City nonprofit partnerships totaling hundreds of millions of dollars mostly follow best practices, according to a new internal audit review of Austin's wide-reaching nonprofit contracting.

What's happening

A range of programs for culture and tourism, public health, economic development, homelessness response, and utility management take place through city-funded nonprofits every year.

Austin sent nearly $2 billion to nonprofits between fall 2019 and mid-June 2025, the period covered by the recent audit project. At the request of some City Council members, city auditors looked into the scale of that spending, whether it's happening in line with city procedure, and how results are being tracked. An initial report was released this summer and pointed to a generally effective system.

"Most city contracts we reviewed followed best practices by having quality performance measures that city staff monitor to ensure they are met," auditors wrote.


Still, the audit team found some issues and reported the city's nonprofit funding data "appears to be incomplete." More in-depth analysis of Austin's nonprofit relationships is expected in the future.

Council member Ryan Alter, one of two officials who'd asked for the spending review, said the information could help with future budgeting decisions as millions of dollars for public services typically offered through nonprofits are drying up.

"The federal government’s slashing of the social safety net has left the city in a precarious situation. We know we cannot fund all these programs, but we also cannot abandon our residents," Alter said in a statement. "The auditor’s report lays the groundwork for this conversation so we can better understand what programs are at risk and who they directly impact. Tough choices lie ahead, but we will always lean into helping our most vulnerable residents."

By the numbers


Hundreds of organizations received a total of $1.87 billion in city funds since fiscal year 2019-20. Of those, just three made up most—$1.13 billion—of Austin's nonprofit spending in that time:Beyond those three largest recipients, all other city-funded nonprofits received $737.99 million with more than half—$408.08 million—going to 10 entities. The remaining $330 million was sent to scores of different organizations through the 2020s.
In addition to contracting, Austin also supports 22 nonprofits with free or low-cost leases on publicly owned property. Ten organizations don't pay any rent, including the Long Center, Zach Theater, Austin Pets Alive and a domestic violence and sexual assault center. A dozen others pay anywhere from $1 to $12,000 per year for their spaces.

Zooming in

Most of Austin's recent nonprofit funding went toward five main purposes, led by the ATP's work with Project Connect, which represented the largest service category backed with city funds. Beyond that, human services from family support to homelessness prevention to workforce programs were the second-most funded. Those were followed by payroll, financial, and communications and public relations services.
For their initial report this year, city auditors reviewed a sampling of Austin's nonprofit contracts to see if they followed best practices with performance tracking. Of that small group, almost all included "specific and measurable" metrics.

Auditors noted one nonprofit in that sample had no "goals or minimum expectations" for measures outlined in its homelessness services contract, which could affect the city's ability to grade performance. The auditor's office didn't identify that nonprofit, citing an exception under state public information law.


Auditors also found the city is monitoring its contracted nonprofits based on defined metrics, with staff able to report on the performance of nearly all organizations from a 20-contract sample. No documentation could be provided about the performance of one of those contracts, which the auditor's office didn't identify.
An internal audit report found city staff effectively track the performance of most of Austin's nonprofit contracts. (Courtesy city of Austin)
An internal audit report found city staff effectively track the performance of most of Austin's nonprofit contracts. (Courtesy city of Austin)
While auditors found Austin staff members appear to be properly overseeing most contracts, they also noted they didn't evaluate whether the nonprofits' reporting to the city was accurate.

What's next

Following up on the council-requested special report, a full audit is planned to kick off later this year and could be completed by next summer, according to the auditor's office. That project's full scope and objectives are still to be determined.

Mayor Kirk Watson, who joined Alter in seeking the review, said he expects city leaders will build on the initial findings going forward.


"This is a step in a process that will allow the city to better understand how we work with our nonprofit partners to ensure we’re getting the best outcomes we can. We will continue this process so that we are looking at assurance that we have metrics and that the metrics are followed," he said in a statement.