Subsidies & Grants

Purpose

This policy is established in effort to provide fair and equitable grant funding to charitable and nonprofit organizations in the city of Spearfish and to provide procedures to apply for and receive funding of non-profit/charitable groups, events, services, and programs that benefit residents in the City of Spearfish.

Organizational Grant Policy

Background

It has been the practice of the City of Spearfish to allocate limited grant funding from the city’s General Fund (101), Hospitality Tax (202) and in-kind contributions to support a variety of highly successful and well-attended community-based programs and activities conducted by charitable/non-profit organizations.

Each organization receiving a grant will fit into one of three categories. Those categories are Social Welfare, Recreation, Arts and Seniors and Hospitality.

Grants to cover operational needs for the Social Welfare and Recreation, Arts and Seniors are funded directly from the general fund (101). Hospitality grants are funded from the BBB taxes (202). The 202 funds have very specific uses for marketing and attraction efforts for the City.

It is important to limit the use of the general fund as it is the primary source of revenue for all City operations, including public safety. A maximum overall amount of 2.5% of the proposed general fund budget revenue (excluding the use of reserves) will be considered available to provide support for grant requests and other similar budget allocations for organizational support.

Support provided through the Hospitality funds have specific uses that are established by South Dakota Codified Law. The overall amount is derived through the budget process and will be based on the anticipated amount of revenue available for any given year.

The City may also provide funding support for non-profits through its Community Development Block Grant (CDBG) funds. This policy shall not involve the utilization of those funds as the City employs a separate process to review and distribute CDBG funds.

In order to ensure a uniform process is followed in the appropriation of city General Funds or in-kind city support requests that are annually submitted to the city, the following guidelines will be followed.

Definitions

"Financial assistance” shall mean any municipal grant encompassing all forms of direct cash payments for eligible activities.

“In-kind” shall mean funding any request that requires the utilization of any municipal service, property, program, asset or employee used to support the event/program for which the non-profit is either sponsoring or participating in.

“Non-profit organization” shall mean any non-profit/charitable organization recognized as a tax-exempt IRS approved 501.C.3/4 and/or recognized as a legally tax-exempt organization under South Dakota law.

Introduction

The Charitable Organization Grant Policy has been established by the City Council to provide guidelines to non-profit organizations that are seeking financial assistance or in-kind assistance with the following:

  • One time start-up funding for a new community program, service, event or festival (support will be limited to funding/in-kind support not to exceed $10,000).
  • Grant sponsorship funding for established community events or festivals.
  • Funding towards event partnerships between the city and/or organizations.
  • Funding to maintain and/or operate private structures, other governmental or property that are used to the benefit of the community as a whole.
  • Requests for in-kind support through the use of city equipment, structures, assets, public space, services and staffing.

Conditions for Non-Profit Support Consideration & Approval


1. Events/Programs/Requests Not Requiring City Council Approval and Not Requiring a Formal Application Under This Policy

The following non-profit in-kind requests not requiring City Council approval shall be reviewed for possible approval by the City Administrator and subject to the review and application process required of all participating departments.

In all such cases, these requests for in-kind support will not require the filing of the formal application.

Eligibility for consideration under this policy section shall not occur if any organization is not eligible as outlined in Section 4 under conditions of this policy, and shall only occur under the following limited conditions:

a.  That the utilization of city property is compliant with existing city policies and ordinances and will not require additional subsidies through the city budget or impact city staffing and resources.

b.  Any utilization of city properties and assets for the support of public meetings for county, state and federal agencies/commissions, local/state/national organizations to which the City of Spearfish participates as a member, and state/federal legislative oversight groups.

c.  Waiver of use policies and/or rental and insurance fees in those instances when the event/program benefits the community; can be co-sponsored as a “City of Spearfish” event; is consistent with the normal use of the facility; and can be supported with budgeted city staff/resources.

d.  Approval of any City Council approved prior year event which remains substantially similar in scope and did not require any direct city cash payment contribution and/or in-kind assistance.

2. City Council Approval - Application Eligibility  

All non-profit requests which do not fall under Section 1 of this policy require the filing of an application. The City Council will review applications for municipal nonprofit support after considering the following eligibility criteria. All applications must be submitted no later than June 15 of preceding fiscal year. The following are the conditions for filing non-profit eligibility:

a.  A not-for-profit organization that meets the definition of “non-profit” as defined in this policy.
b.  Provides a recreation, cultural or community service to a significant proportion of city residents that the city does not otherwise provide.
c.  Has demonstrated revenue-generating capability for the event/program or the organization can demonstrate that it has exhausted all other potential avenues of funding for the service or event.
d.  Organizations demonstrate collaboration and cooperation with other local organizations in the sharing of resources.
e.  Organizations that receive any funding are required to acknowledge the support of the municipality through the use of the municipal, website and tag line on any promotion material for the event, service, activity, etc. The plan for the use of the municipal logo, website and tag line will be submitted as part of the event application to the City Administrator for his/her review.

3. City Council Approval - Application Conditions

The following are those conditions which qualify for city financial assistance or in-kind support and will require the submission of the formal application.

a.  Start-up funds for a new community program, service, event or festival.

•  Start-up funds may be provided, on a ONE TIME basis only, to assist in the initial costs for providing the community with a new community program, service, event or festival.

b. Grant sponsorship funds for established community programs, services, events or festivals.

