Nonprofit Services Preservation Amendment Act of 2025

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A BILL

26-249

IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

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To amend the Nonprofit Fair Compensation Act of 2020 to require that grants and contracts 1
between the District and nonprofit organizations compensate for indirect costs in addition 2
to direct service costs, to establish a de minimis indirect cost rate of 15% of direct costs, 3
to require the inclusion of a plain language indirect cost compensation clause in all 4
nonprofit contract and grant solicitations and awards, to require the Mayor and the Office 5
of Contracting and Procurement to issue guidance on the calculation, negotiation, award, 6
and payment process of indirect cost rates, to require annual trainings for agency staff, to 7
establish timelines for applicability based on grant and contract amounts, and to establish 8
a relief grant program for nonprofit organizations. 9
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BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this 11
act may be cited as the “Nonprofit Services Preservation Amendment Act of 2026”. 12
Sec. 2. The Nonprofit Fair Compensation Act of 2020, effective March 16, 2021 (D.C. 13
Law 23-185; D.C. Official Code § 2-222.01 et seq.), is amended as follows: 14
(a) Section 2 (D.C. Official Code § 2–222.01) is amended as follows: 15
(1) New paragraphs (1A) and (1B) are added to read as follows: 16
“(1A) "Consumer Price Index" means the average of the Consumer Price Index 17
for All Urban Consumers for the Washington-Arlington-Alexandria, DC-MD-VA-WV 18
Metropolitan Statistical Area (or such successor metropolitan statistical area that includes the 19
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District), or any successor index, as of the close of the 12-month period ending on July 31 of 20
such calendar year. 21
“(1B) “Cost estimate” means an independent government estimate solicitation or 22
similar solicitation cost estimate.”. 23
(2) Paragraph (2) is amended to read as follows: 24
“(2) “Indirect cost” means: 25
“(A) A cost incurred by a nonprofit District grantee or contractor that 26
cannot be readily attributed to a specific program, grant award, or contract; or 27
“(B) Expenses considered an indirect cost as defined in 2 C.F.R. § 200.56, 28
or any successor regulations.”. 29
(b) Section 3 (D.C. Official Code § 2–222.02) is amended as follows: 30
(1) Subsection (a) is amended as follows: 31
(A) The lead in language is amended by striking the phrase “indirect costs 32
incurred in provision of goods or performance of services” and inserting the phrase “indirect 33
costs, in addition to and on top of direct service costs, and without supplanting any portion of a 34
grant or contract awarded for the provision of goods or performance of services, provided there 35
is funding available,” in its place. 36
(B) Paragraph (1) is amended by striking the figure “10%” and inserting 37
the phrase “15%, adjusted annually to reflect adjustments to the Consumer Price Index; 38
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provided, that an annual CPI adjustment shall not be in excess of 3% more than the de minimis 39
rate of the previous year,” in its place. 40
(C) Paragraph (3) is amended by striking the phrase “2 years; however 41
nonprofit organizations may request to renegotiate indirect cost rates pursuant to subsection (c) 42
of this section;” and inserting the phrase “3 years; however nonprofit organizations may request 43
to renegotiate indirect cost rates with the District pursuant to paragraphs (1), (2), or (4) of this 44
subsection or subsection (b) of this section;” in its place. 45
(D) Paragraph (4) is amended to read as follows: 46
“(4) As calculated with a percentage rate and base amount as determined by: 47
“(A) A certified public accountant using the nonprofit organization's most 48
recently completed audited financial statements for a fiscal year that concluded not more than 3 49
years prior, pursuant to the OMB Uniform Guidance, and certified in writing by the certified 50
public accountant; or 51
“(B) If a nonprofit organization’s annual revenue totals less than $250,000 52
and certified public accountant-conducted audit documents are not available, an independent 53
bookkeeping or financial services firm using the nonprofit organization’s end-of-year income or 54
activities statements from the immediately preceding fiscal year.”. 55
(2) A new subsection (a-1) is added to read as follows: 56
“(a-1)(1)(A) A nonprofit organization’s request for payment based on an unexpired 57
NICRA or District-negotiated indirect cost rate, as determined pursuant to subsection (a)(2), (3), 58
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or (4) of this section, shall not be used as the sole or determinative factor in a decision to deny, 59
reduce, or terminate a grant or contract. 60
