Dear Governor Inslee & Washington State Legislators,
Nonprofits and government are interdependent partners. State and local
governments in Washington depend on nonprofits to implement much of their work,
such as providing physical and behavioral healthcare, building and managing
affordable housing, providing childcare, foster care, and educational supports
for children and youth, and contributing to our communities and local economies
through job training, economic development, and arts and cultural programs. Unfortunately,
this complex web of critical services that helps meet government objectives is
at risk because of the way funding contracts are constructed.
The Washington State Nonprofit Government
Contract Coalition was convened by the Nonprofit Association of Washington to
advocate for changes to government contracting because current contracting
requirements are neither equitable nor sustainable. Without the changes
outlined here, many
nonprofits will be unable to maintain the quality or quantity of services they
offer or will close their doors.
Nonprofits have been shortchanged. For decades, government and nonprofits have set and accepted contract levels that are too low to cover the full cost
of providing services. Nonprofits from many different sectors (youth
development, housing, disability services, and more) report that their
government contracts cover, on average, 70% of the true costs of service
delivery. They are forced to raise additional funds from other sources to
subsidize their work on behalf of government. This is less and less tenable and results in nonprofit wages at unlivable levels and failure to recognize the expertise of professional staff. Recruitment challenges and high turnover are inevitable. Chronic underfunding also undermines organizational stability by curtailing investment in infrastructure and management. With philanthropic
donations and volunteering dropping in recent years and inflation and labor
market pressures raising costs, nonprofits can no longer make up the
difference, nor should they be asked to. Government must pay the actual cost
of providing services.
Government must stop micromanaging nonprofits’ work. Nonprofit leaders are the experts on managing their organizations and providing quality, culturally-responsive services for
their local communities. Yet, many contracts prescribe exactly how funding must
be spent and do not include adequate indirect costs to pay for necessary
administrative functions like financial management, office rent, data
collection, and organizational leadership. As with general procurement contracts with
for-profit businesses, the focus should be on an organization’s qualifications
and overall cost to complete high-quality work.
Streamlining the nonprofit government
contracting process and removing barriers to access is essential for equity. BIPOC-led and rural nonprofits have been systematically
disadvantaged and excluded from government funding. They do not have equal
access to government contracts and experience more financial challenges in the
contracting process. Yet these organizations have crucial community knowledge
and are trusted by the people they serve, making them essential partners in reaching our most vulnerable communities.
We call on Washington
Pay the True Cost of
- Right-size contracts or increase funding
levels to cover the total cost of services, including administration and
competitive staff wages.
- Establish a realistic de minimus indirect cost rate and honor
federally negotiated indirect rates.
- Increase rates and contract levels annually to
account for inflation.
- Close the nonprofit wage gap.
Streamline and simplify application and reporting processes
- Remove unnecessary requirements and
restrictions on how funding must be allocated.
- Establish multi-year contracts and prompt renewal processes.
- Coordinate and standardize proposal requirements among agencies
and across departments.
- Replace duplicative audits with one audit process.
- Move toward a shared document vault and single online platform for proposal submissions.
Remove Barriers to Equitable Access
- Remove matching fund requirements.
- Guarantee on-time payments.
- Mitigate the impact of reimbursement-based contracts through
- Adjust insurance requirements to match the scope and type of
- Provide technical assistance and capacity
building for proposal writing and contract management.
These changes are urgently needed to ensure the survival and health of nonprofits facing increased pressures, increased need,
and reduced financial support. We have already seen
the closure of human service and behavioral health programs for youth and
adults and an RFP for management of supported housing receiving no bids as
nonprofits cannot expand the subsidies they have always provided to
government. Our state needs a robust nonprofit sector providing services to
Washingtonians and prepared to respond during emergencies. These changes will
move us closer to this goal.
We, the undersigned organizations, are committed to creating a
more effective relationship between government and nonprofits for the benefit
of the people of Washington. Increasing sustainability and equity in government
contracting is possible with nonprofits and government representatives
collaboratively crafting new policies. Together, we can create the conditions
for Washington State to thrive.
Nonprofit Government Contracting Coalition