Eight Steps to Vetting Community Project Funding requests from Eligible Nonprofit Organizations

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POPVOX

12 min readMar 29, 2021

Each House office can recommend up to 10 requests to the Committee on Appropriations for the new Community Project Funding (CPF) program. Potential recipients can be either government entities (such as local, state or tribal governments) or eligible nonprofit organizations.

For eligible nonprofit organizations, it is important that offices thoroughly review and vet requests to ensure that the potential recipient is reputable and that the project is well-governed and will be a good use of taxpayer dollars.

‘Vetting’ can sound like a technical, daunting process, but offices can build simple and efficient routines to make sure dollars are spent openly, fairly and effectively. Several publicly available information sources can help you with an initial understanding of an organization under consideration.

We’ve collected some best process management practices from philanthropic organizations and Congressional staff with experience vetting funding requests to provide guidance as you start setting up a vetting process for your office. The CPF program is a new appropriations pathway for many organizations so this guide is intended to be a first step as further guidance and direction may be determined.

Want a checklist version of this guide? See here for a printable version, or here for a Google docs version.

Step One: Basic Due Diligence

Start by verifying the organization’s identity. To do this, you should request their tax identification number (EIN) and proof of their charitable status (usually a determination letter from the IRS). Several subcommittees specifically request this “proof of charitable status” for requests submitted on behalf of nonprofits.

Check the Organization’s 990

With the EIN, you will be able to look up the organization’s IRS Form 990, which every charity must file each year. The 990 contains helpful information on the organization’s financial health — including income, expenditures, and net assets. For more information on evaluating nonprofit financial health, see here. For a great guide to reading IRS form 990s, see here. When looking at 990s, ask a few key questions:

Is there a significant deficit in the last year, or last several years?
Is there an unusual percentage spent on a line item that doesn’t appear to align with the organization’s mission?
How much are board members or senior executives paid? Is this amount in line with a charitable mission and Congress’ goal of community value?

You can also see if the organization has a profile on Charity Navigator, Guidestar, or another charity rating aggregator. These organizations research and rate charities’ effectiveness based on some common metrics. However, keep in mind that they often only provide ratings for charities over a certain size and longevity, so they may miss some smaller local organizations.

Check for Registered Foreign Agents and Major Donors

You also may want to consider checking whether the organization or prominent employees are registered as Foreign Agents, or appear on the Office of Foreign Assets Control’s Specially Designated Nationals (SDN) list. FARA filings are available on the Department of Justice website here, and the SDN list is accessible on the Treasury website here. We will also cover this below, but it’s a good idea to take a look at the FEC donor profile of the charity and prominent stakeholders to get a sense for any potential difficulties.

Check the Organization’s Public Presence

Finally, take a quick look through the organization’s public presence, including its website and social media.

Are they active and updated?
Are there any odd reviews or results in a quick search?
Is there any particularly positive or negative news coverage, in your local media market or elsewhere?
Does the organization have a track record of successful collaborations and partnerships?
Is the organization practicing transparency and accountability? For example, does it provide easy access to its own financial audit, human resources policy and code of conduct?

Step Two: Management

One important element of vetting a project is to ensure that the organization has a clear plan for who will manage the project, and that the proposed management has the experience necessary.

The Subcommittee on Financial Services and General Government asks this of their specific projects, and we think it’s a helpful question to ask all requestees:

Please provide the oversight and management structure, including accountability measures, of the project. Who will oversee and be accountable for the administration/management?

It may be helpful to see a resume or curriculum vitae of the primary person who will be in charge of management.

Have they managed projects of similar scopes and timelines before?
If not, do they have a support structure who will be able to help guide them through any difficulties?

Step Three: Evaluation Plan

With a limited number of potential projects, you want to make sure that the projects you select for submissions are going to have a real, tangible impact in your district. Performance evaluation is something good projects will have built into their plans from the start.

Once again, the Subcommittee on Financial Services and General Government has a sample question that we think is broadly applicable:

What performance standards will be used to evaluate whether the program or project supported by the funds meets its mission?

Step Four: Risk Assessment

A project’s plan may look great on paper, but a thorough vetting will also include what is not on paper:

What could happen to throw this project off the rails?
What foreseeable events could prevent this project from achieving its goals?
Does the organization have contingency plans to handle these crises if they arise, including funding for contingencies?

For more resources on how to think about risk assessment in the nonprofit space, see this report from the Open Road Alliance and Arabella Advisors.

This is also another point to think about risk specifically in the congressional context.

What would be the impact on your office in the district if the project is unsuccessful?
Is there a potential for negative media narratives?

Step Five: The Funding Weeds

This step is about making sure that the scope of the project proposed matches the amount of requested funding (and the timeframe for funding) proposed.

Start by comparing the amount of funding requested to the organization’s current revenue streams and budget (from their publicly available 990s in step 1).

Does this represent a significant departure from the amount of money they are used to handling?
If so, how do they plan to build out their operation to expand dramatically?

Keep in mind as well that funds awarded in the Community Project Funding Grant process almost always must be used in the financial year for which they are awarded.

Does the scope of the project seem feasible in the one-year timeline?
If not, does the project have other sources of funding beyond FY22?

Some Eligible Accounts have further restrictions on what this money can be used for (for example, a prohibition on using this funding for salaries, debt refinancing, or interest).

Does the proposal meet all of those criteria; if there are non-eligible costs associated with the project, how will those be funded?

Many Eligible Accounts also request that organizations secure cost-sharing or cost-matching support. If the organization has these listed, consider contacting the matching organizations to verify their support. Even if cost-sharing is not required, asking a potential recipient to list their other funders will help figure out if other reputable grantmaking organizations have already vetted the organization and found it satisfactory.

