Some supervisors want to put limits on Shasta County’s nonprofit contracts. Here’s what you should know
On June 8, Shasta supervisors voted to move towards passing a local law restricting the county from contracting with nonprofits that spend more than 18% on administrative costs. The county’s elected auditor-controller has pushed back.
Shasta County relies heavily on nonprofit organizations for essential services, and a recent discussion by county supervisors about limiting which organizations the county works with is getting pushback.
On June 8, the board discussed “the possibility of an ordinance which would require any non-profit organization to limit their administrative costs in order to receive County funding or support.”
The supervisors then voted 3-2 to bring back a draft ordinance capping the administrative cost rate for nonprofits the county partners with at 18%.
Administrative costs for a nonprofit generally refer to “indirect costs,” or “overhead costs,” which are costs that don’t directly translate to the services the organization provides. This may include executive and administrative salaries, facilities, utilities, accounting and legal fees, technology, and other general administrative costs. It’s a term that’s not simply defined, or consistently applied.
In a rare response to the board’s vote, Nolda Short, the County’s auditor-controller, pushed back on the implementation of the ordinance, noting its potential conflicts with regulations for federal funding. Her letter to supervisors appeared in the agenda packet for the June 16 meeting when supervisors were scheduled to make the new rule official.
The ordinance was pulled from the agenda that morning, before any board discussion. A draft of the resolution available to the public online now shows a date of June 30, indicating the board may return to the matter then.
What would the nonprofit ordinance do?
The ordinance, if implemented, would make it difficult for nonprofit organizations that have an administrative cost rate of above 18% to contract with the county.
It does note that exceptions may be granted by supervisors for newly formed nonprofits less than 24 months old and “emergencies or unique circumstances where strict application would undermine critical public services.”
However, the draft ordinance offers confusing information on how the 18% rate would be defined and what organizations the ordinance would impact.
In the June 8 meeting, District 1 Supervisor Kevin Crye was the most vocal advocate for the administrative cost rate cap, which he first suggested should be set at 10%, arguing that tightening financial restrictions for nonprofits was necessary to ensure county funding wasn’t being wasted.
District 4 Supervisor Matt Plummer and District 2 Supervisor Allen Long dissented, arguing that a blanket cost cap would only lead nonprofits to attempt to manipulate their numbers.
What nonprofits would the ordinance affect?
Nonprofit organizations play a significant role in the functionality of Shasta’s government through contracts that largely support the work of Shasta’s Health and Human Services Agency, along with others, including Probation.
While the county has no comprehensive list of which of its vendors are nonprofits, Shasta Scout cross-referenced two lists provided in response to a public records request to determine that at least 40 nonprofit organizations are contracted with the county to receive payments, many of which provide essential services such as child mental health and domestic violence support.
Examples of organizations that the county is currently contracted with include Raising Shasta, which partners with HHSA to provide child abuse prevention programs, and Good News Rescue Mission, a faith-based organization which provides services for the unhoused community and individuals with substance use disorders.
Shasta Scout attempted to conduct administrative cost rate calculations for these and some other organizations that the county contracts with. However, the vagueness of the definitions provided in the board’s draft ordinance for the June 16 meeting made such an analysis almost impossible.
The ordinance defines the administrative cost cap requirement by saying nonprofits must have administrative costs that “do not exceed 18% of its total revenue for the most recent fiscal years.”
It does not clarify how calculations for administrative costs should be determined, or standardized, across organizations. It also states that administrative costs will be measured against the “total revenue” of the organization, whereas typical administrative expense rates are measured against total expenses instead.
The draft ordinance also does not address whether the ordinance, if passed, would impact existing contracts. And supervisors did not discuss how many of the county’s existing contracts might fall outside the cap the board plans to establish.
Why is the auditor-controller against the idea?
Nolda Short, the County’s auditor-controller, pushed back on the draft ordinance in an email to supervisors sent the day after the June 8 meeting. The elected official, who’s often referred to publicly by Crye as “his favorite,” listed several considerations of the probable consequences of implementing an 18% cap.
A primary concern Short noted was the potential conflict with federal policy.
She said the cap could create situations in which the county is “unable to honor federally approved rates, contracting practices become inconsistent across funding sources, and compliance risks arise during federal monitoring or audit reviews.”
She added to supervisors that she should have been included in the conversation earlier, before it went to the public.
