Reforming how New York City pays nonprofits to provide a whole host of services to City residents is long overdue.Human services – everything from providing childcare to representing New Yorkers in court – are provided by nonprofit contractors and those nonprofits received $8 billion in city spending in fiscal year 2024.
The city places an enormous amount of responsibility on nonprofits to do critical work supporting residents, yet when it comes to how these organizations get paid, the city has historically treated them with a lack of trust and respect.
That dynamic started to change last month, when Mayor Adams announced that the city will implement a system to provide upfront payments to nonprofits. We don’t have to look far for examples of how upfront payments can help empower nonprofits and keep them accountable.
Each year, charitable organizations like the Robin Hood Foundation steward millions of dollars to nonprofits starting from a position of trust. Empowering organizations to deliver impact in this way does not mean giving up mechanisms to hold nonprofits accountable for performance. The sector requires rigorous reporting and imposes clear consequences for misuse, such as suspending future funding, without preemptively withholding support based on hypothetical fears. Philanthropy doesn’t punish the many for the mistakes of a few, and neither should the city.
The current model imposes enormous financial strain on nonprofits. A recent Comptroller’s report found that the percentage of late-registered human services contracts rose from 88.5% in FY23 to 90.7% in FY24. As of April, active nonprofit contracts with short- and medium-term durations could be eligible for up to $4.9 billion more than the city has already paid them. As a result, nonprofits are often forced to take out loans—sometimes at high interest rates—simply to deliver critical services the city has contracted but delayed payment for..
All of the costs from this red tape, which are not covered by contracts awarded by the city, fall on nonprofits and leave nonprofit employees struggling because they aren’t compensated fairly. A few years ago, a nonprofit I led was awarded a $90,000 City grant to fund two full-time workers in a juvenile detention center. In Brooklyn, where the average cost of rent approaches $4,000 a month, this funding was grossly inadequate to cover salaries, benefits, and fringe costs, let alone to sustain quality services.
This kind of underfunding forces nonprofits to stretch already scarce resources even further. We are seeing the consequences of this system across the city. Food pantries and other essential services are cutting back or shutting down completely at a time when New Yorkers need them most. Despite these challenges, nonprofits continue to step up. It’s long past time we treat them as essential partners in delivering public services, not as untrustworthy contractors.
Fortunately, solutions are within reach. City Council Speaker Adrienne Adams’ recently introduced legislation proposes that a percentage of a contract be paid to nonprofits upon registration and a clawback provision to address cases where nonprofits fail to meet their obligations. The Comptroller has recommended relaunching a de Blasio-era initiative to raise the sector’s minimum wage, allow partial payments, and setting firm deadlines for registering contracts. These proposals, coupled with the Mayor’s push to increase contract advances, are reasonable steps to steward taxpayer dollars responsibly—building accountability that protects nonprofits, rather than punishing them.
If we truly value the essential services nonprofits provide, we must fund them like the partners they are—not treat them like the risks they are imagined to be. When our nonprofits are shortchanged, it’s not just organizations that suffer, New Yorkers do too. Our neighbors struggling with mental health can’t get support in times of crisis, working parents lose access to affordable childcare, teenagers are left without mentors to guide or safe after-school spaces; the nonprofit workers who show up everyday to provide these services struggle to make ends meet. Fair and timely funding isn’t just a fiscal reform. It’s a lifeline for New Yorkers.
Jocelynne Rainey is president & CEO of Brooklyn Org, a champion for Brooklyn bringing together community changemakers to be a new model for local philanthropy.