•  Sponsorship funds may be given to organizations provided that Council acknowledges that the municipality is obtaining an economic benefit.

c.  Direct cash funding and any in-kind support for organizations that provide a service or engage in a community festival in partnership with the city.

d.  Direct cash funding to maintain and/or operate private structures, other governmental or properties that are used for the benefit of the community.

•  Funding may be provided to organizations to offset operating costs such as taxes and insurance for private structures and properties if Council acknowledges that those facilities are used for the benefit of the community.

4. City Council Waiver Required - Not Eligible for Financial Assistance / In-Kind Support

The following will not be eligible for financial assistance/in-kind unless specifically waived by the City Council:

I. Types of Organizations / Individuals 

a.  Social assistance services that are provided by other government agencies.
b.  For-profit organizations
c.  Organizations with political affiliations
d.  Organizations serving as funding sources for others, e.g. service clubs.
e.  Faith organizations where services/activities include the promotion and/or required adherence to a faith.
f.  Organizations receiving greater than 50% funding from senior levels of government.
g.  Political candidates.

II. Types of Requests

a.  Travel expenses for members of an organization.
b.  Uniforms
c.  Individuals
d.  Programs with legislated mandates of other governments.
e.  Costs for major capital equipment/renovations and financing of deficits.
f.  Any funding requests from organizations that do not submit the required reporting information for a previous year’s grant in accordance with Conditions of this policy.
g.  Incorporation costs or Director’s Liability insurance costs.
h.  Under any one of the following conditions: The event involves fund raising supports with no general public purpose; will not be accessible to the general public; benefits the organization only as a fund-raiser; or provides a benefit limited to the participants, clients or membership of the organization.

5. Funding Limits

Any organization is not limited from applying for more than one class of Funding Sources, General Fund or Hospitality Tax Fund. However, a separate grant request packet is required for each.

a. General Fund: Any organization or event in any one fiscal year will be capped at a cash request and/or in-kind value of $10,000. Any amount, in total cash and/or in-kind received from the city in aggregate from all funding sources, shall not exceed 25% of the total annual budget of the organization. Council has the authority to increase the maximum funding limits of this section on a case-by-case basis.

b. Hospitality Tax Fund: Qualification for grant award approval from the Hospitality Tax Funds will be viewed on a much different set of criteria than general funds. The authorized uses for Hospitality Tax Funds are strictly limited by South Dakota Codified Law and the City of Spearfish’s Code of Ordinances. Therefore, there is a very limited use for these funds and they will be distributed accordingly. Funding limits per organization or event in any one fiscal year will be set by Council on a case by case basis.

  1. The primary determination for grant award will be Return on Investment, how many out of town visitors and therefore, additional sales tax revenue is generated for the City of Spearfish as a direct result of your organization. The reason this is the primary determination is because it is a direct regeneration of the funds being granted.
  2. Secondly, documented need. Will your organization fail to achieve its mission if assistance is not received and have you sought out all other potential avenues for sources of assistance?
  3. Unique or overlapping service?

6. Budget Cycle

The City will open the application process for the next budget cycle on May 1st of each year and all applications must be received no later than June 15th. Approvals shall be tentatively granted through the budget process which generally ends no later than October 1st. Requests outside of the budget cycle will be highly discouraged and only considered due to very unique or dire emergency circumstances.

7. Application Process and Conditions 

Prior to considering any request for funding or in-kind support (not subject to City Administrator approval under this policy), Council shall require the following from the organization:

  • A completed Charitable Funding Application form detailing the requested funding/in-kind support from the city.
  • Evidence that the organization is recognized as a nonprofit charitable or civic organization.
  • Financial statements which shall include an income and expense statement and a balance sheet (if one is available) from the previous event or fiscal year
  • A detailed budget for the upcoming fiscal year or event
  • Information pertaining to the evaluation criteria.
  • The applicant will provide one copy of the application form and any supporting documents to the city. An electronic copy is acceptable.
    - The city reserves the right to request supplementary information in support of the application.
    - Requests for financial and/or in-kind assistance shall be received by the city no later than June 15 of each calendar year
    - If the above information is not submitted by the June 15 deadline, applications will be returned and not considered by Council
    - Filing an application does not necessarily guarantee the awarding of any funding to the applicant
    - Previous year’s funding allocations will not be considered and each application will be reviewed on its own merit
  • The city reserves the right to deny or approve any/all requests

8. Application Review Criteria 

Staff will review all non-profit applications and recommend approval and award amounts to the City Council. Applications will be scored by the committee on the following criteria:

Program Description 10% - Write a detailed summary of what your organization does and also about your requested use for proposed funds.

Uniqueness of service 25% - This will ensure that services aren’t continually duplicated across various applying non-profits. The fewer applying non-profits that provide your service, the higher your score.

Contribution to Citizens 25% - How effective and active your organization is in the citizens’ lives and welfare. The more involved and responsible your nonprofit, the higher the score.

Number of Participants 20% - How many citizens participate in and benefit from your services and how many total participants and Citizens from Spearfish will specifically benefit from the funds you’ve requested from the City.

Audited Financials 20% - If your financials reveal money mismanagement, then your score will be lower.

Those organizations that are awarded funding will submit payment requests and quarterly financial reports of the organization. Documentation showing that expenditures were made for the intended purpose listed in the application will be submitted with the payment requests.