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HD 2009

An Act enhancing the effectiveness of nonprofits’ core mission work through full cost funding

194th Legislature (2025-2026) Introduced by Mindy Domb and 1 co-sponsor

The bill requires indirect-cost reimbursement for state-funded nonprofit grants at NICRA rates or at least 15% of direct costs if no NICRA exists.

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Bill Summary · HD 2009

Summary: An Act enhancing the effectiveness of nonprofits’ core mission work through full cost funding (HD 2009)

Overview

This proposed Massachusetts bill aims to ensure that certain state-funded nonprofit grants and contracts reimburse the nonprofits’ indirect costs. By requiring indirect-cost reimbursement at federally aligned rates, the bill seeks to support nonprofits’ ability to carry out their core mission work more effectively.

Purpose and intent

  • To improve the financial sustainability of nonprofit organizations delivering services funded by the state or by a combination of state and non-federal funds.
  • To ensure grant and contract funding covers not only direct program costs but also indirect costs (overhead, administration, facilities, and other supports necessary to deliver services).

Key provisions

  • Insertion of new Section 6BB into Chapter 29 of the General Laws.
  • Definitions:
    • Indirect costs: costs considered indirect under 2 C.F.R. 200.414 (OMB Uniform Guidance).
    • NICRA: Negotiated Indirect Cost Rate Agreement with the federal government used to calculate indirect-cost reimbursement on federal awards.
    • Nonprofit organization: an organization tax-exempt under 501(c)(3), (4), or (6).
    • OMB Uniform Guidance: the federal requirements for administrative costs and audits on federal awards (2 C.F.R. 200).
  • Indirect-cost reimbursement requirements (for nonprofit direct recipients or subrecipients of grants/contracts funded wholly with state funds or with a mix of state and non-federal funds): 1) Reimbursement at the NICRA rate used for direct federal awards, provided the current rate is unexpired. 2) If the nonprofit has no NICRA:
    • Reimbursement at a rate of at least 15% of modified total direct costs (as defined by OMB Uniform Guidance).
    • Alternatively, the nonprofit may negotiate a new indirect-cost rate with the Executive Office of Administration and Finance (EOAFF) following guidelines established by the Secretary of EOAFF.
  • Applicability: The requirement applies whether state funds are transmitted directly by the state or routed through a third party (i.e., the funding arrangement does not circumvent the indirect-cost reimbursement requirement).

Affected entities

  • Nonprofit organizations that are direct recipients or subrecipients of state-funded grants or contracts (including those funded with state funds alone or in combination with non-federal funds).
  • State agencies and the Executive Office of Administration and Finance, which would oversee NICRA-based reimbursements or negotiate indirect-cost rates with nonprofits.
  • Potentially, other entities involved in state-funded grant administration and audit processes.

Implementation and timeline aspects

  • The act would override other laws to the extent of inserting Section 6BB, establishing a statewide policy for indirect-cost reimbursement.
  • No specific effective date is stated in the text provided; typical legislative acts specify an effective date upon enactment or a separate date thereafter.
  • The bill references a parallel or prior filing (House No. 3122 in the 2023-2024 session) indicating ongoing consideration of this approach.

Potential impact

  • Positive impact on nonprofit financial stability by ensuring indirect costs are reimbursed, aligning state funding with broader federal cost principles.
  • May encourage nonprofits to pursue NICRA negotiations, or to establish baseline indirect-cost rates (minimum 15%), improving budgeting accuracy.
  • Could increase administrative work for both nonprofits (rate negotiation and compliance) and state agencies (rate approvals and monitoring).
  • Fiscal effects on the state budget depend on the change in reimbursable costs and the number of applicable grants/contracts.

Note: The bill’s status is that it is a proposed measure in the 2025-2026 session; it was introduced/ filed in early 2025 as HD 2009 (House Docket No. 3428).

Compiled from official sources — confirm details with the bill’s official record.

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