Who are sub-recipients? And is that related to signing the SPIL?

Question from a SILC: Are the CIL’s considered a sub-recipient? Because I see where I should maintain the following on a sub-recipient. Is this a correct list that ensures they are eligible to participate in the SPIL?

  • Articles of Incorporation
  • Bylaws or other governing documents
  • Determination letter from the IRS (recognizing the sub-recipient as exempt from income taxes under IRC section 501(c)(3))
  • Last three years’ Forms 990 or 990-EZ, including all supporting schedules and attachments (also Form 990-T, if applicable)
  • Copy of the most recent internally prepared financial statements and current budget
A photo of a signature line with a pen below it.

Reply: Actually the SILC and the Subchapter (Part) B funded centers are all subrecipients of the Designated State Entity (DSE), which receives the Subchapter B grant directly. The SILC doesn’t collect those items from CILs. That is up to the DSE. All CILs are supposed to share their Program Progress Report with the SILC, and the Subchapter B centers and DSE to work with the SILC on the report for how Subchapter B funds were used.

Subchapter (Part) C centers are direct recipients of their grants so do not fall under the category of “sub-recipient”.

If a center receives Subchapter (Part) B or C money we already know that the CIL is private, non-profit, community based, non-residential and consumer controlled. Therefore Subchapter (Part) B and C recipients of IL money are entities that sign the SPIL. An approved SPIL requires more than half the CILs sign to approve the SPIL. A center that receives both Subchapter B and C or has more than one C grant still only signs once.  If another non-profit claims to be a CIL, you would ask for evidence that they meet the criteria of private, non-profit, community based, non-residential , cross-disability and consumer controlled and provide all the required core services.

The Olmstead Decision in real life.

From ADA.gov: The story of the Olmstead case begins with two women, Lois Curtis and Elaine Wilson, who had mental illness and developmental disabilities, and were voluntarily admitted to the psychiatric unit in the State-run Georgia Regional Hospital. Following the women’s medical treatment there, mental health professionals stated that each was ready to move to a community-based program. However, the women remained confined in the institution, each for several years after the initial treatment was concluded. They filed suit under the Americans with Disabilities Act (ADA) for release from the hospital.

The Decision

On June 22, 1999, the United States Supreme Court held in Olmstead v. L.C. that unjustified segregation of persons with disabilities constitutes discrimination in violation of title II of the Americans with Disabilities Act. The Court held that public entities must provide community-based services to persons with disabilities when (1) such services are appropriate; (2) the affected persons do not oppose community-based treatment; and (3) community-based services can be reasonably accommodated, taking into account the resources available to the public entity and the needs of others who are receiving disability services from the entity.

The Supreme Court explained that its holding “reflects two evident judgments.” First, “institutional placement of persons who can handle and benefit from community settings perpetuates unwarranted assumptions that persons so isolated are incapable of or unworthy of participating in community life.” Second, “confinement in an institution severely diminishes the everyday life activities of individuals, including family relations, social contacts, work options, economic independence, educational advancement, and cultural enrichment.”

In the words of Alice Wong

I am so thankful for what the disability community achieved in the last 29 years w/ the ADA and 20 years with the Olmstead decision. I owe a lot to Lois Curtis and Elaine Wilson and everyone who came before and after. But I am also I’m also very salty & frustrated at the outright attempts to weaken regulations and programs that are vital to our civil and human rights. So I’m gonna get real with ya’ll.

While I have help that I need, it’s still not easy. The struggle is REAL when it comes to surviving and remaining in the community. I feel very vulnerable and know that I’m one crisis or policy change away from institutionalization. This is the lived reality of a lot of disabled people like myself. This vulnerability extends to the systems and policies I’m enmeshed in:

-Bureaucracy & labor involved in participation in programs. I have to file a plan of treatment every six months for my waiver and an annual redetermination for Medi-Cal which is Medicaid in California. There’s always a need to ‘verify’ and ‘document’ my needs for these services.

-Poverty trap (Medicaid) asset/income limitations. Did you know I can only have $2000 in my checking and savings AND that I can’t make more than 2.5 times the federal poverty level? I’m in the community, but am I really in the community like other non-disabled people? Nope. 

-All of these realities are anxiety producing, especially when there’s a mix up or delay. There’s a long way to go to truly fulfill the spirit of the Olmstead decision. Check out her blog to read her entire article and more of her insights.

