Gotham Gazette Fri, 07 Aug 2020 09:23:02 +0000 Joomla! - Open Source Content Management en-gb (Webmaster) Amid Outbreak Volatility, City Takes Steps to Stabilize Human Services Nonprofits That Constitute Much of Social Safety Net spk qun love

Human Services Nonprofits provide essential staff and programming to the city (photo: William Alatriste/City Council)

Social service organizations in recent days have been scrambling for clarity from government officials on how they will continue to get paid as they carry out essential city services for the most vulnerable populations and take up positions on the frontlines of public health, safety, and crisis management amid the coronavirus outbreak.

On Tuesday, Mayor Bill de Blasio announced that he was designated roughly 40,000 workers from human services nonprofits that contract with the city as “essential city personnel” under his state of emergency declaration, and on Wednesday de Blasio administration officials announced several other measures, including guaranteed contract payments to those human service organizations, even if they can no longer meet their contractual obligations.

New York City spent $6.8 billion on human services in fiscal year 2019, a third of all city procurement, on anything from child protective services to supportive housing for New Yorkers experiencing homelessness and mental health crises. The services they provide are necessary to keep the city government and economy running, making up an essential part of the social safety net and employing hundreds of thousands of New Yorkers.

"Providers and staff need reassurance that contract payments will continue, uninterrupted, during this period of uncertainty," wrote Chief Procurement Officer Dan Symon, in a letter to organizations Wednesday. "We want to assure providers that as long as they are working with their contracting agencies on a plan to continue, modify or suspend services, they will get paid their contracted expenses."

The letter also announces increased cash advances to handle emergency expenses and suspends all new auditing. Additionally, organizations struggling to obtain the necessary cleaning and disinfecting supplies can receive city assistance through their contracting agency.

With city, state, and federal guidance urging (sometimes mandating) people to self-isolate and businesses to drastically reduce their in-person workforce, New York City's network of nonprofit providers are seeing major changes in services as client participation drops off in some areas and new urgent needs arise in response to the outbreak. Wednesday's letter clarifies some of the most pressing questions for city contract payments, but providers say a lot of uncertainty remains as state officials continue to offer little information.

Particularly critical are out-of-home programs that must remain open in a disaster, including residential services like foster care, homeless and domestic violence shelters, and senior assisted living. With the sector's long tradition of community-based care, human services organizations are often the best and, in many cases, only professionals able to provide the immediate resources needed in a crisis.

"We would love to see blanket language from both our city and state governments that say nonprofits will be held harmless on their contracts," said Michelle Jackson, acting executive director of the Human Services Council, a trade association with 160 nonprofit members, in an interview with Gotham Gazette Tuesday, a day before the letter was issued.

"We think this guidance is an important step forward and appreciate the quick response to the letter we sent in collaboration with other coalitions," she added in an email Wednesday in response to the new information from the city. "This will help providers make clearer decisions around finances and being able to support staff."

The letter formalizes de Blasio’s announcement that the 40,000 city contracted health and human service workers will be considered essential workers in an emergency, but Human Services Council estimates the full human services workforce in the city to be over 200,000, including state-, federally-, and privately-funded positions.

"Nonprofit workers who need to continue to work because they work in congregant living or because they've been redeployed to do other work need to be treated as first responders. They need to be given access to emergency childcare, financial assistance, and transportation. They need access to supplies, like gloves, masks and cleaning supplies, so that they can maintain safe facilities," Jackson said Tuesday.

Good Shepherd Services is one of the largest healthcare, child welfare, and social services providers in New York City, serving over 30,000 children and families in the Bronx, Brooklyn, and Manhattan. About 85 percent of its $100 million annual budget comes from government contracts, according to executive director Michelle Yanche. Some of its initiatives, like afterschool programming, have been suspended; but others like its residential services, which serve some of the most at-risk and marginalized populations, must remain operational in a state of emergency.

Good Shepherd runs several residential programs including foster care, domestic violence shelters, and supportive and transitional housing, providing roofs for roughly 540 clients, a vast majority of whom are children in foster care. Henry Street Settlement, which operates “Tier 2” shelters, provides extended-length emergency apartments for children and families with 24/7 onsite support services, like social workers and resource coordinators. President and CEO David Garza told Gotham Gazette it receives about 65 to 70 percent of its annual budget from city and state contracts, a substantial amount of which is from the city Department of Homeless Services.