Step Six: Mission Alignment

By this point in the vetting process, you’re far enough along to have a good sense for what each of these programs and organizations aims to achieve, and their “theory of change” for how they want to accomplish those goals. As you start to think about paring down your list of potential applicants to your final ten, consider how these goals and strategies match your Member’s goals and your team’s strategies. As our friends at BPC recently noted, this process can’t happen without the on-the-ground experience and perspective of your district staff whose workflow, relationships, and experiences are built on community engagement and shared value. Lean on their expertise and networks in doing your vetting!

Does this project advance the Member’s priorities or issues identified as district priorities?
If not, does this project match priorities identified by any other district stakeholders, or is there a tangible benefit that makes it worth going outside of your intended priorities?
If the project is awarded funding and goes smoothly, what opportunities will the success of this project open up in your community beyond the next financial year?

Last but not least, again, think back to your risk assessments:

How much risk is your office comfortable with taking on by supporting a long-shot project or a relatively new organization?
What kinds of risks are acceptable to your team, and which are unacceptable?
What risk mitigation strategies can you encourage a project to have in place, and what strategies can you develop internally?

Step Seven: Community Support

The good news about the House Appropriation Committee’s focus on “evidence of community support” is that you are essentially requiring your community to pitch in and help with the vetting process. Consider leveraging existing community relationships to convene a group of stakeholders to act as an advisory panel to help you in evaluating incoming requests, with the expectation that members of that panel may help by providing letters of support to your ten final projects.

Creating a pool of stakeholders may also help identify potential opposition to projects:

Can the organization or your stakeholders tell you if there are any community groups who would be opposed to this project, or to this project being funded instead of another project?
If there is a stakeholder you would expect to support a project that does not? Can they raise any red flags you may have missed in your vetting up to this point?

Creating a nonpartisan advisory panel will also help build civic voice champions of your final choices to the district once they are selected. Consider holding a press conference with your advisory panel when you announce your final submissions to help cheerlead the projects and show their potential benefit to the community.

Step Eight: The Last Gut Check

Over the course of this vetting process, you’ll have had a lot of both formal and informal interactions with your potential organizations about their project requests, and with members of your community in evaluating them. Think back over this reservoir of experience, and trust your intuition:

Is the organization at all evasive in answering your questions and providing information, or dismissive of any of your concerns?
Has someone from the organization tried to bypass any of your official channels, or ‘pull strings’ on your team or with people important to your Member? (See below for the official rules, recommendations, and other considerations around improper requests)
If you’ve checked with the Ethics Committee on any details of this project, how did the requestor react to being asked to change or modify part of their materials?

If at any point you feel like an organization is attempting to misrepresent their project, take advantage of your team, or pressure you to bend the rules for them, this is an immediate stop sign to keep from going any further.

We’ve provided a Quick Start Guide to Workplace Rights and Responsibilities, with guidance on reporting potential wrongdoing to Ethics or law enforcementーguidance that applies to every staff member, no matter how junior. The success of the Community Project Funding program depends on every office remaining committed to upholding the program’s transparency and purpose as intendedーso trust your instincts, and make it clear to your community that your office will follow all of the rules.

Understanding the rules and considerations

With such a new program, it can be hard to get a sense of the ground rules for what is permissible and the political considerations for what is appropriate. To make it easier, we’ve split these into three buckets: the rules, the ethics, and the politics. For more information, see the latest Dear Colleague from Appropriations Chairwoman DeLauro.

The Rules

There are a few ground rules for submissions in this program.

ONLY eligible nonprofits and government entities (including tribal governments) are allowed to participate.
Members MUST certify that they and their immediate family have no interest in the project (per House rule XXIII, clause 17)
Members MUST publish their submissions on their websites and provide the links to the committee.

The Ethics

While not a rule, there is a very strong recommendation that Offices hold themselves to high ethical standards in considering additional financial relationships that may pose the appearance of a conflict of interest. In the words of Chairwoman DeLauro, “Members should also be fully aware of any other financial aspects or relationships associated with the proposed project that might raise ethical concerns. These include but are not limited to lobbyists, donors, or other affiliated parties that have an interest in the project.”

In other words, even though House staff often take it as a point of pride that they have so little contact with the campaign that they couldn’t tell you who the donors are, be prepared by taking a moment to review your campaign’s financial disclosures to spot potential conflicts.

The House Committee on Ethics is also always a resource for talking through potential gray areas around conflicts of interest and other improprieties.

The Politics

As with anything in Congress, there are the rules, and then there are the political considerations. Part of your vetting process should be to surface any pejorative information that could come up when you’re least expecting it later, and to develop a proactive communications strategy to tackle potential negative narratives if they arise.

The easiest way to tackle potentially negative narratives is to hold your Community Project Funding submissions to the highest possible ethical standards, avoiding even the potential appearance of impropriety. This means very cautiously considering any project connected to a donor, to a Member or staffer’s extended family, a lobbyist with ties to the Member, or other questionable relationship to make sure it is consistent with the highest ethical requirements.

There are also proactive steps to take to tackle any negative coverage in your district of ‘earmarks’ as legacies of corruption. For example:

Aggressive outreach to make sure that organizations and citizens without the means to hire lobbyists get a fair shot at an application;
Aggressive transparency on your due diligence, publishing a summary of why your office chose to make the final 10 list, along with as much of the requests themselves as possible;
Early and positive messaging in your district about your approach to the Community Project Funding Program, emphasizing transparency, ethics, and the opportunity to address community priorities at the federal level.

This program is a chance to build an “audience for explanation” among your constituents. Americans have a large appetite for political and civic information — take advantage of it to demystify Congress and its procedures!