SB 1045 has passed the State Senate 47-0 and is now pending in the House of Delegates Health and Government Operations Committee. This is a significant improvement in state procurement rules that will help many smaller nonprofit service providers. PLEASE help make this happen, by contacting members of this committee as soon as possible – by phone, letter or email – to ask them to support this bill (contact information below) and share this message with others in your networks. The bill may be heard and acted on within the next week (or two at the most)!
Senate Bill 1045 is a modest proposal to help the sustainability of our smaller nonprofit service organizations and to streamline and simplify the treatment of indirect costs across state agencies and intermediaries, similar to the OMB Uniform Guidance at the federal level. It would assure that nonprofits receive at least a 10% indirect cost allowance under all state-funded grants and contracts. Under SB 1045 state agencies or intermediaries would be using the same definitions and guidelines that they have been required to use for at least three years for most federal funds they handle.
Testimony in the Senate hearing showed:
- Many state service contract or grants allow the recovery of little or none of the nonprofit providers’ actual indirect costs of administering the grants or contracts.
- Studies by both GAO (2010) regarding federal grants and the Urban Institute (2012) regarding government grants and contracts found that many grants and contracts do not allow adequate reimbursement of indirect costs - in many cases none at all.
- Underfunding the cost of performing these contracts often leads to less effective programming, financial stress or instability for the providers, service reductions, and discourages well-managed providers from participating when programs force them to operate at a loss.
The Controller of OMB at the time the Uniform Guidance was issued listed as one of its ‘key policy reforms’ that it would "Allow nonprofits and other organizations that have never been reimbursed for indirect costs to use a standard minimum rate that supports the fundamental operations of the organization; removing a key barrier to entry and opening up competition for Federal awards."
Maryland Nonprofit’s position on SB1045 is attached here. Please contact Henry Bogdan, Public Policy Director, at hbogdan@mdnonprofit.org or 443-438-2318 for more information. Thank you for helping!
House of Delegates – Health and Government Operations Committee
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