On Saturday, the de Blasio administration put out guidelines for health and human service providers who are struggling to meet their contractual obligations with the city, either because of programs being forced to close or be modified to meet unforeseen and unprecedented demands.

"We are familiar with the guidance and we think it's helpful. It's certainly more informative than what the state has put out, but a lot of it is opaque," Jackson said Tuesday, before Symon's announcement. "It is not as clear as we need it to be."

“Businesses, governments and non-profit providers are all grappling with the impacts of COVID-19, and we are calling on our Federal partners to deliver the resources we all need to continue to serve all New Yorkers” wrote Freeman Klopott, a spokesperson for the New York State Division of the Budget, in an email. Representatives for Governor Andrew Cuomo did not respond to questions about the state's efforts to recoup contract advances from organizations that have seen a decline in client participation, an issue raised in a recent letter from City Comptroller Scott Stringer to the de Blasio administration for city contracts.

Under the city's previous guidance, the de Blasio administration only committed to reimbursing certain expenses and contract modifications, leaving it unclear whether missed service targets would be penalized and how organizations would come up with the money if they have large new capital needs, like purchasing laptops for remote learning and case work, that hadn't previous been contracted for (an article recently published in The City explores debt incurred by human service organizations as they await payment from city contracts).

Under the new guidelines, "if you work with your contracting agency and agree to a plan for moving forward, you will get paid for executing on that plan. And, if that plan costs more money than the contracted services, you will get paid for the additional expenses. If the plan calls for a suspension of services, you will get paid your contracted expenses," according to the de Blasio administration letter issued Wednesday.

'Waves and Aftershocks'
Continuing to pay for suspended services puts the future of the city's afterschool programming, for instance, on more certain footing but it is also a boon for other essential services that are provided by multi-service agencies that rely on a number of government contracts.

Both Good Shepherd Services and Henry Street Settlement have scaled back some programming during the coronavirus (COVID-19) outbreak and are exploring how they can best serve their client populations now. That task requires them to consider how to maintain and even expand their current budgets, while losing critical revenue from government contracts (including from the state) that will no longer be fulfilled.

"Each area has been impacted differently by this as it unfolds,” said Garza of Henry Street. “Clearly program modifications across the board, sometimes program suspensions, but sometimes an intensification and increase in programs depending on what it is. Right now we are trying to place a really acute focus on our residential programs and shelter because people in high-density situations, they are vulnerable populations, they tend to be way more at-risk."

Issues around food insecurity, primary health care, and mental health care all become intensified at a time like this, he said, adding that the unpredictability of needs exacerbates the crisis.

Consistent with their missions, organizations say they want to be thinking through ways to redeploy unused sites and staff to be responsive to the specific needs that communities now have. "But because we're really so challenged with being able to fully put contingency plans in place for our residential and out-of-home care we're not able to fully focus on some of those other areas," Yanche said.

Garza sees the pandemic in the long-term. "From everything we know [the outbreak] is going to continue to have a huge impact and I think at a point it's going to shift [onto] some of the other programs that we operate, like access to employment opportunities. It's in waves and aftershocks," he said.

For Yanche, the coronavirus outbreak shows that the network of human services nonprofits throughout the city "is one of New York City's greatest assets, that they have us like boots on the ground to be activated to be responsive in a crisis like this. A lot of other places don't have that."

But there's a caveat. "I think because of our lack of preparedness and none of us really having thought through how to respond in a health crisis, we haven't yet been able to fully take advantage of activating that network," she added.

by Ethan Geringer-Sameth, reporter, Gotham Gazette

Read more by this writer.

