Gotham Gazette

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Promoting Transparency, Protecting Non-Profits

The New York City Council has come under intense scrutiny lately for the way members provide funding to not-for-profit community organizations in many of the city's 51 council districts. Questions have been raised about allocations to fake organizations and not-for-profit organizations that employ relatives or staff of council members. (See related story)

The move to greater transparency and accountability in public funding is healthy. Not-for-profit organizations welcome strong accountability measures; our reputations depend on public trust in our work with kids, seniors and all New Yorkers in need.

But while the questionable council funding practices are investigated, all discretionary funding allocations to not-for-profit agencies suddenly are coming under fire. The reality is that the overwhelming majority of not-for-profit agencies honestly manage the city funds that they receive and are accountable to both the law and to the moral code that guides public service.

The Work Non-Profits Do

Every day, not-for-profits make substantial and essential contributions to the citizens and fabric of New York City, providing high-quality services throughout all five boroughs. These organizations work to strengthen communities and are dedicated to important services such as providing day care and foster care, sheltering the homeless, training the unemployed and aiding vulnerable seniors. Yet not-for-profit agencies also struggle daily to secure adequate funding to meet growing needs. Distinctions must be drawn between these not-for-profit organizations and those caught up in the recent controversies.


It is common for not-for-profit agencies to request City Council funding to complement other government funding sources and private fundraising. The so-called council "member items" help sustain programs that are successful but not yet funded by dedicated, budgeted government dollars. City Council discretionary funds also help seed new, innovative programs that require time to evaluate and demonstrate the effectiveness of their work. The money from the council supports specialized after-school programs for disconnected youth, mental health services for the elderly, and HIV/AIDS education programs in poor communities that would not otherwise exist. Without government support, including City Council funding, few not-for-profit social service providers would survive. And without not-for-profits, government would be unable to provide the wide range of vital services offered today.

Meeting Government Requirements

Most not-for-profits that receive council funds comply with all city procedures. They cooperate with oversight by city agencies of their programs and fiscal practices, producing on-time and detailed audits, submitting to interviews and reviews of agency policies and procedures, and filing quarterly reports on accomplishments funded by city money.

The not-for-profit sector fully supports even greater transparency and accountability in the funding and delivery of services. At the same time, we must ensure that funds needed to meet the current and emerging needs of communities continue to be available. The impact of proposed reforms on small community-based organizations, in particular, must be considered. These organizations are vital, bringing a unique perspective to the delivery of social services. Such groups often have a particular ability to understand the issues and barriers faced by clients of color or recent immigrants and have strong ties to their local communities. They are trusted by those they serve because they grew out of the community. It is critical that the value of these organizations be recognized and that reform efforts not impede their ability to flourish.

As the city seeks to reform the current discretionary funding process, it must allow organizations to receive funding in a timely manner. Under the current system, delays are common, both in the allocations of funding and in implementation of contract. This greatly complicates planning and financing for social service groups.

Many of the reforms to the council's budget allocation process announced on May 7 by City Council Speaker Christine Quinn deserve quick consideration, review and implementation. Including the names of all organizations set to receive money, for example, will result in a more transparent process while helping to get funds to legitimate agencies in a timelier manner. Likewise, having pre-clearance lists will ensure that the not-for-profits set to receive funds are in good standing with the city and also will work to move funds into communities more quickly.

Changes that have the potential to make it more difficult for honest not-for-profits to obtain council support, including procedures that significantly complicate the application process or delay the flow of funds to programs, should be considered more carefully. Those who misuse funds -- whether a not-for-profit entity or a public servant -- must be held fully accountable. But we need to consider the impact of reforms intended to catch those who act illegally on the ability of organizations to serve our neighborhoods effectively, efficiently and compassionately. We must not create more barriers for those charged with the difficult tasks of lifting communities out of poverty, caring for our disadvantaged children and elderly, working with the mentally ill and homeless populations, and generally assisting our most vulnerable residents.

Michael Stoller is executive director of the Human Services Council of NYC. Allison Sesso is deputy executive director. The council seeks to build recognition and support for not-for-profit human services sector in New York. 

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