“(B) When making a grant or contract award decision, the District shall 61
only use a nonprofit organization’s requested or negotiated indirect cost rate as a screening 62
criteria after assessing that the organization can meet the desired quality standards. 63
“(2) The Mayor may require a nonprofit organization to provide reasonable 64
financial documentation when negotiating with a District agency pursuant to subsection (a)(2), 65
(3), or (4) of this section, such as: 66
“(A) Financial audit statements from the immediately preceding fiscal 67
year; 68
“(B) End-of-fiscal-year income or activities statements, dating back not 69
more than 3 years, showing a nonprofit organization’s total revenue and expenditures; or 70
“(C) Expense sheets detailing operating costs and salaries that meet the 71
definition of indirect costs.”. 72
(3) Subsection (c) is amended to read as follows: 73
“(c)(1) Each District contract and grant solicitation and award for services to be 74
performed by a nonprofit organization shall include an indirect cost compensation clause, in 75
plain language, that: 76
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“(A) Obligates the District to compensate for indirect costs in addition to 77
direct service costs if the applicant discloses their requested rate amount calculated pursuant to 78
subsection (a) of this section in their application; 79
“(B) Fulfills the requirement of subsection (a-1) of this section; 80
“(C) Provides an awarding agency point of contact, email, and phone 81
number for a grantee or contractor to communicate with regarding indirect cost rates, 82
negotiations, or appeals processes if an organization believes the District is in violation of this 83
act; and 84
“(D) Obligates the grantee or contractor to pay an indirect cost rate to any 85
nonprofit organization subcontractor or subgrantee at the same rate the nonprofit organization 86
would receive as a direct contractor or grantee with the District.”. 87
(4) Subsection (e) is repealed. 88
(c) New sections 3a, 3b, and 3c are added to read as follows: 89
“Sec. 3a. Implementation. 90
“(a)(1) No later than 180 business days after the effective date of this subsection, the 91
Mayor, pursuant to Title I of the District of Columbia Administrative Procedure Act, approved 92
October 21, 1968 (82 Stat. 1204; D.C. Official Code § 2-501 et seq.), shall promulgate rules for 93
District agencies to fairly and uniformly calculate, negotiate, award, and pay indirect cost rates 94
for nonprofit organizations receiving District grants. 95
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“(2) The Mayor shall make available online a plain language explanation of the 96
regulations. The Mayor shall consult non-profit stakeholders when drafting the explanation to 97
ensure clarity and readability. 98
“(b)(1) No later than 180 business days after the effective date of this subsection, the 99
Office of Contracting and Procurement ("Office") shall promulgate rules for District agencies to 100
fairly and uniformly calculate, negotiate, award, and pay indirect cost rates to nonprofit 101
organizations receiving District contracts. 102
“(2) The Office shall post a plain language explanation of the regulations on the 103
OCP website. The Office shall consult non-profit stakeholders when drafting the explanation to 104
ensure clarity and readability." 105
“(c)(1) Beginning not later than 90 business days after the promulgation of the rules 106
required by subsection (b) of this section, the Mayor shall conduct annual training sessions for all 107
District agencies on the calculation, negotiation, award, and payment of grant and contract 108
indirect cost rates for nonprofit organizations. Completion of such training on an annual basis 109
shall be mandatory for all agency employees directly involved in the solicitation or management 110
of District grants or contracts with nonprofit organizations. 111
“(2) The Mayor shall develop training sessions for subordinate agencies regarding 112
agency compliance with the requirements of this act, which shall include: 113
“(A) Explanation of costs eligible to be classified as an indirect cost; 114
“(B) Guidance on District procedures regarding fairly calculating or 115
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negotiating indirect cost rates; 116
“(C) Explanation of the District’s appeals process related to negotiating or 117
awarding an indirect cost rate; and 118
“(D) Other topics deemed appropriate to ensure accurate implementation 119
and compliance with this act. 120
“(d) No later than 120 business days after the promulgation of the rules required by 121
subsection (b) of this section, District agencies shall include plain language clauses in all grant 122
and contract solicitations and awards to nonprofit organizations explaining their right to payment 123
for indirect cost rates pursuant to section 3. 124
“Sec. 3b. Non-profit relief grantmaking. 125