Amid Outbreak Volatility, City Takes Steps to Stabilize Human Services Nonprofits That Constitute Much of Social Safety Net Wed, 18 Mar 2020 04:00:00 +0000
State Leaders Must Blunt Impact of Federal Tax Reform on New York Nonprofits and the People Who Rely on Us 37749459904 8287feee00 z

(photo via The Governor's Office)

The recently passed federal tax law will deepen inequality and jeopardize the health and wellbeing of families and individuals across our state. This legislation penalizes New Yorkers by capping the state and local tax (SALT) deduction and will create deficits that are likely to result in catastrophic cuts to the programs they depend on. These tax “cuts” will drive up the national deficit, which will then be cynically used as a rationale for slashing investments in critical programs such as food assistance, public housing, and affordable healthcare.

Our state leaders must take action to ensure that we can weather this storm.

Federal aid accounts for one-third of the New York State budget and directly accounts for 8-10% of the New York City budget. The state is already facing a deficit that will be exacerbated by any federal cuts to state assistance or Medicaid spending.  For example, homelessness is a major problem in our city and two-thirds of the New York City Housing Authority’s budget comes from federal aid. Cuts in aid to states would also have a significant impact on our children as 41% of the budget for the Administration for Children’s Services and 8% of the Department of Youth & Community Development funding comes from the federal government. Lack of funds at these agencies would impact foster care, adoption services, after-school programs, and Head Start. When direct aid is cut, families and individuals will rely even more heavily on nonprofit human services organizations. Our nonprofits deliver essential programs through contracts with city and state governments that support people through every stage of life, including early child education, elder care, shelter for people experiencing homelessness, job placement, and nutrition assistance. However, these government contracts rarely cover the full cost of providing services, which has resulted in a chronically underfunded sector.

At the same time, this federal legislation dis-incentivizes charitable giving.

Private fundraising has been an important (but insufficient) tool for filling the deficit that comes with government contracts. The tax bill raises the standard deduction, and with that increase many people will not itemize anymore, meaning that they will not see a tax benefit in making charitable donations. According to the Indiana University School of Philanthropy in a report commissioned by Independent Sector, 82 percent of charitable giving comes from people who itemize their tax return, and it is estimated that charitable giving will go down by about $13 billion.

Too many organizations are already at a breaking point. In New York City, 18% of nonprofit human services organizations are insolvent. This tax bill could push them over the edge at the exact moment when they are needed most. While we know this is a difficult budget year, given the deficit and uncertainty at the federal level, it is now more important than ever that we make sure our nonprofits are financially strong and resilient.

We are asking the state to make investments in our workforce and our infrastructure to ensure we are strong enough to continue serving communities well into the future. The underfunding of human services is not a new issue, but we need the Governor to lead in this area and 1) fund the minimum wage for human services workers contracted by the State, 2) continue the Nonprofit Capital Infrastructure Fund – a highly sought after grant program that assists nonprofits in making crucial improvements to their buildings and technology, and 3) fund a wage adjustment for a workforce that has gone without a salary increase in over eight years.

The Governor’s Executive Budget recognizes the federal threats to New York and includes an impressive agenda, which requires the close collaboration of human services providers across the state who are threatened not only by federal policies, but also by years of state policies and funding decisions that have jeopardized their ability to serve as anchors for their communities. Our organizations are dedicated to elevating the human potential of our families and communities, and we were gravely disappointed that some of our representatives did not act in the best interests of our state in passing this damaging tax legislation. However, New York now has an opportunity to be a progressive leader for the country by making investments in the human services sector. In times of challenge and uncertainty, nonprofits are our communities’ first line of defense and careful planning and adequate financial resources from the city and state are needed to protect these essential services.

Center for New York City Affairs
Fiscal Policy Institute
Human Services Council of New York
United Neighborhood Houses

Have an op-ed idea or submission for Gotham Gazette? Email

Note: this column has been updated to correctly identify Independent Sector as the funder of the Indiana University study, not the United Way as originally written.

State Leaders Must Blunt Impact of Federal Tax Reform on New York Nonprofits and the People Who Rely on Us Sun, 28 Jan 2018 05:00:00 +0000
City Council Considers Subcontractors Bill of Rights 12331075774 34a53d8c6d z

Council Member Helen Rosenthal (photo: William Alatriste/New York City Council)

The City Council’s Committee on Economic Development and the Committee on Contracts held a joint hearing on Thursday to discuss proposed legislation that would create a bill of rights for subcontractors working with the city.

