New York has long relied on nonprofit organizations to deliver some of its most essential services — from housing assistance and addiction recovery to school maintenance and youth programming. But for just as long, the city has paid these groups late, often forcing them to take out loans or dip into reserves just to keep operations afloat.
In 2022, Mayor Eric Adams and Comptroller Brad Lander acknowledged the problem, forming a joint task force to address delays. Yet data from the Comptroller’s Office shows the issue has only worsened. In fiscal year 2024, 90.7% of nonprofit contracts were paid late, up from 88.5% the year before. Nearly 40% were more than a year overdue.
City Council leaders are now proposing legislation they say will ease the financial strain. A bill introduced by Council Speaker Adrienne Adams would increase the standard advance payment on contracts to 80% — up from the current 30%. For multi-year agreements, that 80% would be reissued at the start of each fiscal year. The bill also includes a clawback provision if a nonprofit fails to fulfill its obligations.
In theory, this makes sense. The biggest problem is the retroactive nature of payments. Two prominent nonprofits, Hester Street Collaborative and Sheltering Arms, have shut down in the past two years, citing unsustainable delays in city funding. If an advance could keep others from collapsing, it’s worth considering.
But as tempting as the fix may be, advancing more money without better oversight is risky.
Last year, Crain’s examined 14 of the city’s largest nonprofit contractors — those managing portfolios over $1 billion. These groups serve millions of New Yorkers. Ours was a small sample of the 6,900 contracts the city holds with private entities, worth $233 billion in total. We found a troubling pattern: questionable expenses, self-dealing and weak internal controls. Some billed the city for movie outings and alcohol-fueled cruises. Others awarded contracts to firms with ties to their own executives. In one case, a city agency admitted that its policy is to review just one or two line items per invoice.
That is no foundation on which to build a system of larger, earlier payments.
The City Council’s proposal correctly identifies a structural flaw. But increasing the front-loading of payments must be paired with clear conditions and stronger guardrails. The council is calling to increase staff at the Mayor’s Office of Contract Services as part of the package, but with no specific assurance of quality control. The public has a right to expect that taxpayer dollars are used responsibly — particularly at a time of uncertainty around federal funding and growing pressure on the city budget.
This moment calls for a smarter system, not just a faster one. Tie prepayments to performance. Audit more invoices. Require disclosures. Reward reliability — but make sure all players are held accountable.
Nonprofits deserve timely payment for the critical work they do. But City Hall owes New Yorkers something too: assurance that their dollars aren’t just spent — but spent wisely.
