New York CIty Council Member Ben Kallos

Letter Demanding Restoration of Funding for Indirect Costs to Non-Profits

Letter Demanding Restoration of Funding for Indirect Costs to Non-Profits

Dear Mayor de Blasio;

We the undersigned are deeply concerned about the retroactive cuts to the Indirect Cost Rate Initiative (ICR) for human services contracts which represent a reversal of the commitment to fully fund the agreed-upon indirect rate. This is not only a devastating blow to FY20 budgets for providers, but the lack of commitment for FY21 funding before the November plan puts providers in an even more precarious position.

At the end of the previous budget cycle, one of the major accomplishments the Administration and the City Council both worked on and lauded was the funding for the ICR initiative, which represented a significant first step towards rightsizing the human services sector which has been woefully underfunded for decades.  Both put significant effort into this Initiative and noted it made New York City “the first major city in the United States to commit to strengthening the health and human service infrastructure through increased indirect funding.”

As part of this Initiative, human services providers were asked to secure either a federal ICR or a certified rate from an accountant, and many of them spent significant amounts of time and money doing so.  Providers accounted for their true cost rate in their FY20 budgets, many of which are already being closed out.

For the City to announce six weeks after the end of FY20 that they are planning to retroactively cut funding by 40% for many providers represents not just a walk back of this important commitment, but a devastating blow to providers who had counted on this funding in their FY20 budgets and were waiting for it to be paid out.

In addition to this retroactive cut, providers are now being asked to wait until the November plan, at least 5 months into the Fiscal Year, to learn if their ICRs will be funded in FY21. These budgets have already been built and approved by Boards of Directors with the commitment to fully fund ICRs taken into account, and providers will now have to wait five months to find out if there will be yet another retroactive cut.

Our community based organizations are on the front lines of this public health and economic crisis and have already suffered severe programmatic and staffing cuts through the budget. Cuts to indirect will cost organizations hundreds of thousands of dollars that they do not have to spare, and many will not be able to fill the gap.  The City cannot continue to balance its budget at the expense of our human services providers, and it particularly cannot do so retroactively.

We urge the Administration to honor our shared commitment to the sector and ensure that human services agencies have the necessary resources to serve New Yorkers.


Ben Kallos
Chair, Committee on Contracts
Council Member District 5    
Helen Rosenthal
Council Member District 7    
Carlos Menchaca
Council Member District 38    
Adrienne Adams
Council Member District 28
Margaret Chin
Council Member District 1   

Mark Levine
Council Member District 7   

Justin Brannan
Council Member District 43   

Donovan Richards
Council Member District 31

Chaim Deutsch
Council Member District 48   

Antonio Reynoso
Council Member District 34   

Karen Koslowitz
Council Member District 29   

Debi rose
Council Member District 49
Peter Koo
Council Member District 20   

Barry Grodenchik
Council Member District 23   

Andrew Cohen
Council Member District 11   

Paul Vallone
Council Member District 19

Mark Treyger
Council Member District 47   

Stephen Levin
Council Member District 33   

Farah Louis
Council Member District 45   

Robert Cornegy
Council Member District 36

Diana Ayala
Council Member District 8   

Carlina Rivera
Council Member District 2   

Rory Lancman
Council Member District 24


Get involved to make your voice heard.

Get monthly updates with the information you need to make a difference.