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New Federal Grants Aim to Strengthen Local Nonprofits

Tax-Exempt Organizations Update

As part of the American Recovery and Reinvestment Act of 2009, the Department of Health and Human Services announced the availability of $50 million in grant funding from the Strengthening Communities Fund. The new grants are intended to improve the ability of nonprofits to tackle problems faced by families and communities in the current economic downturn.

The new grant funding encompasses two programs: the Nonprofit Capacity Building Program and the State, Local, and Tribal Government Capacity Building Program.

  • The Nonprofit Capacity Building Program will award one time, two-year grants of up to $1 million dollars to "lead organizations" to build the capacity of nonprofits in distressed communities. Lead organizations will provide technical assistance, training, and grants to partner grassroots organizations in the areas of organizational development, program development, collaboration and community engagement, leadership development, and effectiveness evaluations. These grants are not intended to fund the direct provision of services by lead organizations. Lead organizations must re-grant at least 55% of the federal funding to the organizations they assist. Nonprofits, governmental entities, and businesses are all eligible to apply, although nonprofits will be given a preference.

  • The State, Local, and Tribal Government Capacity Building Program will award one-time, two-year grants of up to $250,000 to state, city, county, and tribal governments. Nonprofits are eligible to receive these funds if they have official authorization, through a statute, resolution, or executive order, to apply on behalf of an eligible governmental entity. The funds may be used to conduct outreach or education aimed at increasing the involvement of nonprofits in economic recovery, provide training and technical assistance aimed at building the capacity of nonprofits to address economic recovery issues, or to build the capacity of the government to better involve nonprofit organizations in the economic recovery.

Grantees must match at least 20% of the federal funds through cash or in-kind contributions. The application deadline for both programs is July 7, 2009.

This update is intended as a general summary of legal matters and not as specific advice to any particular client. For more information on how our Stimulus Legislation and Opportunities Task Force can help you, please contact Elaine Waterhouse Wilson at 312-715-5141 / [email protected], Krupa Shah at 312-715-5027 / [email protected], or your Quarles & Brady attorney.

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