New York, NY—The need for social services has increased exponentially during the COVID-19 pandemic but providers face the possibility of cutting back their services because the money that the city first promised late last year to pay for overhead costs is now being rescinded because the virus has pinched the city’s coffers.

The overhead costs, for items such as rent, water bills and staff wages, are known as indirect costs, which Mayor Bill de Blasio and Council Speaker Corey Johnson promised $54 million in December 2019 to fund. But then last month, because of the ongoing economic fallout due to COVID-19, the Mayor notified nonprofit leaders that funding for indirect costs would be cut by $20 million, down to $34 million.

Councilman Ben Kallos and the Human Services Council co-sponsored a virtual rally earlier today to start building momentum to reverse the cuts when modifications to the Fiscal Year 2021 budget happen in November.

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Social service providers like the Chinese-American Planning Council (CPC) and the Fortune Society were just a couple of the providers who spoke about how the cuts will only worsen the dire economic straits they have been experiencing. For example, the CPC had to lay off 150 staffers since March due to funding cuts.

Wayne Ho, the president and CEO of the CPC, the nation’s largest Asian-American social services non-profit, expressed astonishment over the 40 percent cut in funding for indirect costs from $54 million to $34 million.

“This cut means that we are losing out on $240,000 of money that was already promised to us, that we jumped through a lot of hoops with this administration so that we can draw down this funding,” said Ho.

He noted that that money could have paid for more staff such as quality assurance and IT.

He hopes that there will be a better outcome with the November budget modification.

“We encourage all the city council members to please continue standing behind us as we get into the November budget mod, please continue to push for the full funding for indirect, it’s not only what is essential to us as non-profits, it’s also essential to our workers and essential to the families that we serve,” Ho said.

In addition, JoAnne Page, President and CEO of the Fortune Society, which works with the formerly incarcerated, said that in her 31 years at the organization, she’s never seen threats to non-profits that look anything like she’s seeing now.

She noted the organization’s troubles since the pandemic caused major closures in March.

“In March, as the pandemic required that we close our offices, the Fortune Society had $13 million in unexecuted contracts. As we are now in mid-September, we have $17 million in unexecuted contracts,” began Page.

“July, August, September, that means that we haven’t gotten paid for the work that we have been doing. The bargain we’ve had as non-profits, and it’s a terrible bargain, but one we’ve learned to live with, is that we will get paid late, we will have to eat the costs of the interest for the money we paid to borrow but we would eventually get paid, and that promise is no longer reliable.”

Councilman Kallos was one of the few city councilmembers that voted against the FY 2021 budget because he opposed cuts being made across the board for social services for seniors, the homeless and youth while cuts were forestalled in other areas of the budget.

“I identified $15 billion in cuts, including our corporate contracts with folks like KMPG for getting probably more millions of dollars than for our entire non-profit sector. We should be cutting our corporate contracts before we cut our non-profit contracts,” said Kallos.

He vowed to press on to the November budget modification.

“My vow to you today is to fight, fight, fight through the November budget mod to make sure that as this Mayor proposes cuts that we actually cut from where we should and restore the funding to our non-profits that need it,” Kallos said. 

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