Intro.1615, sponsored by Council Members Laurie Cumbo, Robert Cornegy, Jr., and Helen Rosenthal, would require the Department of Small Business Services to create a bill of rights that clearly lays out expectations for prime contractors and subcontractors, and makes it easier for subcontractors to find out what services and resources are available to them should they have a problem or concern with their contract. The legislation would apply to any contracts worth more than $100,000.

“[Contracting] is the heart of so much of what we do here -- construction of public infrastructure and affordable housing, a whole range of human services from pre-K all the way up to senior services,” said Rosenthal, chair of the contracts committee, in her opening statement. “The contracting process is an essential part of how New York City government works.”

The city has registered 12,949 expense contracts worth $20.3 billion in the 2017 fiscal year, which runs through June 30, and subcontractors accounted for $558 million of that sum, according to data available on the comptroller’s Checkbook NYC website. These subcontractors often face a number of hurdles including a lack of access to adequate legal representation to navigate contracts, receiving late payments, and not being able to apply for loans. This is especially true for subcontractors working in human services.

“Contractors often pay subcontractors late because they cannot disburse government funds prior to completion of the service they are paying for, and they themselves are paid late,” explained Tracie Robinson, a senior policy analyst at the Human Services Council of New York, in her testimony. HSC represents thousands of nonprofits in New York and advocates for human services providers as a whole. “[Subcontractors] operate in the context of a broken contracting system. Only if we address the underlying causes of subcontractor instability -- problems at the government-contractor level -- will we be able to set prime contractors and subcontractors alike up for success.”

Many subcontractors are nonprofit organizations and small businesses that are overshadowed by larger entities and do not have the same access to credit and fundraising. Intro. 1615 would make sure that subcontractors get an overview of the payment process, know the points of contact between government agencies, and can get the appropriate documents necessary to get the information and assistance they need.

“Many smaller nonprofit organizations do not have in-house attorneys or staff with experience understanding and administering government contracts,” said Laura Abel, senior policy counsel for Lawyers Alliance for New York, a provider of business and legal services for nonprofits. “City contracts are long, dense, and full of legalese. As a result, nonprofit organizations may take on obligations that they do not understand and cannot fulfill.”

Abel also added, “I have asked clients dealing with an unexpected development what their contract says about that issue, only to hear, ‘Oh, it’s all boilerplate, it’s no help.’ A subcontractor bill of rights can help by encouraging subcontractors to consult counsel before entering into a contract, and whenever they have questions during the life of the contract.”

In addition, subcontractors are frequently minority- and women-owned businesses, commonly referred to as M/WBEs. The city has been trying to encourage the growth and development of M/WBEs to ensure a more equitable distribution of city money. M/WBEs also tend to be more familiar with local community needs compared to larger contractors. M/WBEs accounted for $245.8 million in subcontracts registered in fiscal 2017. Mayor Bill de Blasio’s OneNYC plan includes a commitment to award at least 30 percent of city contract dollars to M/WBEs by 2021 and to award $16 billion in city contracts to M/WBEs by 2025.

Michael Owh, director of the Mayor’s Office of Contract Services and the city’s chief procurement officer, said the de Blasio administration supports the bill and that it “is a step in the right direction toward providing information to businesses and connecting them with resources.”

When asked by Council Member Daniel Garodnick, the chair of the Committee on Economic Development, if the bill warranted any changes or edits, Owh emphasized that it would need input from all the stakeholders. “[We] want to make sure that we get enough feedback from not just our agencies but also the community, the contracting community, as well as the subcontracting community to make sure that we are able to take in all of the various factors,” Owh said.

City Council Considers Subcontractors Bill of Rights Thu, 22 Jun 2017 04:00:00 +0000
Pointing to Progress, Deputy Mayor Says City Hears Nonprofit Funding Concerns Deputy Mayor Richard Buery speaking Medgar Evers

Deputy Mayor Richard Buery (photo: Medgar Evers College)

As city-contracted nonprofit organizations continue to call for funding increases from the de Blasio administration, Deputy Mayor Richard Buery insists that the administration is “sympathetic” to those concerns and is doing everything in its power to ensure a “strong and robust” nonprofit sector.

