Governor Puts Grants on Hold

Last week, Michigan Governor, Jennifer Granholm, ordered a moratorium on payment of the majority of state funded grants in order to help alleviate the nearly $1 billion State budget deficit. Grant expenditures, with a few exceptions will be deferred through the fiscal year, which ends on September 30th.

Many times, state granted funds are awarded to agencies on a reimbursement basis meaning that the organization must first pay for the goods or services and then seek reimbursement for these qualifying expenses on a monthly or quarterly basis. For already cash strapped non-profit organizations that typically do not have a cash reserve, this moratorium could be catastrophic. Especially to those organizations that rely heavily on grant funding. I am concerned for the organizations that I work with in Michigan as well as the people they serve, who will ultimately be the ones that loose the most out of this deal.

Probably the only good thing about this bold move by the Governor is that it will add more validity to the point that I always emphasize to the non-profits I work with, which is to make sure that their funding comes from diverse sources. For agencies that have varied revenues streams this moratorium may be challenging, but will not likely cause them to close up shop. I fear for the others who heavily rely on this state grant funding. One thing is for certain in the world of grants-they are never guaranteed.

The full article is available at Crain's Detroit Business.