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

HD 2009 requires Massachusetts state agencies to reimburse nonprofit organizations for indirect costs when they receive state-funded grants or contracts for service provision. It directly affects 501(c)(3), (4), or (6) nonprofits that provide services using state funds (or mixed state/non-federal funds), ensuring they can recover overhead costs like rent and utilities. The bill mandates reimbursement at either the nonprofit's federally negotiated indirect cost rate (if valid) or at a minimum of 15% of modified direct costs, or through a new state-negotiated rate. This policy change eliminates the current practice where nonprofits often absorb these costs when receiving state funding, aligning state reimbursement with federal standards. The law applies to all state-funded grants, regardless of whether funds are distributed directly by the state or through third parties.