Can a center or SILC earn interest on federal funds?

The CILs are allowed to collect interest on federal funds, but if there is interest, the money isn’t being applied to its purpose, so that is discouraged. The expectation is that the money passes through just in time to pay the bills. Of course this is to the direct grantees (Part C funds for Centers), and not the sub-recipients (Part B Centers and the SILC).

Here is the regulation: 45 CFR 75.305 Payment. (b)(1) states: (1) … Advance payments to a non-Federal entity must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the non-Federal entity in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the non-Federal entity for direct program or project costs and the proportionate share of any allowable indirect costs.

That same section continues with (5) Use of resources before requesting cash advance payments. To the extent available, the non-Federal entity must disburse funds available from program income (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting additional cash payments.

This makes it clear that any interest earned is treated in the same way as program income, and must be used for the same program that generated the funds. This would be true of both subchapter B and subchapter C funds, for both CILs and SILCs. In fact, the requirement is that the earned amount is spent before you draw down more funds from that source.

45 CFR 75.302(b)(3) says Records that identify adequately the source and application of funds for federally-funded activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, expenditures, income and interest and be supported by source documentation.

Can I pay a board member for work completed?

Question from a new Executive Director: Between the death of the prior director and the date I started, my center had a board member who really stepped up and made sure things ran smoothly. Now the board is discussing how she should be paid. Is it okay to do that this late in the game? She finished her work several month ago.

Answer: The matter of payment to a board member, especially retroactively, is complicated.  The work you describe took place over two separate federal fiscal years. It is too late to charge that back to last year’s grant, and it may not be allowable (more about that in a second) so the first question is: What do you want to do and do you have discretionary funds to do it? Whether you pay a contracted amount or purchase a gift to say “thanks” you probably are best off to use discretionary funds. Especially if you use federal funds, though, consider these other issues:

  • Does your state allows this practice? Some states forbid compensation for non-profit board members, even for providing a service.
  • Board members are not expected to benefit personally from their affiliation with the non-profit organization. On the other hand, you had a board member who stepped up in a crisis and spent much more time than a board member typically would, in order to assist the organization after the death of the founder and executive director. S/he should not suffer financially for providing a very critical support.
  • Did you follow your own policies regarding  the procurement of a contract and the procurement of board member specifically? Did you handle according to procurement regulations for federal funds if you are using grant dollars? Since the board had a sudden vacancy in leadership, they had the right to bring someone in to handle the situation immediately and perhaps until an executive director could be hired. In that emergency, you should be fine with this use of funds at least immediately after the event.
  • Was this decision documented in board minutes? If not, it might be wise for someone to detail how the decision was made and keep that for the record. It is not typically acceptable business practice to decide on compensation after the fact. Hopefully there was discussion up front regarding a contract, the rate of pay, the maximum to be paid and so forth. If not, an actual contract payment is more difficult to justify.
  • The next question is whether the proper safeguards against conflict of interest with a board member were taken. Typically this would include checking prices with two other consultants to assure that the amount charged is “reasonable”. We also recommend that the board member either resign from the board or take a leave of absence from the board while providing a service to the organization. (I know it is too late for your situation, but consider this policy in the future.) This assures the board’s ability to oversee the contract without the apparent or actual conflict of interest with the person still on the board.
  • Should a non-profit board member ever be paid for a service (as opposed to reimbursed for an actual expense)? Generally they are not compensated for serving on the board, but might receive compensation for work done for the organization. The payment typically would be outlined in a contract and must be reported to the IRS on a form 1099-MISC if it exceeds $600 in the year.
  • Your bylaws should be reviewed, as they may prohibit or limit compensation for board members. (Or they could be silent on the subject.)
  • You will also want to check with your Secretary of State’s office to make sure that a non-profit board member receiving compensation for service in your state doesn’t lose immunity in lawsuits.

The non-profit board member has a duty to preserve the public trust. If you feel anyone in the public will protest the payment to the board member you must tread carefully. Addressing these points will assist you in that process.

Please don’t quote me — quote the regulations

Hi, my name is Paula and I provide technical assistance to centers, SILCs and DSEs nationally, focusing on the law, regulations and guidance that we are required to meet. Over the course of a year I answer hundreds of questions from staff and board at centers and SILCs, and from your DSEs. Most of these are in email. Even when we talk by phone, I often send a follow-up email. And when that email refers to a regulation, I provide you with the citation and even often say “Feel free to forward this email to others discussing this.”

