Upcoming!
The Non-Profit Fairness Act
A group of amazing non-profit leaders has been working diligently to pass the Nonprofit Fairness Act, which aims to clarify DC nonprofit’s abilities to include a consistent indirect cost rate for all DC grant awards and contracts. Additional detail on this legislation can be found below.
Council has set an official hearing date on this legislation for January 28th at 10am. To sign up to testify, view the hearing notice found HERE
Want more info? Reach out to Lori Kaplan: Lori@layc-dc.org
The Nonprofit Fairness Act In A Nutshell:
What is the Nonprofit Fairness Act?
Bill 23-107, the Non-Profit Reimbursement Fairness Act of 2019, was co-introduced on January 30, 2019, by nine of thirteen DC Council members. The bill requires District government to provide for reimbursement of non-profit contractors’ and grantees’ indirect costs at the same rate the organization negotiated for a current federal contract or grant. The bill would also provide for reimbursement for non-profits without a federally negotiated rate by either allowing for at least 10% of an organization’s modified total direct costs (as determined by federal Office of Management and Budget [OMB] Uniform Guidance), or to negotiate for a rate that is consistent with rates negotiated by other non-profits of a similar size, mission, and cost structure.
What are Indirect Costs?
Indirect costs are costs associated with being in business (typically administration and overhead costs) that pertain to the operation of the business as a whole and cannot practically be assigned directly to the production or sale of a particular product, or provision of a specific service. OMB’s Uniform Guidance makes clear that a nonprofit’s indirect costs are legitimate expenses to reimburse for the organization to be sustainable and effective. An Indirect Cost Rate is the percentage of your overall total budget that are indirect costs.
Why should the passage of the Nonprofit Fairness Act matter to me?
Typically, non-profits are not paid any or all of their indirect costs for work they perform on behalf of the DC government. This underfunding subsidizes government while creating gaps in non-profit budgets that must be filled through fundraising or grants (which may themselves have restrictions on how funds are used). An Urban Institute survey revealed that 76% of non-profits are unable to recover an indirect rate of more than 10%, while 24% of non-profits reported receiving no reimbursement for their indirect costs. However, studies of for-profit and non-profit indirect costs found both entities have indirect costs of 20%-40%, although New York City’s Comptroller heard from advocates that a 15% rate could be appropriate.
What can I do to help?
Sign up to testify today! DC Council needs to hear and understand the challenges non-profits face in providing government services without receiving sufficient reimbursement.
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