Homeland Security Assistance for Nonprofits: Department of	 
Homeland Security Delegated Selection of Nonprofits to Selected  
States and States Used a Variety of Approaches to Determine	 
Awards (22-MAY-06, GAO-06-663R).				 
                                                                 
The fiscal year 2005 Department of Homeland Security (DHS)	 
appropriation set aside $25 million, of the $885 million	 
appropriated for the Urban Areas Security Initiative (UASI), for 
grants to eligible nonprofit organizations that the Secretary of 
Homeland Security determined to be at high risk of international 
terrorist attack. This letter responds to the conference report  
that directed GAO to review the validity of the threat and risk  
factors used by DHS to allocate discretionary grants to nonprofit
organizations in fiscal years 2003, 2004, and 2005. Based on our 
review of DHS's risk methodology for fiscal year 2006, the	 
criteria in the fiscal year 2005 grant application kit, and	 
conversations with Congressional staff about the conference	 
report, we addressed the following objectives: (1) DHS's	 
methodology for determining risk for urban areas and the	 
nonprofit grant program, and DHS implementation of the program;  
(2) states' efforts to implement the nonprofit grant program in  
fiscal year 2005, and (3) whether subgrants were made to	 
nonprofits in fiscal years 2003 and 2004, when funds were not	 
specifically set aside for nonprofits.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-663R					        
    ACCNO:   A54599						        
  TITLE:     Homeland Security Assistance for Nonprofits: Department  
of Homeland Security Delegated Selection of Nonprofits to	 
Selected States and States Used a Variety of Approaches to	 
Determine Awards						 
     DATE:   05/22/2006 
  SUBJECT:   Appropriated funds 				 
	     Federal grants					 
	     Nonprofit organizations				 
	     Risk assessment					 
	     Security threats					 
	     Set-asides 					 
	     Allocation (Government accounting) 		 
	     Program management 				 
	     Urban areas					 
	     Program implementation				 
	     DHS Urban Area Security Initiative 		 

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GAO-06-663R

     

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United States Government Accountability Office Washington, DC 20548

May 22, 2006

The Honorable Judd Gregg Chairman The Honorable Robert C. Byrd Ranking
Member Subcommittee on Homeland Security Committee on Appropriations
United States Senate

The Honorable Harold Rogers Chairman The Honorable Martin Olav Sabo
Ranking Member Subcommittee on Homeland Security Committee on
Appropriations House of Representatives

Subject: Homeland Security Assistance for Nonprofits: Department of
Homeland Security Delegated Selection of Nonprofits to Selected States and
States Used a Variety of Approaches to Determine Awards

The fiscal year 2005 Department of Homeland Security (DHS) appropriation1
set aside $25 million, of the $885 million appropriated for the Urban
Areas Security Initiative (UASI), for grants to eligible nonprofit
organizations that the Secretary of Homeland Security determined to be at
high risk of international terrorist attack.2 This letter responds to the
conference report that directed GAO to review the validity of the threat
and risk factors used by DHS to allocate discretionary grants to nonprofit
organizations in fiscal years 2003, 2004, and 2005.3 Based on our review
of DHS's risk methodology for fiscal year 2006, the criteria in the fiscal
year 2005 grant application kit, and conversations with your staff about
the conference report, we addressed the following objectives: (1) DHS's
methodology for determining risk for urban areas and the nonprofit grant
program, and DHS implementation of the program; (2) states' efforts to
implement the nonprofit grant program in fiscal year 2005, and (3) whether
subgrants were made to nonprofits in fiscal years 2003 and 2004, when
funds were not specifically set aside for

1

Pub. L. No. 108-334, 118 Stat. 1289, 1309 (2004).

2

Nonprofits are those organizations described by 26 U.S.C. S:501(c)(3).

3

H.R. Conf. Rep. No. 109-241, at 65 (2005).

nonprofits. On May 3, 2006, and May 8, 2006, we briefed your offices on
the results of our review. This letter, and the accompanying slides,
transmits information provided during those briefings.

