Released: April 4, 2022
Tennessee Nonprofit Arts & Culture Recovery Fund – Round 1 Allocations
Under the American Rescue Plan Act, the State of Tennessee is receiving $3.725 billion in funds awarded via the US Treasury “Fiscal Recovery Fund” (“FRF”). The availability of onetime FRF funds presents a significant opportunity for Tennessee to: (i) Continue its response to the COVID-19 pandemic and its secondary effects; (ii) Invest in initiatives that support a strong economic recovery; (iii) Strengthen state fiscal stability by reducing demand for state taxpayer dollars to fund existing initiatives or priorities.
To support the development of a comprehensive plan for Tennessee’s Fiscal Recovery Fund, Governor Lee invited state agencies and stakeholders to submit proposals for consideration by the FSAG for inclusion in the Tennessee Resiliency Plan. This document summarizes proposals that have been considered and recommended for expenditure by the Financial Stimulus Accountability Group (FSAG). As new expenditures are approved throughout the grant period, this document will be updated to reflect the state’s plan.
All proposals were subject to a process of review by the Department of Finance & Administration (F&A) and the Governor’s Office for fiscal impact, eligibility, and alignment with state priorities. Proposals were then submitted for feedback and discussion with the FSAG. Among the first portion of spending priorities that were recommended for funding by the FSAG included urgent needs and opportunities for Tennessee including: Sewer, Water, and Broadband Infrastructure initiatives; capital investments to improve the resiliency of state and local public health systems; continuation of the state’s Hospital Staffing Assistance program; and immediate support to Tourism, Agriculture, and Arts and Culture Industries. These recommended proposals were posted for public comment through October 30, 2021 prior to final approval.
The Tennessee Arts Commission: Tennessee Nonprofit Arts and Culture Recovery Fund proposal was approved on November 18, 2021 authorized to provide non-recurring funding to address severe pandemic-related economic harm to Tennessee’s nonprofit arts and culture industry. The fund was authorized to provide grants to over 200 eligible arts nonprofits to recover and deliver arts and culture services benefitting local economies and quality of life in every TN Senatorial district. Among other requirements, eligible applicants must be Tennessee arts nonprofits that have suffered pandemic-related loss and with a history of federal grant administration with the Tennessee Arts Commission. The requested and approved amount was $80 million in relief funding over a three-year period and contracted services for monitoring grants of $100,000 per year.
A total of 127 comments were received for the Tennessee Resiliency Plan including 52 comments, all in support of Tennessee Arts Commission inclusion in the plan.
Total documented pandemic revenue loss for eligible TN nonprofit arts and culture applicants for March 2020 – November 2021 period was $179.1 M, well beyond the available total relief of $80M for all periods. With grant application requests capped at $5M, requests for Round 1 funding based on capped pandemic loss totaled $96M.
II. Overview of TN Nonprofit Arts & Culture Recovery Fund
Process to Date
- Tennessee Arts Commission proposal approved 11/18/2021
- Grant application guidelines developed and posted 12/20/2021
- Intensive outreach to applicants through application due date of 2/4/2022, including newsletter, emails, calls, webinars.
- Applicants without a track record of federal grants administration are offered an opportunity to build a record and become eligible for Round 2. For more information on building eligibility for Round 2, see the TN Nonprofit Arts & Culture Recovery Fund grant guidelines in June 2022.
- Staff review all submitted applications for completeness and compliance by 2/18/2022; External financial technical reviews for documented pandemic-related revenue loss by 3/1/2022; Follow-up due diligence for applicant clarifications and corrections in March 2022
- Commission board unanimous approval of first round allocations voted 3/23/2022
- Grants for operations occurring July 1, 2021– June 30, 2024
Funding Amount Determinations
- Proportional to pandemic-related loss
- Annual awards proportional to applicant annual budget
- Demand of eligible applicants
- Max request capped at $5 million over three years, though pandemic-related loss for some well exceeds cap
Pandemic-related Revenue Loss: Pre-Pandemic Revenue Minus Pandemic Revenue Equals Loss
- Pre-Pandemic Revenue based on IRS 990 reports
- Pandemic Revenue Reports had external technical financial reviews
- Total Pandemic Revenue includes one-time federal pandemic-related relief, thus reducing reported overall documented pandemic-related loss. Therefore, documented loss is residual unaddressed pandemic-related loss, ie, less any other federal relief for the period.
- Nonprofits that showed no loss for pandemic period 1 were not awarded Round 1 funding even though they may have experienced pandemic-related economic harm that was temporarily offset by other revenue.
State Budget Constraints Total funding to TN Arts Commission was awarded by fiscal year and grants awards were made to achieve state budget totals of FY22: $29.9M; FY23: $24.9M; FY24: $24.9M. $100k/yr held back to support contract external monitor support.
III. Summary of Requests: 154 applicants w/documented loss/requests of $96M
Total Funds Available for Round 1 Obligation – Considerations
- Requests of $96M in pandemic-related loss already exceeds total available funds of $80M
- Per TN Resiliency Plan “The first tranche of spending priorities that reflect the most urgent needs and opportunities for Tennessee include…Immediate support to Tourism, Agriculture and Arts and Culture industries.
- Pandemic Period 1 (Mar 20-Nov 21) likely greatest period of loss.
- Guidelines set expectation for future rounds, so holdback at some level is appropriate.
- Approx 100 arts nonprofits with no track record of federal grants administration with the TN Arts Commission or no pandemic loss in Pandemic Period 1 may seek eligibility for next application round. Most are small. Staff estimates $8M could accommodate demand.
- Some grantees may not fully utilize all awarded funds and those will be available for re-obligation.
- 10% or $8M holdback of $80M total is reasonable
- Re-allocate $1.5M in prior obligated but unspent FY22 state funds to supplement response to unprecedented demand based on documented pandemic-related economic revenue loss
Commission Action: Obligate $73.5M – $72M federal, $1.5M state. Hold back $8M federal for next round, including monitoring.
Obligations Detail by Fiscal Year
Criteria for allocation of federal funds to eligible applicants
- Proportional to pandemic-related loss determined by standard methodology
- No awards exceed documented loss/request
- Annual awards proportional to applicant annual budget
Tiered system based on budget size and pandemic-related loss.
State Supplement would add 4.6% (rounded) of request/loss to 28 orgs in Tiers 2 & 3. Any org less than fully funded or proposed to receive less than $2M in fed funds will receive state supplement.
V. Tennessee Nonprofit Arts & Culture Recovery Fund — Next Round
The Commission expects the next round of applications to open late in 2022 or early 2023.
To be eligible for the Tennessee Nonprofit Arts & Culture Recovery Fund, organizations must meet guideline requirements, including:
- be 501(c)3 arts organizations and arts organizations operating within a municipal or county government; headquartered and chartered in TN
- Must have a track record of federal funds administration in TN Arts Commission grant system
- Have documented pandemic revenue loss
Any TN nonprofit arts organization interested in determining eligibility and/or building a track record of federal funds administration with the TN Arts Commission should contact email@example.com .