Nonprofits in the city that provide a range of contracted services, from mental health care and early childhood education to homelessness prevention, say they are facing a crisis of financial instability brought on by decades of underinvestment by successive administrations. As their costs soar and contracts remain relatively flat, many are cutting staff or whittling down their services to remain afloat. Nearly one in five are insolvent.

“There really has been absolutely a history of disinvestment in the sector which makes their work harder,” said Buery, who heads strategic policy initiatives for the administration, in an interview at City Hall. “I think under our administration, there’s really been an acknowledgement of that and I really do believe a real effort to address it.”

Under Mayor Bill de Blasio, a first term Democrat, there have been incremental efforts to buoy the sector and those who work in it, particularly by providing salary increases for employees at city-contracted nonprofits. Two years ago, the city gave 2.5 percent cost of living raises to human services nonprofits. The city subsequently announced a $15 minimum wage for all city-contracted nonprofit personnel and, in the mayor's recently-released fiscal year 2018 budget plan, is proposing 2 percent raises annually for three years for the 90,000 employees of human services nonprofits.

The city also established a Nonprofit Resiliency Committee last year, to examine structural problems in the sector and “streamline some of the bureaucratic challenges which wind up having a dollar impact, a financial impact on nonprofits that try to get work done,” Buery said.

Still, nonprofit groups argue that salary increases, though laudable, are not sufficient in the face of rising costs for insurance, rent, infrastructure, and more. “I think it doesn’t get to the heart of the problem,” said Allison Sesso, executive director of the Human Services Council. “The institution itself is financially struggling,” she said, separating the questions of employee wages and organizational solvency.

Sesso is one of nearly 200 human services nonprofit leaders who wrote to Mayor de Blasio in December, calling for a 12 percent increase in contracts across the board at an estimated $500 million price tag. “You count on us each day to ensure the wellbeing, safety, and security of our fellow New Yorkers,” the letter reads. “We fully embrace your equity agenda, but are compromised in our ability to help achieve it given the years of City neglect of our work. You inherited this situation, but it has continued to worsen and we need bold leadership now to fix it.”

Deputy Mayor Buery stressed that the city is committed to those fixes and is engaged in constant dialogue with the nonprofit sector, but change doesn’t happen overnight. “I think everybody understands that...problems that have taken decades to create, are not gonna be solved in one budget cycle, or two budget cycles,” he said, pointing out that the challenges faced by the sector aren’t a problem specific to the de Blasio administration but one faced by city government at large.

Buery also said that the services provided by these nonprofits are particularly critical at a “vulnerable” time for the city, facing a period of economic slowdown and potential federal budget cuts.

That vulnerability and uncertainty about the future is precisely why Sesso from HSC said the city needs to invest in nonprofits now, to shore up a sector that serves the city’s neediest population. And while she agrees that the crisis can’t be solved immediately, “It’s important they make a substantial move forward this year,” she said.

Sesso commended the administration for creating the Nonprofit Resiliency Committee and ensuring ongoing conversations with nonprofits. But, she said, “As an advocate, until I see the money in the budget, I’m not satisfied. You can’t solve the problem through efficiencies alone.”

The city budget cycle recently began with de Blasio’s presentation of his preliminary budget. It will continue with a round of City Council hearings, behind-the-scenes negotiation and lobbying, de Blasio’s executive budget, more hearings and negotiations, and a budget deal between the mayor and the Council by the July 1 start of the new fiscal year.

The Federation of Protestant Welfare Agencies, one of New York’s largest nonprofit service providers, has been pushing for increased funding not only in the city but also at the state level. And while the state has yet to engage with their efforts, the city’s initiatives are encouraging. “We’re seeing some evidence of interest in addressing the issue,” said Emily Miles, director of policy, advocacy and research for FPWA. Miles cited the minimum wage increase and the cost of living adjustment. “But there’s some ways to go,” she said.