                                    Summary

To implement the fiscal year 2005 nonprofit grant program, DHS used a
two-tiered approach, first determining the urban areas in which nonprofits
would be eligible to apply for the funds and then providing guidance to
the states on how to allocate the funds to applicants. In the first stage,
DHS determined that in the absence of information from federal law
enforcement about risk to specific nonprofit organizations, those
nonprofits that were located in the highest risk urban areas were most at
risk of international terrorist attack. DHS used a model based on five
factors to determine the urban areas that would receive fiscal year 2005
UASI grants and the grant amount for each area. Using this model, fifty
urban areas were determined to be at high risk. Of those 50, the top
18-located in 13 states and the District of Columbia4-were selected to
receive portions of the $25 million set aside for nonprofit organizations
(nonprofits in urban areas that did not receive a nonprofit allocation
could still apply for subgrants from the State Homeland Security and UASI
grant programs). The amounts allocated were based upon each area's
contribution to the overall risk in the 18 areas. In the second stage of
the process, DHS delegated to the states the authority to make subgrants
to organizations, but required them to use six risk criteria provided by
DHS to determine organizations at high risk of international terrorist
attack. According to DHS, it made this delegation because it had no
information about credible threats against nonprofits by international
terrorist organizations, and it believed that state and local law
enforcement might have credible information and that states and urban
areas might be in a better position to assess threats within their areas.
DHS then provided programmatic guidance to the states along with the six
risk criteria that states were to consider in determining eligibility and
selecting nonprofits for subgrants. These criteria addressed the three
elements of risk--threat, vulnerability, and consequences. The criteria
did not require actual threats against facilities within the United
States. Individual awards were not to exceed $100,000 and were for target
hardening only. DHS retained responsibility for managing the grant program
and for monitoring the awards it made to the states with the nonprofit
funding.

The 13 states and the District of Columbia implemented the program using
differing approaches. They interpreted the DHS guidance as providing
flexibility in implementing the program. They used several approaches in
working with their urban areas and required nonprofit applicants to
provide varying amounts of risk-related information and organizational
capacity information. The threat information provided by the nonprofit
applicants varied in specificity and the degree to which it referred to
threats from international terrorist groups; none provided reports of
threats

The District of Columbia received funding for the National Capital Region
(NCR). The District of Columbia, the counties of Montgomery and Prince
George's, Md.; the counties of Arlington, Fairfax, Prince William, and
Loudon, Va.; the cities of Falls Church, Manassas, Manassas Park, Fairfax,
and Alexandria, Va., comprise the NCR.

Page 2 GAO-06-663R Homeland Security Assistance for Nonprofits

or attacks by international terrorist organizations against the specific
facilities of the nonprofit applicants that were located within the United
States. The vulnerability information included some professional
assessments. Some applicants claimed proximity to critical infrastructure;
others cited the presence of particular individuals as indications of
vulnerability. Information on potential consequences generally related to
the size of the organization and included number of employees or persons
served as indicators of potential consequences. The states and urban areas
generally relied on law enforcement to assess threat and vulnerability.
Some of the states and urban areas developed formal methods for assessing
the nonprofit organizations' risk and capacity to implement the proposed
projects. About 400 awards were made, out of 600 applications. Most
recipients were religious organizations. Medical and social services were
the second and third largest categories. The average amount awarded was
about $62,000. State and urban area officials reported a range of views
about target hardening for nonprofit organizations. For example, some
stated that the subgrants met a need, but that nonprofits, relative to
other critical infrastructure, were a comparatively low priority for
funding, and most said they had not received inquiries from nonprofits
about the availability of funding for target hardening prior to the fiscal
year 2005 allocation. Others said that the $100,000 limit on target
hardening subgrants was insufficient to address need. Some officials also
noted that target hardening funds were already allowable under the State
Homeland Security and UASI grant programs and that a specific allocation
for nonprofits constrained their ability to address the security issues of
other types of organizations. Finally, officials reported that they
generally lacked the capacity to conduct the type of vulnerability
assessments needed to determine the relative risk to nonprofit
organizations within their areas and that in implementing the nonprofit
grant program, they needed additional guidance and support from DHS;
implementing the program added additional unreimbursable administrative
costs; and they varied in the degree to which they could determine that
the program reduced the overall risk of terrorist attack to their area.

