Navigating ARPA funding challenging for nonprofits

Navigating ARPA funding challenging for nonprofits




For two years, Elizabeth Williams has watched her employees work themselves to the bone, she says. 

As a nonprofit organization serving older adults, Asheville-based MountainCare Services has been tasked with weathering the pandemic while working with the population most gravely affected by the virus. 

“The impact of COVID is exhausting for us,” said Williams, MountainCare’s executive director.

“We’re needing to respond and make decisions with new information constantly — decisions that are driven by so many changing variables, decisions that are going to impact the safety of the staff and the people we serve, decisions that are going to determine our agency’s financial survival.”

Each of these variables weighed on the MountainCare staff as they continued their work throughout the pandemic. When Williams found out she could use money from the American Rescue Plan Act of 2021 to give her staff a pay raise, she jumped at the opportunity. 

As it turns out, the process of securing ARPA funds has been as complicated as the rest of the pandemic. 

“It’s been really interesting from the nonprofit perspective,” Williams said. 

“All of the different applications, different requirements, different interpretations are making it very difficult.”

Nonprofit organizations qualify for ARPA funding. However, unlike state and local governments, they did not receive the money directly from the U.S. Department of the Treasury.

Instead, nonprofits can secure the federal relief money through either their local governments or programs receiving ARPA allocations from the state.  

Local governments have two choices for determining how area nonprofits receive ARPA funds, said David Heinen, NC Center for Nonprofits vice president for public policy and advocacy. They can either allocate money directly to organizations in their fiscal year budgets or require organizations to submit applications for the funds. 

“The American Rescue Plan really gives local governments a lot of discretion on how they allocate their funds and what criteria is set,” Heinen said. 

“A county or city could open it up to any nonprofit, or they could say only providing childcare services or food assistance can get it.”

Many governments, including those of the city of Hendersonville and of Buncombe and Transylvania counties — where MountainCare sought funding — opted for the application process, but that choice has presented roadblocks. 

Murky rules

“We initially asked nonprofits to complete a grant request form, but as the rules for use of the funds became murkier we put those on hold,” Hendersonville Mayor Barbara Volk said. 

“Now that the rules are finalized we are asking those interested to resubmit a request.”

According to Volk, the “murkiness” was mostly due to the Treasury Department waiting till Jan. 6 to release ARPA’s final rule, which outlines exactly how the money can be used within the four approved buckets: COVID response and adaptation, revenue loss, premium pay or infrastructure investments. 

Before Jan. 6, governments were following an interim final rule, which provided less detail about eligible uses. 

“We weren’t sure how many of these were going to be in the final-final version so we didn’t want to make appropriations when the rules might change,” Volk said. 

The final rule offered more flexibility for entities using ARPA funds by broadening criteria for acceptable projects. The rule also gave more power over determining revenue loss rather than following a federal formula. 

Now that the final rule has been released, Volk said the city of Hendersonville is asking organizations to resubmit their proposals for ARPA funds, including MountainCare’s $30,000 request.

Other governments didn’t wait for the final rule. Transylvania and Buncombe counties opened applications for the funds last summer. 

Nonprofits in need

According to the Buncombe County Director of Strategic Partnerships Rachael Nygaard, roughly 150 organizations applied for the funding, and the county awarded more than $23 million to fund 26 projects with the first tranche of ARPA funds, which was about $25 million. 

Most organizations that received funding through Buncombe County are using the money to assist communities disproportionately impacted by the pandemic with projects to expand affordable housing and early-learning education, the county’s ARPA informational page shows.

If applications were not approved for funding with Buncombe’s first batch of ARPA money — like MountainCare’s request for $118,000 — it was likely because the organizations could receive the money elsewhere, Nygaard said. 

“There’s a complex array of funding opportunities that exist right now and matching the right projects to make best use of the funds has been a point of consideration,” she said. 

Many nonprofits can receive the  funding through entities slated to receive ARPA money directly from the state, such as the NC Association of Regional Councils of Governments.

Western North Carolina’s Land of Sky Regional Council, to which the state allocated more than $150 million in ARPA funds, accepted nonprofit applications for the money. 

“Our (ARPA funds) are really for us to help support our local governments in administering and overseeing the funds,” Land of Sky Executive Director Nathan Ramsey said. 

MountainCare applied for funding through Land of Sky’s Area Agency on Aging and, according to the agency’s ARPA funding overview submitted to the NC Division of Adult and Aging Services, could receive more than $58,000. 

The complicated roundabout of obtaining ARPA money has left nonprofit leaders like Williams exhausted. 

Months after submitting applications for money to up the pay of employees and make up for the organization’s lost revenue, MountainCare has not secured any of the federal funds. 

Transylvania County — from which MountainCare asked for $96,000 — the city of Hendersonville and Land of Sky have not definitely said whether the organization will receive the funds, and Buncombe County rejected MountainCare’s application. 

Having such a large revenue stream up in the air has impacted the nonprofit’s ability to not only recover from the pandemic, but also to function and grow. 

“I actually need to be hiring to get us back to pre-pandemic numbers, but can I be offering employees coming in more pay?” Williams said. 

“It’s the biggest priority, because if I don’t have staffing that I can keep, we can’t service properly.



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