Most NY nonprofits have funding concerns from slow state payments
Originally published in
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ALBANY — Delayed payments from state agencies have put New York’s nonprofit organizations at risk, a new report contends.
Nonprofits — which state agencies depend on for everything from disaster aid to mental health services — have widely struggled to secure timely contracts from the state, especially in the wake of the pandemic. Those delays are taking a toll on the nonprofits' daily operations, according to a report prepared by organizations that include the state’s Human Services Council and the New York Council of Nonprofits.
One in three nonprofits with state contracts say they are owed funding for services already provided, with $650 million in nonprofit funds owed by the state. And 65% of nonprofits report being concerned about funding their basic operations this year.
“When a constituent brought this issue to my attention, I was shocked to learn that nonprofits — who deliver vital services on behalf of the state — were being forced to take out loans just to make payroll while waiting months or even over a year to be reimbursed,” said Assemblywoman Amy Paulin, a Westchester County Democrat. “That is simply unacceptable.”
Paulin sponsors a new bill that would update the 1991 Prompt Contracting Law to standardize the administration of nonprofit contracts across state agencies. Co-sponsored by state Sen. Shelley Mayer, the bill would also increase the interest rate on late state payments and require all contracts to include a recuperable 25% advance payment as a lifeline to nonprofits under financial strain.
The current landscape of nonprofit contracting has left many administrators unable to complete projects, balance budgets and retain staff, according to the report.
“Every two weeks I go through the same anxiety — will we have enough cash to pay payroll? It’s like Groundhog Day,” said a nonprofit representative quoted in the report. “On paper we have plenty of money, but in reality, we run out of cash. I have to call agencies over and over to beg them to move more quickly on payment for vouchers that are many months past due.”
An audit released by state Comptroller Tom DiNapoli's office in January found that more than half of the state’s contracts with nonprofits were executed late in 2023. The report tied those payment delays to the nonprofit sector’s struggle to recover from pandemic-related staffing shortage.
Approximately one in every five New York nonprofit jobs was lost during the pandemic. Just 7.4% of those jobs were regained by 2022, making New York the slowest state to recover from national nonprofit employment deficits as a result of the pandemic.
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