New York CIty Council Member Ben Kallos

On the Eve of Thanksgiving Non-Profits Testify on the Urgent Need to Restore Funding Cuts

On the Eve of Thanksgiving Non-Profits Testify on the Urgent Need to Restore Funding Cuts

Mayor de Blasio Cut Funding Retroactively from Non-Profit on the Front Lines of Coronavirus as They Struggle to Serve the Poor and Hungry on Thanksgiving

New York, NY – On the day before Thanksgiving, non-profits on the frontlines of this pandemic who are struggling to feed the hungry shared the devastating impact of Mayor Bill de Blasio’s retroactive and prospective cuts of tens of millions of dollars. The hearing on cuts to non-profits was held in the New York City Council Committee on Contracts Chaired by Council Member Ben Kallos and joined by dozens of providers and residents who are struggling through the holiday season.

After promising to fully fund indirect costs with $54 million in November of 2019, Mayor Bill de Blasio announced in July of 2020, that he would be cutting the city’s reimbursement for these costs both retroactively and moving forward. Prior to this, Mayor de Blasio’s Executive Plan in April cut indirect funding by nearly 40% to $34 million under the guise of a “right-sizing,” assurances for providers that reimbursements from that fiscal year would be completed. Human service providers are now in trouble having already spent funds relying on this reimbursement which was reduced to 10% of contract value or 60% of actual costs and must now continue through this pandemic without the city paying for indirect costs as promised.

“It’s time for Mayor de Blasio to grow a heart and come to his senses, if Scrooge could come around, so can he, and I am not above showing up at Gracie Mansion dressed as a Jacob Marley, to convince him to do the right thing,” said Contract Committee Chair Ben Kallos referencing A Christmas Carol. “Mayor de Blasio said he would support our non-profits working on the frontlines to help those in need then cut their funding for the previous year and the next, and it is time to pay up. This Thanksgiving I would be thankful if Mayor de Blasio fully funded non-profits feeding our hungry.”

Contracts Committee Chair Kallos along with 20 Council Members demanded a restoration of these funds by letter in August. In September, Contracts Chair Kallos joined Human Services Council, Borough President Gale Brewer, Council Members, and providers to lead a rally demanding a restoration of these funds.

Underfunding was an issue prior to the pandemic: more than half of NYC human services nonprofits cannot keep even two months of cash on hand, due to underfunded government contracts, a problem that dates back years. This funding crisis was the main driver behind last year's groundbreaking commitment to strengthening health and human services infrastructure through increased indirect funding. These retroactive cuts undermine the City’s progress and put providers at significant financial risk when the need for their services is skyrocketing.

"New York City's human service providers are already struggling to keep their doors open even as the city asks these organizations to expand their services to meet the increased needs exacerbated by COVID-19," said Manhattan Borough President Gale A. Brewer. "As COVID-19 cases surge, the Mayor cannot continue to expect organizations to serve more New Yorkers while rescinding his commitment to fully fund the associated indirect cost expenses."

“Retroactively cutting promised funds to nonprofits just as we leaned harder on them to help New Yorkers meet urgent needs was both cruel and harmful for our city’s wellbeing. Too many New Yorkers are hungry and in need this year as we grapple with the unprecedented challenges of the pandemic, and our human service providers are stretching themselves thin to keep up. We owe them not only thanks this year, but a restoration of the funds that they need and are due to continue their essential work,” said Council Member Brad Lander.

Council Member Helen Rosenthal said, “The Indirect Cost Rate Funding Initiative must be honored and fully restored. Cutting funding to our social safety net in the middle of a pandemic and economic crisis is absolutely unthinkable. Human services organizations provide essential services to the most vulnerable New Yorkers. Many of these organizations were already strained financially, and now they face retroactive funding cuts as need for services only grows. The Mayor's actions are a short-sighted response to our budget crisis.”

 

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