Borough presidents want indirect funding for nonprofits restored

All five of New York City’s borough presidents sent a letter to the mayor calling on him to restore funding to an initiative created to help cover overhead costs for human services organizations. 

The City Council and Mayor Bill de Blasio cut $20 million per year from the Indirect Cost Rate initiative across various city agencies during this summer’s budget negotiations. Because of the reduced funding available, the city will now only fulfill 60% of a nonprofit’s funding request if they are seeking an indirect cost rate exceeding 10% of a city contract for fiscal year 2020. Organizations that have requested 10% will still see the full funding, however. 

“For many organizations these shortfalls translate into a current financial liability exceeding hundreds of thousands of dollars,” the letter reads, while acknowledging the city is in a difficult financial situation. It continued, “That agreement and its full cost were mutually established in good faith, and the City should honor its part of that agreement in full.”

Initial uncertainty surrounding the state of the initiative left many city nonprofits frustrated in the aftermath of the budget’s approval. The initiative was proposed as a strategy to relieve a major complaint for organizations that contract with the city, who said the government funding insufficiently covered indirect costs often understood as overhead such as rent, human resources and IT.