Miles and her colleague, policy analyst Carlyn Cowen, praised the administration for tackling structural issues and soliciting feedback from organizations through the Nonprofit Resiliency Committee, something prior administrations ignored. “Having everybody at the table is pretty unprecedented,” said Cowen. But they emphasized the pressing need to strengthen human services nonprofits, echoing Sesso’s warning of how federal policies may impact New Yorkers.

For the administration, the fact that nonprofits are voicing their concerns is a badge of honor, Buery said. “The light that’s being shined on the problem is a good thing,” the deputy mayor told Gotham Gazette, “but it is in part a reaction to an administration which has been willing to shine that light and open that conversation.”

Buery expects that dialogue will continue through the budget process as the city assesses revenue, and analyzes where best to allocate spending. “The mayor’s really shown his commitment to putting his money where his mouth is and so we intend to move forward with this sector to make sure we continue to do so,” he said.

With the city economy humming, and jobs and tourism at record highs, de Blasio has rapidly increased the city budget over his three years as mayor. He has continued to announce new funding initiatives already this year.

Asked at a news conference on Tuesday about the funding for nonprofits in his latest budget, Mayor de Blasio said, “I think the issue of how to make sure each preventive service organization does their job as best as possible is a broader qualitative question and to make sure we have enough of these services available when we need them for families in immediate need...we have to make sure the quantity and the quality is right. In the meantime we’re certainly looking for every opportunity to improve the dynamics for those workers and the compensation they get.”

by Samar Khurshid, senior reporter, Gotham Gazette

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Pointing to Progress, Deputy Mayor Says City Hears Nonprofit Funding Concerns Wed, 22 Feb 2017 05:00:00 +0000
City Approach to Nonprofit Contracting Questioned council hearing rosenthal

Council Member Rosenthal at a recent hearing (photo: William Alatriste) 

Human services nonprofits serve the city’s most vulnerable populations, providing a range of critical programs like foster care, homelessness services, after-school programs, mental health care, food pantries, and more. But, many of these organizations are faltering due to problems with the ways in which government approaches contracting.

On Monday, the New York City Council Committee on Contracts held an oversight hearing to examine serious and systemic issues facing human services nonprofits operating under contracts with the city. The hearing, chaired by Council Member Helen Rosenthal, was held in response to a report released by the Human Services Council (HSC), a coalition of 170 nonprofits that provide vital programs like childhood education, senior care, and job training to New Yorkers. The report identifies the major challenges facing the nonprofit human services sector, as well as recommendations to strengthen and stabilize it.

Leaders from 25 organizations testified at the hearing, echoing the issues outlined in the report and painting the picture of a sector in crisis: government contracts account for the majority of provider budgets, but pay roughly 80 cents or less of each dollar of true program delivery costs, creating budget gaps and diminishing the quality of services nonprofits can provide; contract payment is chronically late, forcing providers to turn to costly borrowing to meet their organization’s needs, often accruing interest that is not covered by government contracts; and, programs are often developed without input from the human services nonprofits that are responsible for implementing them, resulting in “ineffective and unworkable programs,” according to the HSC report.

“We absolutely feel that the government has left us behind,” said Dr. Jeremy Kohomban, president and CEO of The Children’s Village, during his testimony. “In addition to underfunding, we often deal with delayed reimbursement, and hidden costs upon reimbursement of interest payments, that we are forced to make on extended credit lines.”

“While we are untiring in our fundraising,” Kohomban added, “our donors are most interested in helping children and families, and least interested in subsidizing what they increasingly see as government shirking its responsibility.”

The city is required to provide many of the support services involved, but contracts them out to nonprofits in order to save on costs and increase efficiency. According to the Human Services Council, the city’s human services nonprofits deliver “essential government services to 2.5 million New Yorkers” every year.

According to the HSC report, the sector includes more than 200,000 workers and New York City is engaged in over 5,100 contracts worth $4.3 billion in the current fiscal year, which ends June 30. There are also thousands of state contracts that add another $1.5 billion in contracts.

Many of these organizations rely on the government for almost all of their funding, and are told to seek grants or other funding methods to account for the rest of their expenses. The city often turns to outside providers to meet city needs, for instance, “When the city decides to build a $40 million bridge, they hire a construction company with that expertise,” Council Member Rosenthal said during her opening remarks.

