantee acting as a fiscal agent sends funds to a partner that are used for salary. How is this to be reported? Under the current SF-424A budgeting format in Section B a true picture of personnel costs cannot be presented when a coalition of nonprofits conducts a joint project and one nonprofit is the fiscal agent while the others are contractors. Only the personnel and fringe budget amounts for the fiscal agent staff are reflected in the application. SF-424A should include full definitions of what the budget categories include. For instance, does “equipment” cover small items like a $90 printer or is it reserved for items over a set amount, such as $500? There needs to be a consistent and specific definition explaining the difference between “equipment” and “supplies.” Agencies also vary in how they determine indirect costs, causing other budget items, such as equipment or supplies, to be re-calculated for every grant. There is also inconsistency in how agencies treat the salaries of support staff, which sometimes are included in indirect costs and other times included in the direct expenses under personnel costs. In order to truly streamline the grants process, clear and consistent definitions for budget items should be established and used by every agency. Variations should only be allowed where required by statute or upon a showing of unusual circumstances. Proposed Additional Line Items � Nonprofits support the addition of e-mail address, country location and fax number to the SF-424. There should be clear standards for what type of email address is required. For instance, should it be the contact person or the Executive Director? � See comments on Line Item 7 regarding designation of nonprofits by tax exempt status category. 2. Are the current definitions found on the SF-424 clear and explicitly define what is required for applicants to enter on SF-424? The short answer to this question is an emphatic NO! Glossary Needed Although the SF-424 instructions have some definitions, they are not adequate for preparation of an application for federal assistance. Many agencies use definitions that are similar, but not the same. These differences should be reconciled in a single Glossary that all agencies would use. This single point of reference should be comprehensive and understandable for all applicants, including those applying for the first time. The proposed Glossary should be available online and in print. In addition to the standard Glossary available with every application, an additional agency specific Glossary should be available for terms that are unique to that agency. This should be displayed in the same format as the universal Glossary, so that terms are easy to find. However, it should be clear that it is distinct and applies only to the agency involved. The following items are among those cited as needing standardized definitions: � Demographic information, including homelessness, poverty, pockets of poverty, need, rural and youth. � Administrative and budget information, including licensing and contractual compliance, fringe benefits, allowable direct costs, equipment, supplies, under-funded and match requirements. � Evaluation and performance information, including tools for measuring “success,” such as substance abuse reduction. Focus group participants noted that without consistency in these definitions it is almost impossible to develop effective course materials for teaching nonprofits how to apply for federal funds. This is especially true for small community and faith-based organizations that often lack the administrative infrastructure necessary to learn and accommodate multiple systems based on inconsistent definitions. 3. Is the current SF-424, plus the five additional proposed data elements and assurance language, sufficient enough to establish the SF-424 as the data standard? In addition to the items proposed in the Federal Register announcement, nonprofits told us they would like to see the following additional information included: � Whether the applicant is acting as a fiscal agent, and if so, the identity and address of the nonprofit that will actually be carrying out the grant. � Whether the applicant is filing on behalf of a consortium or partnership, and if so, the identity and address of the program partners. � A “doing business as” name, if different from the applicant’s legal name. � Space for both a fiscal and program contact person. (See more in depth comments on these issues above.) In addition, we recommend that after electronic filing for IRS Form 990 becomes available, the SF-424 inquire whether the organization has filed it electronically. This would eliminate the need for attaching the Form 990 to the application. While no other specific information items are recommended, it is important that SF-424 contain all general application information needed by agencies, so that agency specific applications forms become a thing of the past. 4. Is the assurance language feasible for use by Federal agencies in lieu of those found on the SF-424B and SF-424D? Merger of the assurance forms into a single document is a step toward simplification, and we support it. The assurances are items that should only be required to be submitted once, using a process like the clearinghouse concept outlined above. If every agency has the grantee’s universal identifying number, they could review assurances and standard items with each grant application by referring to the document in the clearinghouse. Additional Recommendation for EGrants Online applications create a unique problem relating to limitations on the number of pages allowed in proposals. Actual print-out copies may vary somewhat from printer to printer. Applicants should be assured that their proposals will not be rejected based on these variations. While this goes somewhat beyond mere Request for Proposal standardization, it is not beside the point. The measure of page length for EGrants should not be relative to printer output, but to “screen appearance.” That is, it could be that the screen shows 100 pages (the maximum length accepted), while the printer may print out 101 pages. Some nonprofits have had negative experiences in this regard, which can only lead to reluctance to use EGrants. Applicants that are close to the page limit may not want to jeopardize their proposal by filing under the EGrants system and risk elimination due to printer variations. Conclusion Implementation of the Federal Financial Assistance Management Improvement Act is an enormous undertaking, and we commend OMB and the agencies for their work toward the goal of simplification. It can only benefit everyone- nonprofits and government alike. Charities are seeking easier ways of obtaining federal resources without massive burdens. While we are pleased with the ambitious timetable the EGrants process has established, we caution the agencies not to be so driven by the timetable that the inefficiencies of the current system are not corrected. If these inefficiencies are transferred into an online system we will simply have shifted paperwork burdens to online burdens, and not have gained much. We would appreciate the opportunity to meet with project staff to discuss these comments and any and all questions relating to the simplification and streamlining process. Yours truly, S/ Kay Guinane, Counsel and Manager Community Education Center OMB Watch 1742 Connecticut Ave. N.W. Washington, D.C. 20009 202/234-8494 Fax 202/234-5150 kguinane@ombwatch.org S/ Abby Levine, Public Policy Analyst National Council of Nonprofit Association 1030 15th Street N.W. Suite 870 Washington, D.C. 20005 202/962-0322 Fax 202/962-0321 alevine@ncna.org