Federal Government Needs to Clarify How Grants Cover Charity Costs, Report Says

The way nonprofit groups are reimbursed for work done under federal grants is erratic and needs to be clarified, says a new report by the U.S. Government Accountability Office. Much of the money flows through state and local governments, which offer different rates depending on their policies, it says.

That makes it difficult to get a clear picture of whether the contracts are covering the indirect costs (such as rent or utilities) of the charities doing the work, it says. When such costs are not fully paid for, it adds, the groups cut back on their services -- or on vital "back office" functions, which can over time compromise their ability to fulfill their missions.