2025 Policy Recommendation
Address inequitable access to state funding opportunities by exploring strategies to enable all early childhood partners to compete regardless of current financial resources. The State should develop consistent, realistic policy standards and guidance on advance payment procedures; whenever possible advance payments should be considered as a default when funding sources allow.
What It Means
The State of Vermont practices reimbursement-based grantmaking and contract-making. This means that organizations and businesses offering services or programming on behalf of the state typically have to cover expenses from their own reserves before receiving payment. Recently, the Office of Federal Financial Management, Office of Management and Budget (OMB), clarified that the guidance for federal agencies is that upfront payment is preferable and that reimbursable grants are only preferred when financial and written procedures cannot be met. Vermont can lead the way in ensuring that state grantmaking practices promote equity and support the financial well-being of Vermont-based organizations and businesses.
Why It Matters
For organizations or businesses that are small or have limited access to liquid capital, reimbursement-based grantmaking can be either a significant challenge or a complete barrier to their participation in the grant program.
Connects to VECAP Goal 4:
The early childhood system will be integrated, well-resourced, and data-informed.
Spotlight on Equity
Unsurprisingly, data suggests that this challenge likely has an outsized impact on businesses owned by people of color, resulting in inequities in who is likely able to participate in state contracts. A nationwide survey conducted by Goldman Sachs suggests that Black small business owners disproportionately don’t have access to necessary capital, with 86% concerned about access to capital (compared to 77% of small business owners overall with this concern).
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