Yesterday I had a disconcerting experience. A SILC council member called to ask if I had said something, saying that another person in the meeting left the room and when she returned, said she had talked with me, and then told the group what I had said in answer to the question at hand.

Except she didn’t call me. I keep notes, and I checked to see if perhaps she had called at an earlier time. She hadn’t. This person typically contacts me by email, and at the meeting in question it had been four months since we had email correspondence. (Yes, I keep that, too.) I know most of you are too ethical to outright lie — but you may hear my response through your own filters. If I don’t provide it, ask for it in writing so you have the references and clarity in front of you.

If someone tells you I said something, they may be accurate — or they may not. It is okay to ask to see the email correspondence. In another instance I heard from a council member, who asked a very specific question, and I gave a specific reply. Later he came back to me with SILC staff and the rest of the story — and that shifted the answer because the situation was different than what he supplied initially.

You may have heard me say this, but the first answer to almost any question is, “It depends.” State laws, multiple funding sources and your own bylaws and policies and procedures can impact how you must respond to a certain situation.

At the end of the day, though, what I provide to you is the best information we have available at that point in time. It is only accurate to the extent that we have all the facts at hand, and until something changes in the guidance we get from our key funder, ACL/ILA. While I research the law and regulations to decide what I say, it is my opinion and my own filters can affect my opinion. To read the regulations for yourself, here are the main references I use:

Disability Determination and Consumer Control

Consumer control is an important foundational philosophy of Independent Living. Centers are required to have more than 50% board members who are people with significant disabilities, and more than 50% staff, and managers, who have disabilities. SILCs must have more than 50% people with disabilities of the full council and of the voting membership who don’t work for a center or the state.

The only requirement of proof of significant disability within Parts B and C is the individual’s affirmation that they have such a disability. Typically this is on an intake form, and they check the box “I have a significant disability”, or the staff person can mark it in the electronic record.

The same is true for the board members and staff who are counted to determine consumer control for the Centers. No medical proof is requested or required. You ask them, perhaps on a board application or in an interview (which is legal since they are not employees) it they have a significant disability.

I suggest, though, that if you feel you have to talk people in to admitting a disability, you are not honoring the IL philosophy of consumer control. The disability community — those of us who openly acknowledge a disability, whether it is visible or not — should be in charge of centers and SILCs. Consumer control — the word control was very intentional in the Rehabilitation Act and should be intentional in your policies and practices. Consumer control isn’t a number. It is a way of thinking that should be evident in consumer services as well as in the board room.

Can we buy T-shirts with our grant and sell them?

Question:
Do you know of any rule or federal law that prohibits us at the State level (SILC) from selling T-shirts or doing any other type of fundraising or collecting donations to our organization. Our funding is minuscule and we are all volunteers. Your help is appreciated.

Answer: The Rehabilitation Act, Title VII, is the law that establishes the SILC and sets out its duties (required) and its authorities (allowed if included in your State Plan for Independent Living (SPIL)).

Man in black T-shirt pointing to his chest.

Section 705 of the Rehab Act includes this language: (2) AUTHORITIES.—The Council may, consistent with the State plan described in section 704, unless prohibited by State law— … (B) conduct resource development activities to support the activities described in this subsection or to support the provision of independent living services by centers for independent living

This means that you are allowed, but not required, to conduct resource development activities that assist the SILC in their duties or that assist the CILs IF the plan for resource development is part of your SPIL.

There are also regulations that apply to whether or not an expense is allowed with federal funds. 75 CFR 403 states that the cost must be necessary and reasonable for the performance of the Federal Award. Then beginning in 75.420 the regulations give a number of examples of costs that are not typically allowed. These include advertising and public relations (§75.421), so T-shirts are not typically allowed. If you purchase them with non-federal funds, of course you can do whatever you want, but you cannot pay for most promotional items with federal dollars. If you want to sell them as a fund raiser it is even more important that funds other than your grant pay for the purchase, and that your proceeds are only the profit you make on the shirts, not the full income.

There is an interesting exception that may apply. You are allowed to purchase whatever you need to perform the goals in your SPIL. If you have a goal in your SPIL related to outreach to youth, for example, you may be able to justify buying T-shirts or other promotional items to reach out to them and assist them in connecting with the IL Network in your state.

