December 10, 2019
The initiative increases financial stability among Human Services providers; New York City becomes the first major city in the country to provide full indirect funding
NEW YORK—Mayor Bill de Blasio and Speaker Corey Johnson today announced that the City has launched the Indirect Cost Rate (ICR) Funding Initiative, a groundbreaking process that will increase financial stability for human services providers, predominately nonprofit organizations. By filling out the Indirect Entryway Choice Form, providers can now take the first step towards receiving additional funding for their organizational indirect costs.
With this effort, New York City will become the first major city in the United States to commit to strengthening the health and human service infrastructure through increased indirect funding.
“Nonprofits play a critical role in uplifting our most vulnerable New Yorkers. We are excited to partner with Speaker Johnson and City Council to provide the necessary resources to ensure that health organizations can continue to deliver services for New Yorkers for generations to come,” said Mayor Bill de Blasio.
“We need to do more to help nonprofits that are providing a broad array of essential services to New Yorkers and this initiative will do just that. Community-based organizations are our partners in government but for too long, they didn’t always get the complete funding they needed for indirect services like administrative expenses and overhead costs, such as rent. In this year’s budget, the Council and the Administration created the Indirect Cost Rate (ICR) Funding Initiative, which requires the City to cover the full indirect cost of programs delivered by our CBO partners. We are so proud we reached an agreement with the providers to make sure they get their fair share. With the launch of ICR, the City is keeping its commitment to help nonprofits and allow them to continue the good work they do every day,” said Speaker Corey Johnson.
“Our nonprofit partners provide essential health and human services to millions of New Yorkers including our most vulnerable communities, and this initiative reinforces our commitment to the stability of these vital organizations,” said Deputy Mayor for Health and Human Services Dr. Raúl Perea-Henze. “I want to thank Mayor de Blasio for his leadership and Speaker Johnson and the City Council for a collaboration that has resulted in a clear process to ensure resources are available to support the financial health of our non-profit partners. This outcome shows what the Nonprofit Resiliency Committee is achieving for our communities with its focus on partnership and teamwork.”
“In the pursuit of the Mayor’s fairness agenda, the indirect initiative is a hallmark achievement. It allows us to honor important commitments to our nonprofit human service partners and the New Yorkers they serve. The Mayor’s Office of Contract Services is proud to be part of the implementation team,” said Dan Symon, New York City Chief Procurement Officer and Director of the Mayor’s Office of Contract Services.
The ICR Funding Initiative grew out of a partnership between the Mayor, City Council and sector leaders. It comes at a time when human service organizations are being called upon to reach more deeply into communities to help New Yorkers in need.
This announcement builds on recent steps the City has taken to ensure resiliency in the human services sector. Following a $106 million annual investment in Fiscal Year 2018, the City adopted the Health and Human Services Cost Policies and Procedures Manual in March 2019 to standardize cost definitions, indirect cost rate calculations and indirect cost rate claiming policies for health and human service contracts across all City agencies, nearly $7 billion annually.
In June 2019 the Mayor and City Council committed to funding an adjustment to the ICR in the FY2020 Budget. This commitment was honored in the recent November Plan Update with a $54 million annual investment.
KEY FEATURES OF THE ICR FUNDING INITIATIVE:
Citywide Applicability: The funding initiative applies to health and human contracts across all City agencies, including the Department of Education, with limited exceptions.
Rate Options for Organizations of All Sizes: To accommodate providers of all sizes and levels of sophistication, there are four options for organization to establish their indirect cost rate.
Uniform and Streamlined Processes: All indirect cost rate claims and funding requests are centralized and submitted to and approved by the City’s Implementation Team (CIT). The initiative leverages existing City technology, including the HHS Accelerator and PASSPort (Procurement and Sourcing Solutions Portal) to upload, store and notify providers, City agencies and the CIT of actions taken, information needed and rate acceptance.
Generous Timeframes: Providers have over 12 months to establish and claim an indirect cost rate and make a funding request.
Retroactivity: Providers submitting claims by June 30, 2020 will receive funding retroactive to the beginning of Fiscal Year 2020. Claims received between July 1 and December 31, 2020 will be retroactive to the beginning of Fiscal Year 2021.
Deep Provider and Agency Engagement: The ICR is a result of an unprecedented level of communication between Coalitions, Providers, and City Agencies. In response to surveys and workgroups, the City convened Technical Assistance meetings, and developed an Indirect Implementation Webpage which offers training resources, a revised Cost Manual, FAQ, videos, and webinars.
