Nonprofits in the human services sector do essential work for New York City and its residents, from operating homeless shelters to providing legal counsel to tenants facing eviction. For that, these organizations have consistently dealt with late contract registrations and delayed payments. Nonprofit leaders tell stories of having to take out loans to tide them over until the agreed upon cash from the city comes in.<\/p>\n
\u201dThis has been a chronic issue for 15 plus years,\u201d said Michelle Jackson, executive director at Human Services Council, whose organization represents over 180 nonprofits that make up around 80% of total human services contracts at the city level. \u201cEven if your contract is registered, it is not a guarantee you will get that money. Many organizations have to deal with late payments.\u201d<\/p>\n
Now, Council Member Lincoln Restler, who chairs the Committee on Contracts, is rolling out a comprehensive agenda<\/a> meant to tackle the issue.\u00a0<\/p>\n \u201cWe depend on the nonprofit sector to care for the most vulnerable New Yorkers, from little kids to older adults, from the homeless, to the homebound,\u201d Restler said. \u201cAnd yet we fail to pay them in a timely way for their work.\u201d<\/p>\n The Brooklyn Democrat\u2019s proposals fall within four buckets: reliable access to funding, speeding up payments, enhancing agency capacity and ensuring ongoing accountability.<\/p>\n One problem many nonprofits face with their contracts is the difficulty of accessing\u00a0 interest-free bridge loans offered by the city. The Returnable Grant Fund<\/a>, which is managed by the Mayor’s Office of Contract Services, provides these loans to organizations in need of it. However, the funds are limited and the same agency responsible for the late payment is the same one the nonprofit must interface with to initiate the loan process.\u00a0<\/p>\n \u201cOftentimes, you have a choice of, \u2018can you register my contract,\u2019 or \u2018can you process my loan,\u201d said Jackson.<\/p>\n For many nonprofits, cash on hand is king. The limited funding and \u201cFaustian choice,\u201d as Restler describes it, available to them pushes many nonprofits towards taking out loans with private institutions, which incurs interest that isn\u2019t reimbursable<\/a> by the city.<\/p>\n \u201cMy finance department has to talk to banks to make sure we can have lines of credit \u2026 We have to spend more time with our auditors explaining to them what’s going on with cash flow,\u201d says Wayne Ho, president and CEO of the Chinese-American Planning Council, which contracts approximately $40 million worth of human services with the city annually. \u201cThat’s how it impacts us just because things are not registered on time and things are not paid on time.\u201d<\/p>\n As part of Restler\u2019s agenda, each city agency that contracts with nonprofits would have to hire a point person whose job it is to handle bridge loan applications and submit them to the Fund for the City of New York as well as increase agency staffing levels for their respective contract procurement teams. Restler already introduced a bill, Int. 1053<\/a>, which would require human services agencies to create staffing plans and recommend minimum staffing numbers.<\/p>\n Restler also wants City Hall to reboot a 10-week \u201cclear the backlog\u201d initiative focused on approving budgets and invoices paired with a similar initiative from MOCS to help agencies with contract approvals.\u00a0<\/p>\n Because contracts both large and small get processed through the same system, logjams crop up. Smaller nonprofits end up waiting for a modest sum of money while large nonprofits are in the lurch for millions of dollars.\u00a0<\/p>\n \u201cRight now, nonprofits and city agency staff spend similar amounts of time on $5,000 contracts as they do on $500,000 contracts. That’s pretty stupid,\u201d said Restler.<\/p>\n Which is why he is calling for the expansion of the Discretionary Grant pilot program, which transforms smaller contracts into grants to help speed up the registration and payment process. Receiving grant funding from the city is a much less onerous process to complete compared to regular contracts and does not need to be sent to the city comptroller\u2019s office for registration.\u00a0<\/p>\n \u201cYou get the procurement benefit of it being grants,\u201d said John MacIntosh, managing partner of SeaChange Capital Partners, which offers grants, loans, financial analysis and strategic advice to nonprofits. \u201cThat should make it much easier to process those quickly, which I think is exciting because those have always gummed up the system.\u201d\u00a0<\/p>\n The final plank of the contracts agenda revolves around ongoing accountability, starting with reviving the Nonprofit Resiliency Committee which started in former Mayor Bill de Blasio\u2019s administration. The plan would be for the committee to meet monthly for at least a year and address the many issues present in contract procurement.<\/p>\n Furthermore, the contracts chair also wants to see ContractStat, which is an internal tool used by the Mayor\u2019s Office of Nonprofit Services and MOCS to track agency performance on contract-related outcomes according to Restler, to become fully public.<\/p>\n \u201cI know that accountability isn’t necessarily fun, but it’s really important,\u201d Restler said. \u201cWe should all have access to the same data on how agencies are performing to effectively push them to do better.\u201d\u00a0<\/p>\n