One more thing that may or may not apply. You notice the regulation quoted above says you may “conduct resource development activities”. It does NOT say fund raising, and in fact, fund raising is strictly prohibited with federal funds (§75.442). Be very careful that you never say your are “fund raising” with federal dollars. We don’t have a definition for resource development so it is up to each entity to determine what resources in your state can develope and how you want to do that. If it is included in you SPIL you should be able to develop resources.

*CFR =Code of Federal Regulations

Staff training clips from archives

You might find it helpful to utilize some of the on-line resources for your staff meetings and staff training. Some center approach training by doing a short segment during each staff meeting. I suggest up to 30 minutes each. Here are some specific suggestions some basic topics including how you can take one segment of the training that fits that time frame.

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I have mentioned these before, but there are four modules about history and philosophy from 14 to 21 minutes in length, at https://www.ilru.org/il-history-and-philosophy-orientation-for-il-staff  They have audio, video with old photos, etc.

For the following, you can start at a specific slide number and end at another to trim minutes or split content. You click on View the Training, projecting the slides and turning up the sound.

For Information and Referral –https://www.ilru.org/training/get-core-it-best-practices-cil-core-services-information-referral-15-hours  Slides 4 – 11, which is less than 30 minutes.

For IL Skills, you might want to look athttp://ilru.mediasite.com/mediasite/Play/8a1397907e1c4bdfbacbe9febff823f61d  I would do slides only, reading slides 1, 2 then skip to slide 8 and play the audio through slide 11. Audio begins roughly 25 minutes in.

http://ilru.mediasite.com/mediasite/Play/8a1397907e1c4bdfbacbe9febff823f61d has a little more detail and focuses on those leaving institutions.  I would  start it right after the intro/slide 2 through 13 as one segment and start at 18 through 33 for the second part.

This peer support module is a specific model of using volunteers as peers. You don’t want use this link if you aren’t going to consider that model. http://ilru.mediasite.com/mediasite/Play/2aa68ea8934348b9a734d66087f6da4c1d   Slides 5 – 16 describe this model in roughly 30 minutes; Slides 18 – 40 discuss more nuts and bolts for implementing the program.

Youth transition is addressed at https://www.ilru.org/training/creating-wider-vision-for-youth-transition-cils and stop and discuss slide 9. Separate section slides 10 – 21. Then beginning on slide 22, go through the slides through 30 without the audio and brainstorm how you want to provide youth transition at your CIL.

System Advocacy is addressed at https://www.ilru.org/training/get-core-it-best-practices-cil-core-services-systems-advocacy  A nice 20 minute segment can be found at slides 6 – 13. You can skip over the Q and A and do a separate how-to segment starting at 15 – 31.

After your staff watch and discuss these segments they can certainly follow the link and watch the entire presentation.

Hopefully these will get you started.

How do I teach consumer control to staff?

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Question: I’m particularly focused on boundaries and personal choice as reminder to existing peers in their work with consumers. As happens with many of us in any human service in our desire to “help,” I’ve had a couple situations in which peer advocates have done far more for consumers than they should have. I figured a refresher training on boundaries, etc. would be good, What other resources might work for us?

I like to start with some philosophy, because the Rehabilitation Act, the first paragraph of Title VII begins with that.  It reads: The purpose of title VII of the Act is to promote a philosophy of independent living (IL), including a philosophy of consumer control, peer support, self-help, self-determination, equal access, and individual and system advocacy, in order to maximize the leadership, empowerment, independence, and productivity of individuals with disabilities, and to promote the integration and full inclusion of individuals with disabilities into the mainstream of American society…

That language – a philosophy of consumer control, self-help, self-determination … in order to maximize leadership, empowerment, independence and productivity – state our goal clearly in terms that emphasize the individual’s control of their life and decisions.

We also have a four-part series of videos around the history and how that philosophy came to be. Each is about 20 minutes and works well as part of a staff meeting. You can find these at https://www.ilru.org/il-history-and-philosophy-orientation-for-il-staff

As you move from philosophy to action,  an Introduction to Consumer Service Records, IL Plans and Service Coordination is always a good foundational piece https://www.ilru.org/introduction-consumer-service-records-independent-living-plans-and-service-coordination-for-cils

Your own written policies and procedures should mirror this philosophy and specifically state that the individual is in charge of their decisions. When it comes to helping staff understand boundaries, no tool is greater than their own experience as people with disabilities. You might help them think about scenarios in their own lives, or give sample situations for discussion and learning.

