Across New York State, human services providers are hanging by a thin fiscal thread. Predominantly funded by government contracts, the safety nets that these nonprofit organizations provide — protecting hundreds of thousands of vulnerable New Yorkers — are at risk of being severed.
While COVID-19 has taxed their resources beyond the limit, the larger danger comes from a contracting system defined by late payments, risk of retroactive cuts on existing contracts, failure to register contracts for work already performed, and threat of canceling existing contracts.
It would be as if a small construction company was told, after completing the job, “Sorry, pal, we’re not going to be able to pay you any time soon and if we do, you’ll only get 80% of the amount stipulated in the contract.” Pretty outrageous, right? No good businessperson would abide this practice.
Yet this is precisely what the state government is asking human service providers to do. At a time of pandemic and economic crisis, state agencies are withholding millions of dollars in contract payments from nonprofits across New York. What’s at risk is nothing less than the health and safety of homeless children, survivors of domestic abuse, people with mental illness and addiction, formerly incarcerated individuals, low-income aging New Yorkers, military veterans and others who rely on nonprofits for the support they need to exist day to day.
Nonprofits were already struggling. The Human Services Council of New York recently surveyed 125 member agencies and found that 66% believed they would have to reduce services while 70% expected to implement layoffs.
As nonprofit leaders, we live with the fearful reality of not getting paid for work already done and expenses incurred. We are being forced to take out loans and pay interest for which we will never be reimbursed.
At The Fortune Society, where I serve as president and CEO, we were told to expect payment on only 80% of our claims since COVID hit — for money that we have already spent to provide services. At best, we will get paid the remaining 20% sometime in the future. At worst, we might not get paid that 20% at all.
We need to make hard choices in the face of terrible uncertainty. What do nonprofits do? Close programs and abandon clients? Keep services going and risk insolvency if not reimbursed? Just as the state has a fiduciary obligation to fulfill its contractual obligations to us, we have a moral obligation to keep our clients safe and out of harm’s way. But we cannot meet this obligation when our very survival is threatened.
Do we lay off, fire or furlough employees? The vast majority of nonprofits in New York employ a workforce of low-income people of color. Without a job, will those workers soon need the services that they once provided?
We are stuck between a rock and a hard place. Either choice would cause irreparable and massive human damage.
Nonprofit leaders do not live in a bubble. We are keenly aware of the fiscal constraints facing both state and city governments. With no federal aid on the horizon from Washington, the picture is not encouraging.
But New York State simply cannot abandon its human services providers and those we serve at a time of unprecedented crisis and need. Since February, collectively, our social workers, case managers, janitors, food service workers, counselors, drug treatment specialists, shelter workers, housing advocates and others have been on the front lines putting their lives at risk to ensure that others would be safe.
Our “demands” of New York State are simple: Just don’t break the promises you’ve already made. We want certainty on whether or not we’re going to be paid for future work. And we must be reimbursed for work that’s already been done. Pay us for our work, and pay us on time.
Lives of the most vulnerable — and the survival of too many of the nonprofits that serve them — are at risk if you don’t.
Page is president and CEO of The Fortune Society.