“(a)(1) For the purposes of this section, the term “relief grants” shall mean a grant issued 126
by the Mayor for the purpose of strengthening nonprofit organizations’ financial viability, 127
enabling nonprofit organizations’ to meet indirect costs when providing services to District 128
residents, and encouraging private partnership in support of meeting nonprofit general operating 129
expenses. 130
“(2) The Mayor shall have the authority to issue general operating relief grants to 131
nonprofit organizations involved in the delivery of human services and other community-based 132
activities in the District. 133
“(3) Applications for such grants may be open on a rolling basis. 134
“(4) Applications shall require: 135
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“(A) A list of any contracts or grant agreements that the applicant is 136
seeking or holds with the District government; 137
“(B) Expense sheets detailing operating costs and salaries that meet the 138
definition of indirect costs; 139
“(C) Explanation of organizational general operating hardship and 140
intended uses of relief grant; 141
“(D) Financial audit statements from the immediately preceding fiscal 142
year; and 143
“(E) End-of-fiscal-year income or activities statements, dating back not 144
more than 3 years, showing a nonprofit organization’s total revenue and expenditures. 145
“(b) Grants issued pursuant to this section may be in the form of matching funds for 146
organizations that receive funds from nongovernmental sources to cover indirect costs and other 147
nonprogrammatic organizational expenses. 148
“Sec. 3c. Rules. 149
“The Mayor, pursuant to Title I of the District of Columbia Administrative Procedure 150
Act, approved October 21, 1968 (82 Stat. 1204; D.C. Official Code § 2-501 et seq.), may issue 151
rules to implement the provisions of this act.”. 152
(d) Section 4 is amended to read as follows: 153
“Sec. 4. Applicability. 154
“(a) Section 3(a), (a-1), and (c) shall apply: 155
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“(1) For grant and contract solicitations with a cost estimate at or below $500,000 156
beginning in Fiscal Year 2027; 157
“(2) For grant and contract solicitations with a cost estimate at or below $1 158
million, but greater than $500,000, beginning on the first day of the new fiscal year following the 159
applicability of paragraph (1) of this subsection; 160
“(3) For grant and contract solicitations with a cost estimate at or below $2 161
million, but greater than $1 million, beginning on the first day of the new fiscal year following 162
the applicability of paragraph (2) of this subsection; 163
“(4) For grant and contract solicitations with a cost estimate at or below $5 164
million, but greater than $2 million beginning on the first day of the new fiscal year following 165
the applicability of paragraph (3) of this subsection; 166
“(5) For grant and contract solicitations with a cost estimate at or below $10 167
million, but greater than $5 million beginning on the first day of the new fiscal year following 168
the applicability of paragraph (4) of this subsection; and 169
“(6) For grant and contract solicitations with a cost estimate above $10 million 170
beginning on the first day of the new fiscal year following the applicability of paragraph (5) of 171
this subsection. 172
“(b) The provisions of this act shall not apply to the disbursement of business 173
improvement district taxes pursuant to section 16 of the Business Improvement Districts Act of 174
1996, effective May 29, 1996 (D.C. Law 11-134; D.C. Official Code § 2-1215.15).”. 175
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Sec. 3. Applicability. 176
(a) This act shall apply upon the date of inclusion of its fiscal effect in an approved 177
budget and financial plan. 178
(b) The Chief Financial Officer shall certify the date of the inclusion of the fiscal effect in 179
an approved budget and financial plan, and provide notice to the Budget Director of the Council 180
of the certification. 181
(c)(1) The Budget Director shall cause the notice of the certification to be published in 182
the District of Columbia Register. 183
(2) The date of publication of the notice of the certification shall not affect the 184
applicability of this act. 185
Sec. 4. Fiscal impact statement. 186
The Council adopts the fiscal impact statement in the committee report as the fiscal 187
impact statement required by section 4a of the General Legislative Procedures Act of 1975, 188
approved October 16, 2006 (120 Stat. 2038; D.C. Official Code § 1-301.47a). 189
Sec. 5. Effective date. 190
This act shall take effect following approval by the Mayor (or in the event of veto by the 191
Mayor, action by the Council to override the veto) and a 30-day period of congressional review 192
as provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 193
24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(1)). 194