NYC Council Members join nonprofits in calling for city to restore funding for overhead costs

New York City Council Members and human services organizations denounced cuts to the city’s initiative to help nonprofits cover overhead costs in a virtual rally on Tuesday pushing for the funding to be restored.

The Council and Mayor Bill de Blasio approved a budget this summer that cut $20 million from the city’s Indirect Cost Rate initiative, which was created last year to help nonprofits cover administrative or overhead costs otherwise not included in their city contracts. Organizations were promised they could get reimbursed for indirect costs exceeding 10% of a city contract retroactively, but the city released guidance last month showing that they would no longer receive the full funding.

“What for-profit business would accept payment without the ability to pay their HR department, IT department, pay for maintenance?” said Janelle Farris, executive director and president of Brooklyn Community Services. “How do you run a business with less than what you deserve?”

City Council Members Ben Kallos, Helen Rosenthal and Brad Lander – who all voted against this year’s budget – and Manhattan Borough President Gale Brewer joined calls for the city to fully fund the initiative. Lander criticized the city for pursuing cuts that have led to layoffs for local nonprofits. “And then to add insult to injury by agreeing to increase the indirect cost rate,” he said, “and then turning around and cutting it in a way that we know will make it impossible for our nonprofits to provide the essential services that we’ve asked you to provide through contracting is simply unacceptable.”