Iowa City boosts nonprofit funding program by $350K, to nearly $1.1 million

IOWA CITY — Iowa City will increase the amount of money it provides to area nonprofits after the city council voted Tuesday to increase funding in the city’s Aid to Agencies fund by $350,000, to nearly $1.1 million.

The Aid to Agencies budget for fiscal year 2026, which begins July 1, will be spread across 20 organizations, with awards ranging from $20,000 to $150,000. With the additional funds added, each organization will receive its full funding request.

The original $740,000 allocated to the program came from a mix of federal Community Development Block Grant money and city general funds.

As a result of council’s decision, the city will dip into its general fund reserves, which contain about $26.8 million, to increase the Aid to Agencies budget. The city council has already approved the city’s FY26 budget, which has a $2.8 million shortfall to be covered by the reserves.

The Aid to Agency funding application is on a two year cycle, so all agencies will receive funding next fiscal year on a prorated basis depending on the program’s budget next year.

Responding to changing circumstances

The Aid to Agencies application process had undergone a review since its last funding cycle. The city worked with individuals from the Housing and Community Development Commission, United Way of Johnson and Washington Counties, Johnson County, and the cities of Coralville and North Liberty.

Part of the application process review included increasing the minimum award from $15,000 to $20,000.

Typically, city staff work with members of the Housing and Community Development Commission to score the applications and allocate funding proportionally. However, the commission was unable to meet a quorum so the recommendations to council were from city staff and just two members of the commission.

All members of city council were in favor of increasing the Aid to Agencies fund in order to respond to the “political climate.” Since January, some funding sources to nonprofits — particularly from the federal government — have been discontinued, while the need for services has continued.

“I don't want to send a signal to the applicants that, you know, you'll just get whatever you ask for if you come in lobby us. That's not what this moment is about. This is about identifying what has changed since we made some preliminary decisions and what's in front of us right now,” said council member Laura Bergus.

Specific conversations around increasing the total budget came about after some concerns were raised that the Center for Worker Justice and Dream City did not receive any funding.

“I think this decision really contradicts the purpose of aid to agency programs, which is a means to provide stable support to trusted organizations ...,” said council member Mazahir Salih.

Dipping into General Fund reserves

Once the council decided to increase the budget for the program, the question was how to do it in the most equitable way possible. Ultimately, the council decided to fully fulfill each funding request.

“I just want to be very transparent that if we do this, this could just set us up for something in the future,” said Mayor Bruce Teague. “But, I don't know how you do this right now without just making a big leap ...”

The council also discussed where the funding would come from. Among the options discussed were the city’s Black Lives Matter account, which contains a little over $600,000, and the Opportunity Fund, which has around $250,000. Ultimately, the council decided to use general fund reserves.

However, City Manager Geoff Fruin advised council that the specific funding requests might not be the best way to allocate funds.

“I'd caution you a little bit to look at those requests, because different agencies come into this process with a different mindset on request if they received X number of dollars plus two or 3 percent for 15 to 20, years, that's what they expect, and that's what they ask for, even though those needs could be greater,” Fruin told the council.

Council member Josh Moe was the lone dissenting vote on the motion to fully fund each organization’s request.

“I'm in favor of increasing the total money, but I continue to believe that our professional city staff has a better sense of who also has ARPA funding … who also maybe asked aggressively versus who asked conservatively … I'm for increasing the funding, but not for saying whatever you ask for can happen that seems to be a really bad slippery slope,” said Moe.

Comments: megan.woolard@thegazette.com

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