Summary for Policymakers | Unlocking Equitable Access to Grants

Options for Federal Policymakers to Improve Matching Fund Requirements

This is a Summary for Policymakers of a longer report released by GCC. Read the full report here.

As federal policymakers award grant funds to implement climate, clean energy, transportation, and other programs, they have opportunities to remove barriers to the equitable distribution of federal resources. Non-federal match funding requirements – mandates that require grant recipients to contribute financial or other resources for a certain percentage of the project cost in order to qualify for federal funding – are one substantial administrative and financial barrier that limits the ability of overburdened communities to benefit from federal funding programs.

The federal government is providing an unprecedented level of funding to state and local governments and community groups, including through funding programs included in the Bipartisan Infrastructure Law (BIL, or Infrastructure Investment and Jobs Act) and Inflation Reduction Act (IRA). To help ensure a more equitable distribution of federal funding and address the decades-long and ongoing disparities in access to government funding for overburdened communities, the Biden Administration established the Justice40 Initiative (Justice40), which set a goal that 40 percent of the benefits of certain federal funding go to “communities that are marginalized, underserved, and overburdened by pollution.”[i] However, those same communities often lack access to the level of funding (or substantial in-kind resources) required to unlock federal grants.

Note regarding the use of "overburdened communities" in this report:

This report uses “overburdened communities” to refer to any community or population in the United States that has faced inequitable barriers to accessing federal grant funding. While each community experiences unique circumstances and may identify with varying terminology, for the purposes of this report, overburdened communities are those that experience disproportionate environmental harms; social, economic, and health inequities; greater vulnerability to the impacts of climate change; and inequitable distribution of federal funding. Local governments and organizations within overburdened communities may be eligible for match requirement flexibilities, depending on the grant program. The term “overburdened communities” in this report is not a reference to a single defined term in federal or state law, but may be read to include the following federal definitions and designations for communities, among others:  

• EPA uses the term “overburdened communities” to describe “Minority, low-income, tribal, or indigenous populations or geographic locations in the United States that potentially experience disproportionate environmental harms and risks. This disproportionality can be as a result of greater vulnerability to environmental hazards, lack of opportunity for public participation, or other factors. Increased vulnerability may be attributable to an accumulation of negative or lack of positive environmental, health, economic, or social conditions within these populations or places. The term describes situations where multiple factors, including both environmental and socioeconomic stressors, may act cumulatively to affect health and the environment and contribute to persistent environmental health disparities.”^{See footnote 1} 
• The White House Environmental Justice Advisory Council defined an “environmental justice community” as “a geographic location with significant representation of persons of color, low-income persons, indigenous persons, or members of Tribal nations, where such persons experience, or are at risk of experiencing, higher or more adverse human health or environmental outcomes.”^{See footnote 2} 
• The Biden Administration’s Justice40 Initiative identifies “disadvantaged communities,” using a variety of environmental, social, and economic indices related to climate change, energy, health, housing, legacy pollution, transportation, water and wastewater, and workforce development. Note, "to respect Tribal sovereignty and self-government and to fulfill Federal trust and treaty responsibilities to Tribal Nations, land within the boundaries of Federally Recognized Tribes are designated as disadvantaged on the map."^{See footnote 3} 

As a result, non-federal match requirements can be a formidable barrier to achieving the goals of federal grant programs intended to benefit overburdened communities. Federal agencies have an opportunity to mitigate and, when possible, remove this barrier to increase equitable access to federal grant funding for communities most in need of federal resources. Six recommendations for federal policymakers to address the barrier of non-federal match requirements are discussed below.

Georgetown Climate Center’s report Unlocking Equitable Access to Grants: Options for Policymakers to Improve Matching Fund Requirements, contains a detailed analysis, including an overview of federal grant funding programs and their non-federal match requirements, case studies of the non-federal match requirement for specific grant funding programs, and policy considerations for federal officials.

Non-Federal Match Requirements are a Barrier to Equity and Environmental Justice

Most federal grant programs require that the grant recipient contribute a portion of the total project amount, often 20 percent of the total project cost, from non-federal sources, as a requirement to receive the federal portion of the grant funding. The rationale often provided by agencies and congressional appropriators for requiring non-federal matching funds is to demonstrate local interest and financial stake and to reduce total federal expenditures on a program by attracting other sources of funding for projects. However, for communities that already face funding constraints and other challenges, the non-federal match requirement can keep them from receiving federal funding for critical projects and programs.

While many grant programs have statutorily required non-federal match requirements that would require congressional action to change, other grant programs provide greater discretion to the implementing agency. For example, agencies may have statutory authority to issue “non-federal match waivers,” exempting specific communities, geographies, or project types from non-federal match funding requirements. Additionally, agencies can increase transparency about non-federal match requirements and match waiver processes, provide technical assistance, and engage with federal appropriators on the statutory design of grant programs.

Federal Policy Recommendations

As the Biden Administration and federal agency officials implement federal funding programs in ways that are consistent with the Justice40 Initiative and other policies, they have several opportunities to reduce the barrier of non-federal match requirements to support projects in overburdened communities, including: 

1. Explore opportunities under existing statutory authority to reduce or waive non-federal match requirements;
2. Update agency grant navigators and resources to increase awareness of match requirements and agency flexibility;
3. Streamline the non-federal match requirement waiver application process;
4. Include support for non-federal match requirements in technical assistance to federal grant applicants;
5. Engage with congressional appropriators regarding statutory requirements for non-federal match requirements; and
6. Update Justice40 Guidance to provide direction to agencies regarding non-federal match requirements.

