The nonprofits that New York City relies on to care for its most vulnerable residents are being squeezed at both ends — by worsening late contract payments from city government and potential cutbacks in federal aid from President Donald Trump’s administration.
In an annual analysis released Thursday, City Comptroller Brad Lander found that 90.7% of human services contracts were registered late during the last fiscal year that ended in June, an increase from 88.5% the year before. Those $14.8 billion worth of contracts cover critical work like homeless services, day care and mental health treatment, but nonprofits cannot be paid until their contracts are sent to the comptroller’s office — and the late payments jeopardize their finances by forcing them to work for free.
That worsening of a longstanding trend coincides with the Trump administration’s attempts to freeze or reduce federal aid, which poses its own threat to the city and its vendors.
In a separate report published Thursday, Lander — who is challenging Mayor Eric Adams for re-election — broke down how the city spends the roughly $10 billion in federal funds that make up about 8% of the city budget. Much of that funding flows to city programs propped up by nonprofit providers.
A $7.3 million homeless outreach initiative led by the Department of Health and Mental Hygiene, for example, gets two-thirds of its funding from federal grants, and relies entirely on contracts with outside providers, the report shows. Another $29 million in contracts for domestic violence shelters includes $20 million in federal funds.
“Trump shattered the foundation that government keeps its financial promises and in turn, nonprofit executive directors and financial officers are having to brace themselves against the sudden stop of funding,” said Lander, who, unlike Mayor Adams, has been harshly critical of the policies of the new administration in Washington.
Michelle Jackson, executive director of the Human Services Council, said that she has spoken to nonprofit leaders who contract directly with the federal government and who were unable to log into their typical online payment systems the day that Trump ordered a freeze on federal aid last month. That problem has eased since the White House rescinded the order and the freeze was blocked in the courts, but nonprofits are still bracing to lose funding if Trump reduces aid to local governments.
“Providers that have those federal contracts are grappling with, ‘Do we change things on our website? How do we make sure the funding continues?’” Jackson said.
The biggest chunk of nonprofit contracts — 39% — were registered more than a year late, while 20% were delayed between 6 months and a year.
Yexenia Markland, a spokeswoman for the Mayor’s Office of Contract Services, said in a statement that “the Adams administration has prioritized resolving procurement delays in our nonprofit contracting process,” including by shifting all of its contracts to the procurement website called PASSPort.
“By transitioning to PASSPort, we’ve implemented a digitized system that improves efficiency in processing contracts and payments,” Markland said. “We’ve made significant progress in addressing longstanding payment backlogs — clearing over $6 billion in delayed payments and reducing discretionary contract payment times by nearly 90 percent. Our goal is to ensure that service providers receive timely resources to support New Yorkers effectively.”
The Adams administration has promised other reforms — last month issuing an executive order that requires each city agency to appoint a “chief nonprofit officer” focusing on payment issues. Also last month, Adams replaced the head of the Mayor’s Office of Nonprofit Services and convened a new City Hall working group that would meet weekly to “examine contract performance data.”
Jackson said the chronic delays stem from a range of problems, including budget cuts to the Contract Services office and a hiring freeze that continues to stifle headcount in city government, even after Adams lifted it last year. Late payments also worsened last year in recent months when the city began shifting all of its active contracts onto the PASSPort procurement website, which led to billing problems that the administration said would be temporary.