The City’s investments to date in the nonprofit sector have totaled over $700 million annually and have supported wage increases for employees, including a minimum wage of $15 per hour and a 9 percent increase in wages, and parity for early childcare workers, funding for indirect rates, rate enhancements for several critical programs such as homeless shelters, Beacon youth centers, and case management for senior centers.
These actions build on the Administration’s launch of the Non-Profit Resiliency Committee (NRC) in September 2016, which represented a substantial change in the City’s approach to working with nonprofit service providers, resulting in a fuller and more collaborative partnership.
"As Contracts chair, nonprofits have told me over and over that all they want is the stability that comes with on-time, standardized payments. Ensuring nonprofits get paid a fair rate that actually covers the all-in cost of the services they provide for the City will allow them to help more New Yorkers in need," said Council Member Ben Kallos. “Thank you to the Mayor and to Speaker Johnson for focusing on this initiative and implementing it."
“Talk of changes to “indirect cost rates” might not sound revolutionary to an ordinary bystander, but this is indeed a bright new day in New York City,” said Jennifer Jones Austin, CEO and Executive Director of FPWA. “Human service nonprofits stand with our neighbors in need, every day, at the crossroads of hope and despair, opportunity and desolation, dignity and injustice. It is their work that carries, for all of us, our humanity as New Yorkers. Yet until now they have never been provided the real resources required to sustain their operations. Today, thanks to the leadership of the Mayor, the Speaker and the City Council, we are finally on the path to resourcing these nonprofits in a way that is commensurate to their contribution to our city. The result will be a more stable, capable, and enduring human services sector.”
“It has been a great experience working alongside the City Implementation Team as part of the Provider Workgroup tasked with advising the City on the rollout of the Indirect Cost Rate Funding Initiative. Nonprofits have long suffered from chronically underfunded contracts and untangling how we allocate costs and what it would take to fully fund the work that our membership does to sustain their organizations a complex process. The team has been very responsive of provider needs to help identify challenges, provide flexibility, training and technical assistance to make sure nonprofits are able to take full advantage of this investment. We are excited that the process is now underway and look forward to continued success with the implementation process. Thank you to our partners at the MOCS and OMB for facilitating this important work,” said Catherine Trapani, Executive Director Homeless Services United.
“Settlement houses and human services organizations are critical neighborhood institutions that support New Yorkers of all ages. For years, city contracts have not provided enough funds to support basic operations. Thanks to the de Blasio Administration, with strong support from the New York City Council, human services organizations will benefit from a significant increase in indirect cost funding. This investment will help sustain the sector and strengthen New York City’s safety net,” said Susan Stamler, Executive Director, United Neighborhood Houses.
“We are excited the City has reached this important milestone,” said Phoebe C. Boyer, president and CEO of Children’s Aid. “The City’s decision to cover indirect costs to support community-based organizations is a meaningful advancement to keeping nonprofit agencies healthy and strongly positioned to provide essential human sector services. This is an important acknowledgement of the true costs of our work. We are so grateful to all those who made this possible,” said Phoebe C. Boyer, President and CEO of Children’s Aid.
“As a member of the Nonprofit Resiliency Committee, I am elated to see the City Council and De Blasio Administration committing to deliver human services providers with their true indirect cost rates. The ability to claim our true indirect costs on contracts will make a remarkable difference in funding streams for many organizations throughout the City like Urban Pathways that serve New Yorkers in need each day. We look forward to continuing to work with the City as this process rolls out and encourage our fellow providers to take advantage of this opportunity to update their indirect rates,” said Frederick Shack, Chief Executive Officer, Urban Pathways.
“Thank you to Mayor de Blasio, Speaker Johnson and the entire City Council for making possible what is a truly historic initiative: reimbursing not-for-profit human service providers like Good Shepherd Services for the actual indirect costs of the services the City contracts with us to provide. Good Shepherd Services works with children, youth and families in some of New York City’s most under-resourced communities. When real costs are supported, services can be provided more efficiently and effectively. It’s a win-win for both the City and the New Yorkers we serve,” said Michelle Yanche Executive Director Good Shepherd Services.
“Developing and implementing the Indirect Cost Rate Funding Initiative was a collaborative, inclusive process, taking into account the voices of numerous stakeholders from across government and the human services sector. It was an honor to represent the small- to medium-sized organizations in this endeavor who are often most at risk and whose services are most closely connected to the participants on the ground,” said Christopher Hanway, Executive Director Jacob A. Riis Neighborhood Settlement.