To: Joint Finance Committee
From: Melissa Hopkins, Executive Vice President of Sector Advancement
Date: February 10, 2022
Subject: DANA comments regarding the FY23 Department of Services for Children, Youth and Their Families
(DSCYF) Budget

As the State evaluates its funding priorities, we ask you to consider the reliance the State places on
partnering with nonprofits to deliver the State’s health and social wellness priorities.

Delaware nonprofits are compensated for this work through contracts and grants. We have consistently
heard from DANA nonprofit members, that year over year, these contracts and grants are not adjusted to
reflect the increased cost to deliver those services. With an increase to the minimum wage, these costs will
only continue to grow. This is a phenomenon that extends to multiple divisions through the Department of
Children, Youth and Their Families, and on behalf of the nonprofit sector we request increased funding
support for nonprofit partner agencies through reassessment of contracts, and resources be applied to
improve payment schedules.

Within the Governor’s Recommended Budget, there is an acknowledgement of the increased cost of salary
costs to not only meet the requirement of minimum wage increases, but also to recruit and retain talent.
Nonprofit service providers face the same challenges. For contracts and grants awarded for FY 2019, DANA
members indicate there was not an adjustment to cover the last increase in the minimum wage. Unlike a
retail business, most nonprofits are not able to raise prices to offset rising costs, and thus would be
dependent on public donations to cover those increases – or worse, will have to reduce services to clients,
employee hours or even jobs.

We hear the perceived solution for nonprofit providers to offset rising overhead and employee costs is seek
more donations. It is important to note that often donors restrict their donations, not permitting
nonprofits to use those contributed funds for salaries. This only compounds the challenges nonprofits face
to not only meet the service demand, but also to invest in the IT, impact evaluation and accounting systems
to provide the required reporting necessary to secure future grants and contracts.

As we start to look beyond the pandemic, and plan on how we restore our communities’ health and
wellbeing, it will be nonprofit partners who will be relied upon to assist the state. It is important they have
the financial resources to move quickly and effectively to move us out of this crisis. We request you resolve
this issue with a commitment to raise contracts and grants, year of year, at the least by the rate of the
increase in the minimum wage.

We appreciate your consideration in adjusting rates for the fiscal 2023 year.