- The Washington Times - Monday, May 23, 2011

State money will continue flowing to most nonprofit health care providers in Virginia, while other types of nonprofits wait to hear whether an opinion issued by the state’s attorney general will cut their funding.

After Kenneth T. Cuccinelli II wrote an opinion in January that outlined the circumstances under which nonprofits may receive state funding, the state delayed payments to dozens of groups until their contracts could be reviewed. Of 26 contracts reviewed so far, the attorney general’s office has deemed 11 constitutional, one unconstitutional and 14 that require greater accountability.

The Virginia Association of Free Clinics (VAFC), a network of 61 clinics that provide free health care services to uninsured, low-income Virginians, falls into that last category. The nonprofit will have to report more details more frequently about how it uses nearly $3.2 million in state dollars every year.

“It really got down to a technicality,” said Lou Markwith, the association’s director. “There weren’t enough specifics in the contract to really say what the organization was delivering on a regular basis to the state.”

Legislators have long debated appropriating money to nonprofits. Republicans have questioned whether it’s an appropriate use of taxpayer dollars, while Democrats have argued that they ease the burden on state government by providing core services.

That debate surfaced last week in meetings of the Senate Finance and House Appropriations committees, where members of both parties accused Mr. Cuccinelli of advancing a political, anti-earmark agenda.

Mr. Cuccinelli’s opinion resulted in more than $1 million being held from VAFC from February to April. The group received $800,000 early this month after submitting reports and expects the rest in June.

Under a now-mandated procurement process, VAFC must issue quarterly, instead of annual, reports that list specifics of where, when and how money is spent. Mr. Markwith said the new requirements will not require VAFC to hire any more staff members.

“The situation certainly created a lot of concern, but ultimately I can’t say it’s created a lot of problem at this point,” he said.

With dozens and possibly hundreds more contracts to review, the attorney general’s office is most concerned that they contain specific requirements for what nonprofits must accomplish with state dollars, said Secretary of Finance Ric Brown.

That could bode poorly for nonprofits focused on historical or cultural betterments, like the Wolf Trap Foundation for the Performing Arts in Vienna or the Montpelier Foundation that maintains James Madison’s home in Orange.

“What causes the attorney general’s office the most heartburn is where you have an appropriation where there is no articulated service agreement,” Mr. Brown said.

Mr. Brown has requested all state agencies to send him a list of the nonprofits providing services under their jurisdiction. Because funding for nonprofits is often found within the budgets of different state agencies, there is no comprehensive list of how much funding nonprofits receive.

The Bedford Hospice House in southern Virginia is the only nonprofit to be stripped of state funding so far. It was because the group couldn’t guarantee enough private dollars would be raised to complete the facility, Mr. Brown said.

Two other nonprofits - Operation Smile and the Federation of Virginia Food Banks - also missed out on funding requested by Gov. Bob McDonnell earlier this year, due to Mr. Cuccinelli’s opinion. The attorney general concluded that while Virginias Constitution allows the state to contract with charities for services, it bans the no-strings-attached funding proposed for Operation Smile and the FVFB.

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