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Local Governments: Setting Up a Nonprofit to Acquire Private Sector Funding

by Beverly Browning on March 15, 2016
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Cityscape.pngA few weeks ago, I had the opportunity to present a grant writing session (along with Corey Coll, eCivis Enterprise Account Executive) and meet a lot of great, dedicated members of the Government Finance Officers Association (GFOA) – Arizona. I listened to a ton of great stories about funding needs and best practices in local communities. One such best practice for local governments entails establishing a tax-exempt nonprofit to be eligible to receive certain private sector (foundations and corporations) funding. This practice was implemented by the Pima Association of Governments (PAG) in Tucson.

The PAG created a couple of tax-exempt organizations in conjunction with their association. The first was the Center for Pima Basin Sustainability (CPBS), which opened up an opportunity for donors to make tax-exempt contributions. Here’s an overview of its programs:

  • Clean Cities – A committee to advocate for clean energy for transportation. The U.S. Department of Energy funds PAG for our work but the nonprofit is funded by dues, giving us more capacity to do things and allowing dues-paying members to take a tax deduction for their donations.
  • Solar Partnership – A committee to advocate for solar technology. Dues-paying members include individuals, businesses, and vendors. Dues are used for education and advocacy.
  • Conserve to Enhance – This committee evolved from the University of Arizona and is funded by donations. Donations come from individuals as well as a checkbox on the municipal utility bills. The idea is to calculate the savings resulting from water conservation measures and use that savings to fund local environmental restoration projects.
  • Dispose a Med – This committee resulted from the confluence of the region’s individual efforts into a cohesive, coordinated effort. It is designed to keep expired or excess medications out of the water table and out of the hands of potential drug abusers.

CPBS has been able to secure other reoccurring donations over the past three years, including about $60,000 in donations for its Conserve to Enhance program and another $5,000 for its Dispose a Med program. Plus, CPBS has a couple hundred donors who make annual donations to the Clean Cities and Solar Partnership programs. The second nonprofit formed was the Regional Partnering Center; no information was available about the center at the time of publication.

Setting up a 501(c)(3) tax-exempt nonprofit under your unit of municipal government is a very reasonably priced investment. The incoming grants and benefits to the greater community served by PAG far outweigh the initial start-up cost. Your county, city, or town can do this too!

OMB Uniform Guidance Training 2015 with eCivis and the City of Los Angeles

Topics: Nonprofits, Local Government