“I also want to note that matters of this nature would typically be routed through my office during the development process…so that fiscal and compliance concerns can be shared with everyone early,” Short wrote.
Why the board’s focus on nonprofits?
The June 8 meeting followed broader board discussions in May about more strictly examining nonprofits before the board approved contracts with them, something brought up by Supervisor Matt Plummer in the wake of a decision related to opioid settlement fund use. Plummer has pushed for the county to review one to three years of organizations’ Form 990s before approving county funding, in order to increase accountability.
However, the board’s discussion this month outlined a different limit suggested by Supervisor Kevin Crye, bringing up a potential 10% blanket cap on nonprofit organizations’ organizational cost rates.
“We don’t have jurisdiction when we send [money] to a nonprofit and it’s gone,” Crye said about the county’s lack of oversight over funding once it’s designated, citing concerns about fraud and nonprofit organizations being “money funnels” that echo national narratives.
District 3 Supervisor Corkey Harmon agreed, saying that “we can’t not have a limit” to ensure that organizations don’t abuse administrative costs. While District 5 Supervisor Chris Kelstrom showed hesitation at outlining an arbitrary percentage, he was one of three supervisors, alongside Crye and Harmon, that supported bringing back an ordinance for the 18% cap.
Plummer, in particular, pushed back on Crye’s ideas both in the June 8 meeting and on his social media later, by citing his experience in the nonprofit world — namely as a nonprofit advisor at The Bridgespan Group.
By setting a blanket number for overhead rate, Plummer said, the county would actually be restricting organizations’ abilities to effectively provide their services, as they may lack funding to evaluate performance or scale up their capacity. Plummer also argued that there was high variability between organizations on what “administrative cost” means, saying the cap could result in organizations seeking to manipulate numbers to meet the county’s standard.
The county’s own indirect cost rate is 25%, as Plummer also pointed out.
“It would be kind of hypocritical for us to say, we can take a 25% indirect cost rate, but we’re only going to allow our nonprofits to take 13%,” Plummer said, citing one of the earlier caps considered by the board before the vote to move forward with an 18% limit.
Long agreed, saying the county should examine nonprofit contracts on a case-by-case basis.
It’s not yet clear when supervisors may consider the nonprofit ordinance again. Deputy County Executive Officer Stewart Buettell did not immediately respond to a question about when the ordinance would be brought back for discussion.
Moe Shimizu is a student at Yale University. She’s reporting for Shasta Scout as a 2026 summer intern, with support from the Nonprofit Newsroom Internship Program — created by The Scripps Howard Fund and the Institute for Nonprofit News.
Do you have a correction to share? Email us: editor@shastascout.org.
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Shasta citizens are tired of government intruding into areas they don’t belong.
County Contracting Policy and Manual:
The policy ensures the County is getting the service, a fair price, effectively meets the need and the contract would benefit the people of Shasta County.
The county requests bids for what they need to contract for. It is competitive. Non-profit entities and for-profit entities are able to submit a bid proposal. The county reviews the bid by ensuring the winner has the experience/credentials & ability to meet the need. After that the county will select the winner considering other facts; cheapest cost, expertise, local vs out of area, track record. There may be some contracts only open to a non-profit by requirement.
The county`s own indirect and direct administrative cost far exceeds what they expect non-profits to have. The county has no equal mandates or requirements towards for-profit local business contracts. The board awards contracts that meet expected results, performed by qualified/experienced people and provides the best benefit at a beneficial price. It is government overreach to mandate how any local business or non-profit budget their business.
My first thought when reading this story was, “Who’s Kevin Crye after?”. It’s always personal vindictiveness with this guy. Sometimes a cancer diagnoses makes one more introspective, sometimes not. It’s a choice.
A non-profit is just a tax-exempt organization that isn’t in business to make a profit and exists to provide some sort of benefit to society. Instead of trying to micromanage how they run the enterprises, how about evaluating them on a cost-benefit basis? We give you X number of dollars and in return you provide a measurable Y in value. If some other non-profit or for-profit can return better value for the same money, or the same value for less money, they get the contract.
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It’s absolutely stupid for the County to be putting an arbitrary cap on overhead. Studies show that this cripples non-profits, causing them to underperform because they can’t hire and retain qualified staff, can’t afford to build and maintain infrastructure, can’t afford to monitor and use adaptive management to improve performance, and can’t scale the services they provide to be more efficient.
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Counting the days until we’re done with these three ignorant MAGA nippleheads.
