Mayor Adams’ recent announcement that the city’s “Clear the Backlog” initiative has unlocked more than $4.2 billion in contractual dollars for nonprofits is groundbreaking news for nonprofits and city residents. I am grateful the mayor is committed to supporting nonprofits that act as lifelines to the communities and people they serve. I hope his administration continues to quickly register contracts and pay nonprofits — as there is still much work to be done.
One of our grantees, a mid-sized community-based organization with a $10 million budget, had, as of early August, nine unregistered contracts for the fiscal year that ended June 30. In total, the city owes the organization more than $1 million for services and invoices rendered. Other grantees of the foundation I run are in similar situations.
Clearing the backlog and fixing the nonprofit contracting system, as the mayor and comptroller pledged to do earlier this year, are key to getting the city back on track. Paying nonprofits fairly is also crucial to their — and our — success. Nonprofits, after all, provide the most vital services and supports that help individuals and communities prosper.
What makes the nonprofit sector uniquely positioned to improve life in New York City is the holistic scope of its work — addressing workforce issues, creating safer communities, caring for the homeless and those who have significant mental health challenges, providing childcare for working parents, running world-class cultural institutions, beautifying parks and public spaces, and so much more. Yet nonprofits have historically not been properly compensated and are made to jump through hoops for their limited funding.
The city can do more to support nonprofits by taking three system-altering steps: make contract registration and payment faster and easier, adjust contracts for large inflationary cost increases, and increase wages for workers at nonprofits contracted by the city.
While improvements to PASSPort, the city’s contracting system, have been made, problems persist. Another grantee of our foundation — a small local organization — spends countless hours each year uploading forms to PASSPort, only to have them rejected for issues like a typo in the file name. As a result, their one staff member who juggles the demands of running the organization’s finance, administrative and human resources departments has little time to spend to improve staff training and administrative efficiencies.
Streamlining the bureaucratic red tape will go a long way in freeing up smaller nonprofits to focus on improving their operations and fulfilling their missions, without any seeming impact to the city’s contracting oversights. For example, if PASSPort could become truly centralized and nonprofit agencies could upload contract registration documents (insurance docs, tax affirmation, board lists, etc.) once, in one place, using one standard format, making all those details then become accessible to all city agencies, the process would be more efficient for all.
But even when contracts are finally all registered and paid on time, organizations will continue to struggle, even more so in times like these when paying the bills is getting harder due to sky-high inflation. While businesses can pass higher costs on to customers, nonprofits are left holding the bill for significantly higher costs of doing business. City contracts aren’t set up to respond to rising costs. The city should implement procedures to compensate contracted nonprofits for significantly higher costs that are out of their control, like inflation.
Similarly, contract-dictated salaries are too low. Increasing pay rates for nonprofit workers providing city-contracted services isn’t just about providing individuals doing some of the city’s most important work with a living wage. Low wages contribute to high turnover and vacancy rates in the nonprofit sectors. Some social service organizations have 50% turnover rates and more than 20% vacancy rates. Those unfilled positions mean services are not delivered to all those who need them, diminishing the impact nonprofits can make. The new city budget’s 5.4% cost of living adjustment to nonprofits is good news — but it’s only a start.
Changing the way our city contracts with and pays nonprofits is not just the right thing to do, it’s also a matter of racial justice. Nonprofits are the primary providers of social, economic and health care services in our communities of color. Moreover, they create jobs: In Brooklyn, nonprofits account for more than 20% of all private sector jobs (and an incredible 33% in the Bronx), and 56% of the city’s nonprofit workers are people of color. So, paying nonprofits fairly and on time for their work, and making the contract process easier, will make things better for many people and communities of color.
Mayor Adams has long been a champion of nonprofits. I have faith he will create a more fair system that uplifts nonprofits, its workers, and all those it serves. In turn, those nonprofits will help Adams achieve his goals for a renewed, post-pandemic thriving New York City.
Rainey is CEO of the Brooklyn Community Foundation.