Recommendation 1: Explore opportunities under existing statutory authority to reduce or waive non-federal match requirements

Agencies can evaluate their authority to waive or reduce non-federal matching fund requirements for both new and long-standing grant programs. For some grants, Congress has provided specific statutory direction about match waivers; and in other cases, it has granted broad discretion to the implementing agency. Recent legislation such as the BIL has created opportunities for agencies to grant waivers of non-federal match requirements, including new or amended programs that provide greater flexibility to the implementing agency. For long-standing grant programs, there may be underused opportunities for agencies to act when an authorizing statute is broad in granting an agency the authority to waive match requirements. For example, the Fiscal Year 2023 Appropriations Act authorizes the Environmental Protection Agency (EPA) to grant waivers in the Community Grants Program, and EPA subsequently acted to proactively grant waivers to defined disadvantaged communities. 

Recommendation 2: Update agency grant navigators and resources to increase awareness of match requirements and agency flexibility

While new legislation and federal initiatives have significantly expanded federal funding available to local communities, these new federal programs are only helpful to communities if they are aware of the programs and application requirements—including non-federal match requirements and the potential for match waivers. To increase awareness of match requirements and agency flexibility, a grantor agency can:

• Provide clear and accessible information about grant program match requirements. For example, the U.S. Department of Transportation’s (DOT) summary of covered Justice40 funding programs includes details on non-federal match requirements for each program. 
• Update existing funding navigators and guides to include information on match requirements. For example, the Department of Housing and Urban Development’s Funding Navigator tool includes information on funding opportunities, including funding type and eligible uses, but does not currently include any information on match requirements or waivers.
• Create guides and summaries for potential grant recipients specific to match funding requirements and flexibility. For example, the Federal Emergency Management Agency (FEMA) has created a Hazard Mitigation Assistance Cost Share Guide.
• Form direct lines of dialogue between the agency and potential recipients to inform them of available funding resources and deadlines. One federal initiative seeking to do this, AmeriCorps, is achieving transparency by proactively sharing information about their waiver request process via live calls and written updates, posting on respective program web pages, and posting with current funding opportunities. 

Recommendation 3: Streamline the non-federal match requirement waiver application process

If a federal program is meant to help and direct funding to overburdened communities, potential applicants from these communities need assistance to competitively engage in the agency’s grant solicitation process. To ease the administrative burden on applicants, a grantor agency can:

• Clarify in advance whether a community or geographic location qualifies for a waiver (rather than requiring the applicant to sift through multiple data sources and tables).
• Adjust matching waiver application deadlines so an applicant will know whether a waiver will be approved well in advance of the grant application deadline. (If communities are required to apply for a grant without knowing whether they can properly fund the project if they are denied a waiver, they may be discouraged from applying).
• Take on the burden (the federal agency, rather than the applicant) of determining whether the project/applicant qualifies for a waiver. For example, AmeriCorps’ grant process allows applicants to request a waiver using a standard form for consistency and efficiency and self-certify waiver justifications; additionally the grant administrators commit to doing an initial review of waiver requests within 30 days, to the extent possible.

Recommendation 4: Include support for non-federal match requirements in technical assistance to federal grant applicants

Federal agencies can consider expanding opportunities for agencies and funding assistance providers to support communities navigating non-federal match requirements. For example, some agencies have provided support for grant applicants by hosting webinars. Agencies can also provide accessible venues for information exchange, as well as peer-to-peer forums to support communities through the federal funding application process. 

New federal technical assistance providers and networks can play a role in addressing the challenges of match requirements. For example, the Federal Interagency Thriving Communities Network and the EPA’s Environmental Justice Thriving Communities Technical Assistance Centers, which provide assistance for overburdened communities navigating federal grant processes, present an opportunity to help applicants with match requirements.

Recommendation 5: Engage with congressional appropriators regarding statutory requirements for non-federal match requirements 

When agencies engage with Congress in the federal appropriations process and the development of new legislation, they may have an opportunity to influence the design and requirements of federal funding programs. In future legislative engagement, agencies could provide information on the benefits of eliminating non-federal match requirements for certain applicants or providing broader match requirement waiver authority to administering agencies. There are recent examples of legislative changes to amend the statutory requirements of grant programs related to non-federal match requirements to help promote equity in providing grants to overburdened communities. One example of this type of legislative change, described in the report, is the U.S. Department of Energy’s (DOE) State Energy Program, which originally had statutory language requiring a non-federal match, but was amended by the BIL to eliminate this requirement. 

Recommendation 6: Update Justice40 Guidance to provide direction to agencies regarding non-federal match requirements

The White House Justice40 Interim Guidance, issued in July 2021, does not discuss non-federal funding match requirements for grant programs. An update to the Justice40 Interim Guidance could address match requirements more explicitly and guide agencies to do as much as they can under existing statutory authority to waive match requirements when it would advance Justice40 goals.

Such an update to the Justice40 Interim Guidance should be developed with the input of the White House Environmental Justice Advisory Council (WHEJAC), a council established to advise the White House Council on Environmental Quality (CEQ) on environmental justice issues. The WHEJAC published a summary of recommendations on the implementation of the Justice40 Initiative in 2021, which included examples of grant programs where non-federal match requirements should be reduced or eliminated, noting such requirements may be “prohibitive and limit the number of communities who can apply for funding.”

In addition to the federal policy recommendations included in this report, state and local governments can support overburdened communities in accessing federal funds. Georgetown Climate Center is exploring additional analysis on these policy opportunities. Please contact us at climate@georgetown.edu with any questions or comments or to stay in touch with us regarding this work.