Well how much does Jonathan Anderson, Director of the Good News Rescue Mission make? Enough to by a new Harley Davidson AND a new Houseboat?
Isn’t this really about Crye doubling down after accusing one non-profit administrator getting raises over a period of years Crye falsely claimed was embezzlement?
The county of Shasta should have a review of not only the annual Federal 990 forms but also quarterly or semi-annually reviews of the efficacy of all the non-profit contracts as well as for all for-profit businesses holding county contracts. Those reviews should be done by the sheriff in a partnership with the county auditor. Yes, there would be costs in workhours for both the sheriff and the auditor, but those costs are true investments in saving taxpayer monies, It is difficult for me to fault anyone who says ninety percent of non-profit entities are all about profit: The profit is the handsome salaries and ancillary benefits paid out to the creator of the non-profit and a select member of his or her handpicked directors on the board of the non-profit. Additionally, these quarterly of semi-annually reviews would determine if the work of each of both non-profit and for-profit entity is working. When one considers the problems that plague the people of the County of Shasta–primarily within the City of Redding–something or somethings are without expectable efficacy.
As someone with firsthand knowledge of being a target of Kevin Crye, his justification for his attempts to place this cap, are not true. He really has a personal vendetta against several knowledgeable, strong women who serve on boards of non-profits, run non-profits or work or previously worked for non-profits. It is all an attempt to punish this group of women for serving the public with needed services and his own inability to comprehend the truths behind how the funding works or worked in specific programs. He would prefer to diminish needed services, rather than let go of his own personal distaste for women who do not have interest in following his commands, or aligning with his need for the ultimate say and control of areas he has no expertise. This approach is distasteful and unfair to those seeking much needed services in Shasta County!
Hmmmm, me wonders if the 3 proponents of this proposed ordinance have a specific non-profit in mind ? No to mention, this is a lawsuit in-waiting.
What is the overhead associated with the county administering the fund and managing these contracts? I’d be all for this if the rule was that the COMBINED costs of administrative overhead (county and NP) could not exceed 18%.
I’m all for fiscal accountability, but a one size fits all percentage cap based on 1ast year’s revenue is incredibly myopic.
Revenue can be highly volatile, especially for smaller non-profits. If you get a gift from a billionaire’s ex-wife that covers your operating expenses for the next 5 years, you’ll have very low administrative costs relative to revenue in your first year and very high administrative costs relative to revenue in years 2-5 despite doing the exact same work year after year.
Smaller non-profits also tend to have fewer employees who have to fill multiple roles. You might be serving soup in the morning (program expense) and doing paperwork in the afternoon (administrative expense).
And different fields require more administrative costs than others.
2024 administrative expenses compared to revenue for the 10 largest US non-profits:
Feeding America: 2%
Catholic Charities USA: 33%
Salvation Army: 13%
United Way: 33%
American Red Cross: 8%
Task Force for Global Health: 13%
St Jude Children’s Research Hospital: 21%
Direct Relief: 0.5%
Goodwill: 10%
Habitat for Humanity: 26%
Before you think Direct Relief is super efficient a closer inspection shows that 99.8% of its reported “revenue” was in the form of donated pharmaceuticals which they gave away. These might be drugs you can buy at walmart for $10 cash that have a $1,000 list price no one actually pays. But the pharmaceutical companies can claim the drugs are worth that for the purposes of lowering their taxes…
Yes.. I’ve been a Board Member of a number non-profits over the years. It’s always a struggle to figure out how to handle fundraising AND stay on mission. The core of the struggle is that fundraising is far easier than actually making a dent in the problem the non-profit is focused on. In reality, many of the on-profits government fund set their first priority on raising funds, managing programs per requirements and paying staff (period). Accomplishing the change they tout to be working toward is the last thing they want as it would put them out of business. Yes, funding is hard, but fundraising is not an issue if you’re actually generating real results.
Should listen to Nolda. She is an extremely knowledgeable, non political and competent Auditor. There are several requirements placed on contacts utilizing federal funding. This includes all emergency disaster relief funding provided by FEMA. Such restrictions placed on contractor/consultant eligibility could disqualify such contracts from federal reimbursement.
