‘Real lives are impacted’: City pauses funding for nonprofits over reporting spat

(MIRROR INDY) — Indianapolis is threatening to cut off access to pandemic-relief money that’s been funding dozens of programs across the city because of inadequate financial reporting.

Now, some organizations have suspended their programs and laid off staff as they wait for more details.

The uncertainty means nonprofits have to pause work, including programs to help feed people.

“Real people and real lives are impacted,” said Laura Henderson, executive director of Growing Places Indy, which has had to lay off nearly 20 people.

Essentially, the city is worried organizations aren’t spending federal money quickly enough. And if that money isn’t committed by the end of the year, it goes back to the federal government.

The Indianapolis chapter of the Local Initiatives Support Corporation — which administered some of the grants to smaller nonprofits — is one organization accused of not giving the city good enough documentation for spending.

LISC awarded funding for programs related to food access and small business development. Organizations reported their spending to LISC and received the money through reimbursements.

In a statement, LISC Executive Director David Hampton told Mirror Indy the organization is working with the city to provide financial documentation that would meet federal guidelines.

“We recognize the immense negative impact funding termination would have on our small businesses, community organizations, and neighborhoods that we serve,” Hampton said.

American Rescue Plan funded the programs

The programs were funded through the American Rescue Plan Act as part of the federal government’s COVID-19 response.

“With just four months left in the year to reevaluate and commit remaining ARPA funding, it is simply too great a risk that the residents of Indianapolis will lose out on millions of dollars of funds intended to support and uplift them,” a city spokeswoman said in a statement.

The city’s Office of Finance and Management will put LISC on a performance improvement plan to “minimize negative effects” on the organizations that received funding.

In the meantime, though, groups that depend on access to that money are left floundering as LISC tries to convince the city to reverse its decision.

“There’s already been harm done,” said Henderson with Growing Places Indy.

The organization was awarded about $340,000 to help incorporate gardening and urban agriculture into existing community projects — with a focus on the near east side.

And while Henderson said it’s important to figure out what’s happening between the city and LISC, she doesn’t want it to distract from the bigger picture of food insecurity.

“It just reinforces harm over and over and over again,” she said.

Loss of funding comes as Indy battles food insecurity

The potential loss of money that supports food access comes as advocates are trying to lessen the impact of food deserts on Indianapolis residents.

Sierra Nuckols, interim president of the recently formed Community Food Access Coalition, said it would be a bad look to end those programs.

“We’re now taking away the ability to have fresh food from local farms?” she said. “I think that’s a huge problem.”

[‘A healthier lifestyle’: Eastside urban farms improve food access]

But it isn’t just food programs on the chopping block. Some organizations used funding to help small business owners.

For Katina Washington, who was awarded about $35,000, losing funding could mean closing a downtown department store that houses 10 Black-owned businesses at the corner of North Delaware and East 9th streets.

Washington founded SHE.Xperience to help Black business owners attract more customers and increase revenue.

She already had to pause one program, and now the future of her store is in jeopardy.

“We’re gonna shut the doors until we can get our own building,” Washington said.

As of now, though, she doesn’t have another place to go to.

Mirror Indy reporter Tyler Fenwick covers economics. Contact him at 317-766-1406 or tyler.fenwick@mirrorindy.org. Follow him on X @ty_fenwick.