We acknowledge the budget realities for DC and understand the huge challenge the Mayor had in putting together the proposed 2026 budget. However, collectively we are concerned about how lean agency budgets will translate into fewer contracts and grants for nonprofits and therefore fewer services for DC’s most vulnerable residents. Nonprofits have long been asked to do more with less. This is unsustainable and will begin to affect DC's children, youth, and families. The District partners with nonprofit service providers to assist residents, particularly in areas such as physical and behavioral health, housing stability, food access, education, and workforce development. The stability and health of the nonprofit sector needs urgent attention.

Investments in nonprofits and services saves money for the city in several ways, for example, community health centers save millions of healthcare dollars annually; nonprofit employees contribute to the economy (as a group nonprofits are the 2nd largest private employer in the city); and nonprofits produce needed workers for struggling sectors through training programs (i.e. healthcare, construction).

As we head into another fiscal year marked by decreased public funding, at a minimum, nonprofit contracts and grants must include fair and consistent application of indirect cost rates to cover operational expenses. B26-0249 – the Nonprofit Services Preservation Amendment Act of 2025, introduced by Councilmember Nadeau, is an effort to ensure structures are in place to fortify the sustainability and resilience of DC’s nonprofit sector by ensuring:

• Fair application of indirect costs in government contracts and grants: clarifies that funding for indirect costs supplements, rather than supplants, direct funding for services, as was intended in the original law

• Increase the de minimis indirect cost rate from 10 to 15% to comply with the federal indirect cost rate to cover the business costs of providing services.

• Includes provisions to improve transparency and implementation, such as requiring clearer, standardized contract language, regulations and guidance for agencies and grantees, and agency training.

• Provides the Mayor authority to establish a relief grant program to help eligible nonprofits cover funding gaps, critical to ensuring the health and sustainability of service providers.

We urge all Councilmembers to vote yes on B26-0249 and to focus on the need for full cost payments to nonprofits for the critical services they provide. The health, well-being, and future of our children, families, and communities depend on it. B26-0249 is a necessary step to prevent the erosion of vital nonprofit services and to ensure that community-based organizations can continue serving residents with stability and dignity.

Quote from Ralph Boyd, President & CEO of SOME, Inc.
“Nonprofits like SOME do more than provide services—we are part of the infrastructure that holds D.C.’s safety net together. We’re on the front lines of the District’s most urgent challenges, but we can’t do this work without sustainable funding. If agency budgets shrink any further in the upcoming fiscal year, organizations will face tough, if not impossible choices—reducing services or laying off staff—just as need is rising. The Nonprofit Services Preservation Act is essential to protect vital services, ensure fair funding, and keep community-based providers strong. It’s not just the right thing to do—it’s a smart investment in D.C.’s economic stability and growth.”

Quote from Stephen Glaude, President and CEO of The Coalition (formerly CNHED)
"Nonprofit workers are driven by passion for their work. DC residents rely on nonprofits for job training, supportive services, housing counseling, youth development, and more. Our contracts and grants need to be sure they are compensated fairly."

Quote from Kelly Sweeney McShane, President and CEO of Community of Hope
"At a time when budgets are tightening and the need for services is increasing, it is more important than ever that nonprofits have a solid foundation for their work. Indirect costs are true expenses that are vital to providing direct services - things like IT, finance, human resources, etc. The Nonprofit Services Preservation Act is an important step to ensure that nonprofits can remain whole and meet the demands of the moment."

Quote from Gretchen Van der Veer, CEO of Fair Chance
“For almost 25 years Fair Chance has been working with DC community-based nonprofits helping them build financial systems, measure outcomes, increase fundraising from multiple sources, etc.  However, a nonprofit can do all these things and yet still be fragile because of the way funding opportunities including DC government grants and contracts often require deliverables without full compensation.  B26-0249 the Nonprofit Services Preservation Amendment of 2025 will put structures into place that hopefully prevents this in the future.”