Kimberly Perry, Executive Director, before the Committee on Public Works and Operations

February 15, 2024
Testimony
Person Testifying: Kimberly Perry
Title: Executive Director, DC Action
Testimony Heard By: Committee on Public Works and Operations
Type of Hearing: Oversight Hearing

Good afternoon Chairperson Nadeau and staff of the Committee on Public Works and Operations. My name is Kimberly Perry and I am the Executive Director of DC Action. DC Action uses research, data, coalition building, advocacy, and a racial equity lens to break down barriers that stand in the way of all kids reaching their full potential.

DC Action convenes the following coalitions: DC Out-of-School-Time, Under 3 DC, Youth Economic Justice and Housing, and the Home Visiting Council. We know that the community-based nonprofit service providers in our coalitions play critical roles in combating the effects of poverty on children, youth, and families. However, a common challenge to their success requires action on the part of the Office of Contracting and Procurement. For more than three years now, the District has failed to comply with the Nonprofit Fair Compensation Act of 2020 􀀁L23 185􀀂 which requires payment of indirect costs in addition to the direct costs associated with providing services like youth shelter housing or afterschool programming.

The lack of payment for true costs means our partners face a loss every time they accept a grant or contract from local government. When grants and procurement officers don’t follow the law by negotiating a rate, organizations are left scrambling to fill the gaps with other sources of revenue, disrupting continuity and quality of services and creating a state of constant anxiety regarding job security for staff. The years of not having true costs covered, flat funding, and increased operating costs have created an untenable situation for nonprofits. This cannot continue.

DC Action is grateful for your leadership, Chairperson Nadeau, in passing the Nonprofit Fair Compensation Act. Unfortunately, the District’s failure to implement the law demands that you intervene. We ask that you and the Council work collaboratively with the Office of Contracting and Procurement, Mayor Bowser’s administration, and the chief financial officer to urgently make the following legislative updates to ensure the full implementation of the law:

1. Clarify that indirect costs are to be paid in addition to direct costs. This clarification should prompt OCFO to produce an updated fiscal impact statement to determine the full and true cost of implementing the law. Alternatively, this clarification could trigger a new timeline for OCP to conduct the study they were funded to do three years ago in the FY2021 budget.

2. Require OCP, in partnership with the Office of the City Administrator, to develop uniform grants and contracts language that is accessible to an average reader regarding a nonprofit’s right to indirect costs. This language should be disseminated to all agencies that fund nonprofits within 30 days of the effective date of the amended law. All agencies should be required to utilize this template language.

3. Require OCP to facilitate ongoing trainings for relevant staff across the government (e.g. program officers and managers, agency procurement officials, agency financial officers, division directors whose program fund nonprofits, etc) regarding compliance requirements of the Nonprofit Fair Compensation Act.

4. Create a special fund of at least $50 million at OCP – or a standalone special purpose fund, if appropriate – in FY25 to begin phasing in funding implementation of the law, focusing on indirect costs owed to small nonprofits first.

5. Establish a long-term legislative timeline for indirect cost funding to be directly budgeted for within all agencies that grant to or contract with nonprofit organizations.

Staff at DC Action is available to assist the committee and appropriate partners in the administration with amending the Nonprofit Fair Compensation Act to ensure its swift and successful implementation. Thank you for this opportunity to share our concerns and recommendations in support of our nonprofit direct service coalition partners. I am happy to answer any questions.