However, Rosenthal continued, “the city would never say to a construction company, ‘We’re going to pay you $35 million. Try to get philanthropy, foundations, or other jobs that you do to pay for the remaining $5 million.’”

Not only do those contracts rarely cover the actual operating costs of the city’s human services nonprofits, but the payment is often late and unpredictable, creating an unsustainable situation that forces many of these nonprofits to take out loans from private banks in order make payroll and rent.

“Do you know of any human services providers that have had to borrow from a bank in order to provide services?” Rosenthal asked Michael Owh, director of the Mayor’s Office of Contract Services, during his testimony. Owh said he didn’t have any specific examples, but knows that some providers have lines of credit.

Rosenthal asked leaders from several human services nonprofits if they had been forced to take out a loan due to a lack of timely and sufficient funding, and eventually instructed Allison Sesso, executive director of the Human Services Coalition, to consult with her organization’s affiliates and put together a comprehensive list of how many providers have needed to borrow money.

“We are often forced to borrow against a line of credit to meet payroll…last year, CAMBA paid $375,354 in interest for the use of our line of credit,” said Thomas Dambakly, chief administrative officer of CAMBA, a large Brooklyn-based nonprofit that provides employment, education, health, legal, and youth services.

Several human services nonprofits have been forced to close in recent times, and a number of others are on the brink of insolvency. According to a report from SeaChange Capital Partners, a merchant bank serving the nonprofit sector, 18 percent of New York City nonprofits in the health and human services sector are insolvent, while the HSC report (created by a commission of 32 human services executives, civic and philanthropic leaders, former government officials, and others) determined that 60 percent of humans services nonprofits are financially distressed, with no more than three months of cash in reserves.

In March of last year, after 80 years of operation, the Federation Employment and Guidance Service (FEGS), a “$250 million behemoth nonprofit human services provider, announced it would be closing; a clear signal that systemic issues threatened the survival of the sector as a whole,” says the HSC report.

Before filing for bankruptcy, FEGS provided mental health, housing, disability, home care, and employment services to 120,000 households and individuals. As a result of FEGS’ closure, the city’s remaining nonprofit human services providers have been relied on to meet the needs of those 120,000 households and individuals who relied on FEGS services.

If the city does not address the issues facing the sector, providers argue, the communities that these nonprofits serve will be the first ones to suffer the consequences.

“Our ability to effectively serve New Yorkers is seriously compromised by a government system that simply doesn’t cover the true cost of programs and services, and how those costs grow over time,” said Dan Lehman, chief financial officer of the Children’s Aid Society. “Failure to address this issue jeopardizes the viability of community-based organizations, and ultimately harms those who we serve, and who the city depends on us to serve.”

The HSC report and representatives from human services nonprofits who testified at Monday’s hearing put forward a number of solutions that could ameliorate the nonprofits’ dire financial situation. For one, the government could seek input from and collaborate with the human services sector while designing programs, which would ensure the creation of programs that the nonprofits are truly capable of implementing.

Additionally, the government could issue contracts that fully fund nonprofits’ operating costs, including so-called “indirect costs,” or expenses like IT, building maintenance, accounting, and human resources, and fulfill those contract payments in a more timely and consistent manner. These contracts, human services workers say, should also account for cost increases that occur over time due to inflation or newly added mandates.

Toward the end of the hearing, Council Member Rosenthal asked Sesso to return to the testimony table to answer a few additional questions. “Do you think it’s reasonable to ask the administration for some sort of roadmap or strategic plan for how you get from these recommendations to implementation?” Rosenthal asked.

“At the heart of this is the rates, and it’s about what do we consider to be program costs...I do think that, [Mayor’s Office of Contract Services] would be a good partner, but there does have to be a directive at the very highest levels of the administration to do this.” Sesso replied.

“And if there’s another recession,” Sesso continued, “If government has to cut back, we are first on the list - this is going to be a big problem if we do not act, in the context that we are providing services that are a bridge to opportunity for some of the neediest people in New York City.”

by Meg O'Connor, Gotham Gazette

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City Approach to Nonprofit Contracting Questioned Tue, 05 Apr 2016 23:58:55 +0000