Maryland nonprofits face overly complex processes and inadequate funding structures

By Jackie Rittenhouse* 

Government grantmaking is an essential aspect of nonprofit organizations’ ability to function and support the populations they serve. These funding opportunities, however, are frequently inefficient and utilize nonsensical processes that prevent nonprofits from providing necessary assistance. Maryland Nonprofits, the sole association serving Maryland’s comprehensive nonprofit sector, firmly believes that government grantmaking must allow for accessible and transparent processes, especially for smaller nonprofits and those led by historically excluded groups, to ensure equitable access to transformative government funding opportunities.

To visualize the disparities in government funding opportunities, we analyzed data from usaspending.gov to determine how federal government obligations to nonprofit organizations in Maryland differed by congressional district and socioeconomic demographics. We searched the Prime Awards and Transactions, filtered by time period: fiscal year 2021, 2022, and 2023; award type: grants; location: Maryland, USA; and recipient type: nonprofit. With this search criteria, we were given a dataset that we exported and began cleaning so that the spending was divided by the recipient organization’s congressional district in Maryland to see the differences in government spending by congressional district.

The top two awarding agencies, giving $1,177,483,284, and $1,138,256,517 respectively, were the Agency for International Development, and the Department of Health and Human Services. These top awarding agencies provided significantly more funding than other agencies.

The data showed disparate awards by congressional district compared to population reported in the 2023 American Community Survey. For example, District 1, encompassing eastern Maryland from Harford County to Somerset and Worcester counties, has a population of 781,695, the third highest, and received only $11.94 per resident. Contrastingly, District 7, generally encompassing Baltimore City, has the smallest population of the eight congressional districts with 744,504 people but received the highest total obligations of any district with $3,238.83 per resident. District 7 has 37,191 fewer residents than District 1, but received more than 270 times the total obligations per resident that District 1 received in FY21-23. This stark difference highlights the uneven distribution of resources from federal funding opportunities.

Rounded to the dollar

Furthermore, the districts with higher poverty rates do not necessarily receive more funding per capita. District 7, with the highest percentage of people below the poverty level at 14.1%, received the most funding per resident. However, District 4, generally compromising Prince George’s County and Montgomery County, has a poverty rate of 12.6% but received only $308.94 per resident, indicating an inconsistency in addressing poverty through federal spending and nonprofit grants.

The mean household income varies greatly among the districts, and the federal funding does not correlate with household income levels. District 7 had the lowest mean household income at $79,362, and District 8, comprising most of Montgomery County and a small portion of Prince George’s County, had the highest. Despite these differences, District 7 received $1,312,651,460 more funding in FY21-23 than District 8. These disparities point to an inequitable distribution of federal funding that does not align with economic needs.

Only 10 recipient organizations received 70.57% of the total obligations, and the top 5 recipient organizations received 58.06% of the total obligated funding to all Maryland nonprofits. Additionally, the average percentage of total funding received was 0.19% over this time period, and 97% of all the organizations received less than 1% of total obligations. This concentration of funding amongst a small number of recipients exacerbates the inequities listed above, as the majority of resources are extremely concentrated, excluding the economic needs of residents and nonprofit organizations supporting them in other congressional districts.

Maryland nonprofit organizations play a vital role in supporting our state’s economic and community well-being, yet their efforts are hindered by overly complex, inefficient processes and inadequate funding structures. While the Office of Management and Budget (OMB) has made minor improvements, smaller nonprofits remain excluded from accessing transformative federal funding opportunities. Comprehensive federal grant reform is essential to addressing these systemic barriers, which are often rooted in historical discrimination and racism. Urge Congress to act now by co-sponsoring the Streamlining Federal Grants Act of 2023 (S.2286/H.R.5934) to cut red tape, ensure transparency, and make grant processes more accessible and equitable.

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* Jackie Rittenhouse is a dedicated advocate for social justice endeavors with special attention to challenges faced by historically disadvantaged groups. In her current position, Jackie developed a prominent speaker-led panel event to address the intricacies of Vicarious Trauma as it relates to social service professionals and has led multiple projects evaluating government spending on nonprofits in Maryland, aiming to enhance the effectiveness and transparency of community support initiatives.