Shasta County supervisors are considering a proposal to cap the administrative costs of nonprofit organizations that contract with the county. The proposed cap of 18% aims to prevent waste of county funding.

Background

The discussion began on June 8, when the board voted 3-2 to bring back a draft ordinance capping the administrative cost rate for nonprofits at 18%. The ordinance defines administrative costs as indirect costs or overhead costs, including executive and administrative salaries, facilities, utilities, accounting, and legal fees.

However, the draft ordinance has been met with pushback from Nolda Short, the County’s auditor-controller, who raised concerns about potential conflicts with federal regulations and the lack of clarity in the definition of administrative costs.

Concerns and Implications

Supervisors Matt Plummer and Allen Long dissented, arguing that a blanket cost cap would lead nonprofits to manipulate their numbers. The county’s own indirect cost rate is 25%, which has led some to question the fairness of imposing a lower cap on nonprofits.

The proposal has significant implications for the many nonprofit organizations that contract with the county to provide essential services, including child mental health and domestic violence support. Examples of organizations that could be affected include Raising Shasta and Good News Rescue Mission, a faith-based organization that provides services for the unhoused community and individuals with substance use disorders.

The county has no comprehensive list of its nonprofit vendors, but Shasta Scout has identified at least 40 nonprofit organizations that receive payments from the county. The ordinance, if implemented, would make it difficult for organizations with administrative cost rates above 18% to contract with the county.

Original reporting: Shasta Scout (Redding) — read the source article.