By Michael Paddock

Formula grants, or title grants as they are sometimes called, are those reliable, easy  funding sources that your agency probably already receives.

Some examples of formula grants include Title I and IDEA grants for schools, Strengthening Institutions Program grants at higher educational institutions, Community Development Block Grants in municipalities, Justice Assistance Grants for police departments, and Hospital Preparedness Program grants in hospitals. In some states, these pass-through grants are re-distributed to local entities through a competitive (non-formula) process at the state level, but most states pass these funds through on a formula basis.

As the name implies, formula grants use an objective calculation to determine how much funding is available to each eligible recipient, and although some forms may be required, and the forms can be simple or extensive, applicants are essentially guaranteed to receive their allotted funding.

It is the very ease of accessing this annuity that so often leads to inefficiency in the use of the funds and a lack of scrutiny by executives and boards of how the funding is spent. If your organization’s approach to formula funding resembles the one I just described, don’t be alarmed. The same phenomenon appears across organizations, regions, and fields of specialization.

Another feature of most formula funding is its flexibility. Recipients are given a broad set of program goals and encouraged to use their funding to advance those goals. In pursuit of broad objectives,  recipients can use their funds for equipment, materials, technology, training, staffing, and in some cases even construction, so long as they can demonstrate that they are using the funds to “supplement” (not “supplant”) locally funded initiatives.

Add these features together, and you get a large amount of money being distributed more or less consistently each year to recipients who can use the funding for a wide range of activities. You also have oversight of the funding that is often less than would be allocated to a similar locally-funded application.

As with any bureaucracy, further investigation into your own agency’s use of the funding will probably provoke an explanation of what the money is spent on each year, in terms of a position or a broad budget category, rather than why the money is spent that way or how the decisions on the use of funding are made each year.

All that said, it may be worthwhile to take a second look at your organization’s use of its formula funding, and, if possible, participate in developing an assessment of how formula funds are allocated each year, to ensure there is accountability, efficiency, and prioritization built into the process.

Find out who is responsible for formula funding in your organization

The individual who actually writes the application for formula funding each year my welcome input into the process. Depending on the size and complexity of your organization, the job of developing the annual application may fall on the top or (more often) second executive of the organization, while in others, it may be someone who participates in some way in the division that uses the funding, such as a reading team in a school district or an emergency management committee in a hospital.

Ask how decisions on how to use the funds are made

The process for developing budgets for formula grants can range from an individual copying and pasting last year’s budget into the new one to an ad-hoc governing committee that decides what should be included each year and demands accountability for how the previous years’ funds were spent. Understanding which end of the spectrum your organization falls on will be important in evaluating what you might do to improve the process and ensure you are able to contribute meaningfully.

Work toward a structure

A transparent structure for making decisions about how to use formula funds does two important things. First, it allows for an annual re-examination of the priorities that drive the uses of the funds, reducing the likelihood of recycling old budgets just because it’s easier. Second, it encourages participation in the process and may result in new ideas and better ways of doing things that ultimately produce more meaningful results for your organization, its constituents, and its community.

A structure doesn’t have to mean layers of bureaucracy, endless meetings, or even a concrete committee roster, but it should have a defined process for evaluating the needs of the organization, comparing that with the intent of the formula grants it receives, and determining the best use of the funds each year.

Communicate and expand

Decisions to use your formula funding that are based on a clear understanding of the need in your community and with an eye toward the most effective use of funding will help ensure these programs advance your mission and the maximize goals of the funder. Moreover, the initiative you have undertaken will provide a platform from which to attract funding from other sources, so be sure to communicate your efforts to the wider community and consider seeking additional grant dollars to build on your efforts. Funders love to add to projects that have already been funded by someone else, and your colleagues in other similar circumstances may find inspiration from your efforts.