Colorado nonprofits come close to shutting down as state delays grants

Colorado nonprofits serving people struggling with addiction say the state’s Behavioral Health Administration repeatedly changed the rules for vital grants, pushing organizations close to shutting down as they waited months for tens of thousands of dollars in reimbursement.

Racquel Garcia, CEO of Castle Rock-based HardBeauty, said the organization’s bank account got down to about $700 in January — a hair’s width from forcing the peer-mentoring group to close its doors altogether. Nonprofits spend their funds on approved uses and expect the state to reimburse them, she said. And when the money is late, they can’t cover expenses.

“I can only say, ‘Hey, the state’s going to pay, I swear it’s coming’ (to creditors) for so long,” Garcia said.

The Denver Post spoke to seven people who work for or with nonprofits that received grants administered by the Behavioral Health Administration, all of whom reported delays in payment and frustration with unexpected changes the state agency requested after they signed contracts.

Colorado’s Behavioral Health Administration had a difficult first two years, with controversy after its first commissioner was fired and the head of another state agency temporarily took over, turnover among other employees near the top, and difficulty meeting ambitious deadlines. The second permanent commissioner will start later this month.

In HardBeauty’s case, Garcia said, the agency would identify what seemed like small problems in the information her organization had submitted two or three months later, then refuse to release the entire $50,000 the nonprofit was due to receive in the month in question. Like many small nonprofits, the organization didn’t have employees focused on managing grants and had to hire additional accounting help, she said.

The agency caught up on some months’ payments, Garcia said, but still hasn’t reimbursed the group more than $100,000 for December and January.

The money for the agency’s grants comes from the American Rescue Plan Act, a $1.9 trillion federal stimulus package passed in 2021. States received shares of the money that they have to designate for specific purposes by the end of this year and spend before January 2027.

The Behavioral Health Administration has distributed more than $145 million in American Rescue Plan grants to more than 100 organizations statewide, which created an “unprecedented opportunity” to expand programs for children, youth and people in the criminal justice system, agency spokeswoman Stefany Busch said.

The agency did not respond to The Post’s questions about late grant payments or nonprofits’ concerns about frequent rule changes.

“BHA is committed to working with providers on the challenges they face, including creating resources to guide the invoicing process, as well as one-on-one meetings and office hours allowing providers to ask questions and receive real-time assistance,” she said in a statement.

“It’s been extremely frustrating”

The Behavioral Health Administration signed contracts and started grant payments a few months late last year, said Gabe Cohen, executive director of Rifle-based Discovery Café, which works with incarcerated people with substance-use disorders in western Colorado.

So far, the agency has only reimbursed Discovery Café’s expenses from October, and owes the nonprofit about $59,000 over multiple months — even though the contract dictates the state has 45 days to reimburse costs, Cohen said. Under the contracts, organizations submitted proposed budgets for particular projects or goals, and the agency agreed to reimburse costs for salaries, equipment and other expenses in line with those budgets.

To make up the difference, Discovery Café essentially emptied its savings and took out a line of credit, Cohen said. He said the state agency keeps changing its rules for using the money, requiring the organization to repeatedly resubmit documentation and delaying payment. Some other nonprofit workers told The Post they believed the federal government was responsible for most of the changes.

“I’m sure they’re going to pay us, but it’s been extremely frustrating,” Cohen said. “If they’re going to put it out there that they’re going to award grants and pay in 45 days, they should do what they say they’re going to do.”

The problem is widespread, said Breeah Kinsella, executive director of the Colorado Providers Association, a trade group representing mental health and addiction care providers.

“Every single one of my providers who received these ARPA funds have had issues,” she said. “These smaller organizations cannot wait 75, 90 days for this money.”

Federal money always brings another layer of documentation and reporting, and it appears the state is being extra cautious so the federal government won’t find problems and demand repayment, Kinsella said. The Behavioral Health Administration has only existed for about two years and dealt with leadership turnover during that time, but hopefully the new commissioner will bring stability, she said.

“I do think we’re on the right path,” she said.

“They were already past due”

An accountant who works with nonprofits, who spoke on condition of anonymity to avoid damaging her relationship with the state agency, said minor adjustments to the terms of grants and brief delays in payment are common enough. But she said she’d never seen an agency ask for large changes, such as wanting grantees to focus on a different part of their region, after the grantees already had spent the grant money.

Some clients have had to cut expenses elsewhere and aren’t sure if they can apply for future grants to expand their services, she said.

The state can choose to have more stringent requirements for grants than the federal government if it wants to, and most nonprofits want to comply, the accountant said. The problem is that the Behavioral Health Administration hasn’t been upfront about what it expects, she said.