Nice bit of reporting! Thanks
However, the board’s discussion this month outlined a different limit suggested by Supervisor Kevin Crye, bringing up a potential 10% blanket cap on nonprofit organizations’ organizational cost rates. —
It was my understanding that the cap was for compensation, wages, only. Not organizational costs
Nick: Here’s the draft ordinance so we don’t have to rely on anyone’s understanding. https://www.documentcloud.org/documents/28304385-draft-ordinance/
In my experience, County contracts detail out overhead allowances within relevant contracts. It really shouldn’t matter what the non-profits overall overhead costs are as an organization as much as it should matter that the contracted funding the County enters into with said non-profit details the overhead allowance, and that the contract is followed accordingly.
I have to wonder why this is only a concern for County contracts with non-profits.
I agree that the Board of Supervisors should not be making blanket policies regarding monies without involving the Auditor; this is directly related to her expertise and purview.
And, finally, it is extraordinarily hypocritical of the BoS to try to mandate an overhead percentage restriction, on only non-profits, that is less than that of the County itself – especially when those non-profits provide services the County is unable to provide to our community.
This feels like a “do as I say and not as I do” mentality, and that is NOT how leadership should work.
Leadership is the art of influencing, inspiring, and empowering others to work collaboratively toward a shared vision. It is not defined by a title, but rather by the ability to bring out the best in people and facilitate collective success that couldn’t be achieved alone.
At this point, anything advocated by Crye should be dismissed out of hand. The rest of this year will be one long tantrum trying to punish us for not recognizing his greatness.
Selah
The Board does not understand the topic they are trying to control. They are saying they want to punish a nonprofit who spends more than 18% on administrative costs.
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While the County is allowed 25%. That is NOT accurate. The County can claim up to 25% in administrative costs when invoicing the government to get funding payments. This is not a CAP on how much we can actually spend. Just how much we can recuperate/get paid for.
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What is REALLY hypocritical and frightening is the astronomical administrative costs HHSA programs have to pay. Higher than 40% in some cases. No way? Yes way.
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The budget of a little program trying to do outreach might typically include wages and maybe travel and supplies. Logical. Then they get hit with fees that feel like a tax bill. They pay a portion of Personnel’s costs, IT, Payroll, Facilities, Privacy & Security, etc. They pay a portion of the County’s insurance premiums a portion of the HHSA vehicle fleet costs. This is not even close to a complete list.
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On top of that they share the cost of the entire HHSA Administration and Agency costs (salaries, rent, and all of the above fees).
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But wait! There’s more! They pay a support cost for every single tech gadget (phone, monitor, you name it) and they pay every time they call Facilities out to hang a photo or fix a toilet. And they pay a share of workers’ compensation processing and claims, electricity bills, rent, security guards and more. None of that goes directly for the benefit of the citizen (so they are called “indirect” costs).
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A government agency telling a non-profit they have to keep their overhead low? I don’t know it that makes me laugh harder or cry harder.
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How about do something ridiculously simple? Instead of adding a limit on admin costs (which would require even MORE government overhead to audit and manage) how about just cap the amount a non-profit can pay its staff (salary and benefits combined)? How about just start there?
Btw, thank you Moe for the informative article. Appreciate you! 😊
Nolda Short is right, for so many reasons. Thank God we have at least one fiscally concerned individual in or county who is willing to push back, and stand up for the right thing.
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With that said, let me tell you why “I” think that 18% overhead rate is incredibly stupid:
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The best example is rent and utilities. These are indirect costs not directly related to a nonprofit’s mission to provide services.
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Not directly related, but essential nonetheless.
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Let’s say the county was going to give a nonprofit $100K. At an 18% cap that would mean they could spend no more than $18K on rent and utilities on a year.
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How much do you think rent per month would be for a non-profit? $1,000 a month would be a steal and unrealistic. And that already comes to $12,000 a year, giving them $6,000 left to spend on administrative costs.
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How much do you think utilities in Redding, California cost per month in summertime? Especially for bigger sized buildings that most nonprofits need?
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This is easily exceeding the 18% cap, and doesn’t include any other administrative costs such as accounting costs, legal fees, or other admin salaries that are necessary for the nonprofit to exist.
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I could easily add a lot more indirect costs that are necessary for a nonprofit to function. The point is that people that say an arbitrary number, such as 18% cap, have no clue what they are talking about.
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I am readily open to debate on this.
Pretty obvious that this is being orchestrated by Kevin Crye’s feelings. He is a very vindictive man. We all know who he is trying to hamper. And it’s amazing that the board majority are so in favor of micromanaging non profits. That’s not very small government of them.