Those things should get you started. Reach out again when you are ready for more.

What should you do when you discover waste, fraud or abuse of funds?

Businessman, handcuffed hands behind his back, holding $100 bills.

Embezzlement is a very specific type of fraud, and most cases involve taking money from an employer through deceit. Usually the person embezzling is the person who cuts your checks, and often they have developed an elaborate ruse to use the CIL or SILC funds to pay their own bills by altering checks or creating fake vendors or employees. Taking company money for personal use without proper authorization is embezzlement, even if the individual rationalized why the funds should belong to them, or that they were “borrowing”. As recipients of federal funds, embezzlement is a serious issue that can damage your bottom line and the integrity of your center or SILC, and can require that the funds are repaid, either by insurance, through legal steps, or with discretionary funds, back to the funder. If you suspect an employee is stealing from you, you need to handle the matter quickly and carefully. Here are some steps for you to take:

Gather initial evidence: If you suspect an employee is embezzling money or stealing property, the first step is to gather evidence to prove your suspicions. Good internal controls — reconciling the back account, checking payments to credit cards by reviewing detailed receipts, reviewing the vendor list and payroll records for names you don’t know or names that shouldn’t be there — will reveal most embezzlement. Keep a close eye on the books, and make copies of paperwork regarding suspicious transactions. You may want to require inventory of purchases from the office supply, grocery, anywhere that common items can be purchased, to make sure none of the items were snagged by the purchaser before coming into the office. Notice how many credit card bills you are processing, because you may find a new account slipped in without approval and is being used by an employee for personal expenses. There are certain things that are consistent tools used by embezzlers, and your banker or auditor can probably learn fairly quickly if theft has taken place, even before you have a clear idea of how long it has been going on or how much is missing. You want to act quickly enough the employee is not aware of the investigation and can be apprehended.

Seek advice. When you suspect embezzlement, consult with the people who can assist you in a resolution. Those include:

  • Your attorney. You will want legal guidance as you navigate a complex response to a complex employment situation.
  • Your board. The board of directors has a fiduciary responsibility related to your funds. They also need to be aware of all legal matters and of matters that may end up with negative press. Don’t let them be caught unaware
  • Your insurance agent. If you have directors and officers insurance, if your thief was bonded, or have other insurance to protect your organization from theft, his may be your only hope for repayment of the loss for you and your funders.
  • Local law enforcement. They are probably the ones that will make the initial arrest and coordinate with federal law enforcement. Because federal funds were involved, your case will likely also be handled by the FBI.
  • Your project officer at the Administration on Community Living/Independent Living Administration. You must report to your primary grantor plus other agencies whose funds to you may have been affected. You should let them know an investigation is in progress, even before you are sure of the full extent of the theft.
  • A forensic auditor or other auditor to conduct an impartial review and determine the details. To settle the situation you will need to go back several years, and will need to determine not only how much was stolen, but which of your grants were used in this process. You will have to pay your funders back for whatever stolen funds were allocated to specific grants. This repayment cannot be made with federal funds.

Complete a thorough financial review with findings. Start with a review that goes back three years, hoping that the auditor can pinpoint when the theft started. The review will need to include some specific information, including what funder(s) was the victim of the theft with you. While this is costly, it will be required at some point.

Press charges. It is tempting to try to hide the theft. You feel foolish that you were taken advantage of, and hurt and angry that it was by someone you know. You know your Center or SILC’s reputation will take a hit. However, you and your board have a responsibility to the public to assure that justice is done. Press charges and inform your funders so that they can follow up with their legal responsibilities as well. Embezzlement is a crime; and while a case can take several years to prosecute in court — and you may never get the money back, even with a restitution order, choosing to press charges can send a message that you’re serious about theft and help you get closure to a difficult situation.

Strengthen your written policies and procedures. Identify where your practices were week enough to allow the fraud, and tighten up those controls. While it can be difficult to prevent all employee theft, by establishing a training program that clearly outlines a zero-tolerance policy for employee theft, you may deter a potential embezzler. The policy should detail the steps that you’ll take if you discover theft, including prosecution. Having this written policy in place — and a signed declaration of understanding by the employee — gives you a road map for action when there is a problem and removes some of the emotional aspects of the decision.