Overview
MCC awarded 26 ineligible applicants $39,000 from funding provided under its interdepartmental service agreement (ISA) with the Executive Office for Administration and Finance (EOAF) for grants to cultural nonprofit organizations (NPOs) without amending the terms of the ISA. Also, MCC did not provide the Executive Office of Housing and Economic Development (EOHED), its partner under the ISA, with the names of the 26 applicants and the amounts of the grants for EOHED’s authorization before payment. The Cultural Organization Economic Recovery Program grant was to be disbursed only to cultural NPOs, unless the terms of the ISA were amended by MCC and approved by EOAF.
As a result of this issue, eligible cultural NPOs that could have been awarded full or partial grant funding from this $39,000 may have been denied grants.
Authoritative Guidance
The ISA between MCC and EOAF for the Cultural Organization Economic Recovery Program states that the grants were to be disbursed “to support 501(c)(3) nonprofit organizations negatively impacted by the 2019 novel coronavirus.”
Section 6.03(3)(e) of Title 815 of the Code of Massachusetts Regulations states,
An ISA Amendment is required for . . . any material change in performance requirements . . . and must be executed by the Buyer and Seller Department prior to the termination date of the ISA, or as amended.
Reasons for Issue
MCC management told us that they had notified EOHED that MCC had $39,400 remaining from the ISA. MCC did not receive any objections or directions from EOHED regarding what to do with this remaining funding, so MCC decided to disburse it to individuals who were eligible, but not selected, for grant funding under the fiscal year 2021 COVID‑19 Relief Fund for Individual Artists. They told us they had made this decision to enable an additional 26 artists to receive $1,500 grants because the next several cultural NPOs in line had each requested more grant funding than the remaining $39,400 available. MCC’s governing council approved the $39,000 of payments to individuals. MCC’s management was not aware that MCC needed to amend the ISA, and MCC did not have a policy in place to ensure that ISAs were amended when needed.
Recommendations
- MCC should stay informed of the requirements of its ISAs.
- MCC should establish policies and procedures to ensure that future ISAs are followed or properly amended and communicate the policies and procedures to all employees who are responsible for ISAs.
Auditee’s Response
Mass Cultural Council agrees that it did not obtain an amendment to interdepartmental service agreement (ISA) regarding usage of the leftover $39,400 of CARES Act funds from the [Cultural Organization Economic Recovery Program] (0.394% of a program allocation totaling $10 million) to support its FY21 Individual Artist Relief Program. Please note that as described in the draft report, under the [Cultural Organization Economic Recovery Program], the list of approved grantees were required to [be] approved by the Executive Office of Housing and Economic Development (EOHED) and such Department approved $9,960,600 of grants under the program. There were several grantees tied on scoresheet as next in line for funding . . . and distributing such leftover funds would have resulted in relatively small amounts to those grantees. However, Mass Cultural Council did not have the option of making additional grants under the program to the next-listed organizations. After notification of the leftover funds, EOHED did not opt to further approve any more grants but indicated Mass Cultural could determine the use of such funds. While Mass Cultural Council subsequently informed EOHED that it would be applying such funds to the Individual Artists Relief Fund, and was not informed that the Department had any objections, the Council did not document that decision with an amendment to the ISA. Mass Cultural Council will establish policies and procedure to ensure compliance with ISAs and obtaining necessary amendments in the future.
Auditor’s Reply
Based on its response, MCC is taking measures to address our concerns on this matter.
| Date published: | June 16, 2022 |
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