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Nonprofit Services Preservation Amendment Act hearing spotlights sector strain and funding gaps
Summary
At a Nov. 6 committee hearing, nonprofit leaders urged raising the District's minimum indirect cost rate from 10% to 15%, praised transparency and a proposed relief grant, and warned that current contracting practices force nonprofits to cut services; the administration urged a fiscal impact analysis before implementation.
Nonprofit leaders and service providers told the Committee on Public Works and Operations that the Nonprofit Services Preservation Amendment Act of 2025 (B26-249) is needed to shore up the city's social safety net by ensuring contracts and grants pay for nonprofits' indirect costs. Witnesses described understaffing, delayed reimbursements, and examples where agency solicitations or contracts listed lower indirect rates that forced organizations to reduce program services or absorb costs.
"Indirect costs are not profit. They reflect real expenses like finances, human resources and IT that are critical to providing direct services," Kelly Sweeney McShane, president and CEO of Community of Hope, told the committee. Multiple witnesses urged raising the de minimis rate to 15% to align with federal practice and asked for clearer, standardized grant and contract language, agency training, and a nonprofit relief grant to cover immediate gaps.
The administration's representative (who self-identified in the record as Jenny Bridal) agreed nonprofits are vital but cautioned that a 15% minimum would create a new budgetary obligation for the District. She urged a complete fiscal impact analysis and proposed a fiscal task force and phased or waiver options for small nonprofits. Chair Brianne Nadeau pressed the administration for data and timelines and set a deadline for written testimony on Nov. 20, 2025.