About 18 UASI subgrants were made to nonprofits in fiscal years 2003 and
2004. No funding was set aside specifically for nonprofits in the DHS
appropriations for those years. Nonprofits were eligible for subgrants,
but many states were unaware that they could make subgrants to nonprofits.
The subgrants that were made to nonprofits were generally for citizen
preparedness and capability enhancement for emergency response
organizations. None were for target hardening.

                             Scope and Methodology

To review the DHS methodology for determining risk for urban areas and the
nonprofit grant program and the decision to delegate the selection of
nonprofit subgrantees to the states, we interviewed officials and reviewed
documentation from DHS. To address the remaining objectives, we
interviewed officials from the 18 urban areas that received fiscal year
2005 nonprofit allocations; reviewed solicitations for applications;
reviewed copies of applications, where available; interviewed officials
from 17 additional urban areas that did not receive fiscal year 2005
nonprofit allocations; and reviewed DHS data and documentation. We
assessed the reliability of the data and determined that it was sufficient
for our purposes.

We conducted our work in accordance with generally accepted government
auditing standards from February 2006 through April 2006.

We provided the Department of Homeland Security with a draft of this
report. It provided technical comments that have been incorporated into
this report.

As agreed with your office, we will send copies of this report to relevant
congressional committees and subcommittees and to the Secretary of the
Department of Homeland Security. Copies of this report will also be made
available to others upon request. In addition, this report will be
available on GAO's Web site at http://www.gao.gov.

If you or your staff have questions regarding this report, please contact
me at (202) 512-8757 or by e-mail at [email protected] or William Sabol at
(202) 512-3464 or by e-mail at [email protected]. Key contributors to this
report were David Alexander, Frances Cook, Kathryn Godfrey, Daniel
Kaneshiro, Doris Page, and Nettie Richards.

William O. Jenkins Jr. Director, Homeland Security and Justice Issues

                                  Enclosure-2

      Enclosure I: Fiscal Year 2005 UASI Nonprofit Allocations, Number of
                   Applications and Nonprofit Grants Awarded

                                     Nonprofit organizations applying,                Amount of 
                                               awarded, and not funded                nonprofit 
                                  Amount                                             allocation 
                            allocated to     Number of                                      not 
                                                                                        awarded 
                               nonprofit organizations  Number  Number     Number of      as of 
                                                                                          March 
State         Urban area   organizations       applying funded not     solicitations   31, 2006 
                                                               funded                
California    Anaheim           $114,490              0      0       0             2   $114,490 
              San                935,551              7      6       1             2    394,141 
              Francisco                                                              
              Los Angeles      3,750,000             88     46      42             1          0 
              San Diego          320,885              8      6       2             1          0 
District of   National         4,500,000             38     37       1           2 c  1,706,527 
Columbia      Capital                                                                
              Region                                                                 
Florida       Miami              402,110             28     18      10             1          0 
Georgia       Atlanta            216,068            15a     15       0            NA          0 
Illinois      Chicago          3,000,000             41     38       3             2     73,000 
Maryland      Baltimore          132,160             45    38b       7             1          0 
Massachusetts Boston           2,075,000             43     25      18             1          0 
Michigan      Detroit            516,028              6      6       0             1          0 
New Jersey    Newark             181,298             8a      7       1            NA          0 
New York      New York         6,311,701            203   113b      90             1          0 
              City                                                                   
Oregon        Portland           100,000              4      2       2             1          0 
Pennsylvania  Philadelphia     1,347,598             76     29      47             1          0 
Texas         Dallas             261,148              5      2       3             1          0 
              Houston            681,984             13     13       0             1          0 
Washington    Seattle            153,978              7      3       4             1          0 
Total                        $24,999,999            635    404     231               $2,288,158 

Source: GAO analysis of DHS data and interviews with state and urban area
officials.

a

UASI regions selected applicants and awardees rather than issuing
solicitations.

b

Additional DHS funds were used to supplement the initial UASI nonprofit
allocation to enable funding this number of applicants. cAwards for the
second solicitation had not been made at the time of our review.

                           Enclosure II: Presentation

(440478)

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