Overview
The Massachusetts Cultural Council (MCC) did not verify that all 1,071 individuals who received some of $1,456,000 in grants from its 2019 coronavirus (COVID-19) pandemic relief funding were eligible to receive it. As a result, there is a higher-than-acceptable risk that grants were awarded to ineligible applicants.
Authoritative Guidance
According to the fiscal year 2020 COVID-19 Relief Fund for Individual Artists grant guidelines, an applicant must meet all of the following criteria to be eligible:
You may apply for Mass Cultural Council COVID-19 Relief funding if you are:
- An individual artist working in any artistic discipline. Artist here is defined broadly to include, but is not limited to artists such as musicians, theater artists (including those that work on sound, lighting, and costume design), photographers, puppeteers, crafts artists, painters, poets and authors, vocalists, folk and traditional artists, dancers, etc.
OR
- An individual teaching artist, humanist, or scientist who promotes education in the arts, humanities, or interpretive sciences to people of any age, who typically works in schools or other educational settings.
AND you meet all five of the following requirements:
- You are 18 years or older.
- You are a legal resident of Massachusetts. We define “legal resident” as someone who meets the definition of a “full-year resident” in the Massachusetts tax code. . . .
- You have reported taxable income related to earnings working as an individual artist and/or as an individual teaching artist, humanist, scientist in your most recent tax return.
- The income you reported earning as an individual artist and/or as an individual teaching artist, humanist, scientist in your most recent tax return represented more than 25% of your total income from all sources.
- You can demonstrate at least $1,000 of lost income directly related to COVID-19 that is not eligible to be recouped through Massachusetts unemployment benefits. This could include lost revenue due to:
- Canceled jobs/gigs, classes, performances, exhibitions, shows, residencies, etc.
- Organizational closures and/or suspended operations
- Lost sales, commissions, vendor fees from canceled markets, events, exhibitions, etc.
According to MCC’s website, eligibility requirements for an individual grant from the Gary Knisely and Varian Foundation grant guidelines had the same criteria as the MCC fiscal year 2020 COVID-19 Relief Fund for Individual Artists grant guidelines, except that the applicant had to be an individual theater professional (e.g., a performer or director) and live in Berkshire County (see Appendix B.)
The website also states that the fiscal year 2021 COVID-19 Relief Fund for Individual Artists grant guidelines had the same criteria as the fiscal year 2020 grant guidelines, except that the definition and requirements for reported income had changed.
Specifically, reported income under the fiscal year 2020 COVID-19 Relief Fund for Individual Artists grant guidelines was based on the most recent tax return. In the fiscal year 2021 COVID-19 Relief Fund for Individual Artists grant guidelines, income is defined as follows:
- The income (gross) you reported earning as an individual artist and/or as an individual teaching artist, humanist, scientist in at least ONE tax return filed within the last three years represented more than 25% of your total income from all sources.
In addition, in the fiscal year 2020 COVID-19 Relief Fund for Individual Artists grant guidelines, applicants were required to demonstrate at least $1,000 of lost income directly related to COVID-19 that was not eligible to be recouped through Massachusetts unemployment benefits. In the fiscal year 2021 COVID-19 Relief Fund for Individual Artists grant guidelines, the requirement was revised as follows:
- You can demonstrate at least $1,500 of lost income directly related to COVID-19 that is not eligible to be recouped through Massachusetts unemployment benefits.
The state Department of Revenue’s “Form 1 2020—Massachusetts Resident Income Tax” instructions defines “legal resident of Massachusetts” as follows:
You are a full-year resident if your residence (domicile) is in Massachusetts or if you maintain a permanent place of abode in Massachusetts and during the year spend more than 183 days, in the aggregate, in the state.
Reasons for Issue
MCC officials told us they did not require applicants to prove eligibility because they wanted to provide relief funding as soon as possible and did not want to delay grant payments to request supporting documentation and verify each grantee’s eligibility.
Recommendation
MCC should establish policies and procedures to ensure that supporting documentation is provided to prove eligibility before it awards grants.
Auditee’s Response
The draft report states that the Council did not appropriately verify the eligibility requirements of the grant recipients of its Covid-19 relief programs leading to a “higher-than-acceptable risk” that ineligible applicants received grants. The Council acknowledges that it did not independently verify all of the information submitted by grant applicants to these emergency relief programs but believes its procedures were appropriate and necessary in the circumstances—especially given the nature of the funding crisis for the cultural sector caused by the pandemic and the need to respond to the emergency in haste (as noted in the surveys detailing the effects of the pandemic on the sector which are cited in the draft report). In the case of the [Cultural Organization Economic Recovery Program], the fact that the allocation of [Coronavirus Aid, Relief, and Economic Security, or CARES] Act funds was made in late October 2020 with an absolute deadline of awarding the grants by the end of the calendar year (it was unclear at that time that the CARES Act would be extended until late December 2020). Greater review and verification of the data submitted by applicants would have required a great deal of time and additional staff neither of which the Council had. . . .
Based upon the draft report’s finding, Mass Cultural Council will design future pandemic recovery programs so as to either provide for easily verifiable information using available resources or to not require information difficult to verify.
Auditor’s Reply
Based on its response, MCC plans to take measures to verify grantee eligibility in future pandemic recovery programs, but did not have the time or personnel to appropriately do so for the COVID-19 Relief Fund for Individual Artists.
The Office of the State Auditor (OSA) believes that MCC could have verified grantees’ eligibility in a timely manner if it had required documentation supporting applicant eligibility at the time applications were submitted, as it did for the Cultural Organization Economic Recovery Program. Go Smart allows applicants to upload and submit supporting documentation when applying for a grant. MCC could have required applicants to upload photo identification such as a Massachusetts-issued identification card to determine whether they were 18 or more years old and met the residency requirement. MCC could also have required applicants’ most recent Internal Revenue Service income tax returns, which would show whether applicants were legal residents and whether at least 25% of their total reportable taxable income was related to earnings from work in a qualifying artistic discipline. Finally, as evidence of loss of income, MCC could have required documentation such as notifications of organizational closures, canceled fairs, and canceled performances.
OSA believes MCC could have reviewed this documentation for the selected grantees before approving the grants. Therefore, we reiterate our recommendation that MCC establish policies and procedures to ensure that applicants provide supporting documentation to prove eligibility before it awards any grants.
| Date published: | June 16, 2022 |
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