Introduction to the New Initiative
Nonprofit organizations working under city contracts will soon be able to receive up to half of their payments upfront, Mayor Eric Adams announced Tuesday — but service providers say it’s just one of many reforms needed to fix a notoriously problematic billing system.
The Announcement and Its Implications
Adams said the move to give higher advance payments, estimated to be more than $5 billion, for the next fiscal year was “unprecedented.”
“This is about trust, respect, and making sure those who care for our city can count on their city to care for them,” Adams said in a statement.
Current State of Nonprofit Funding
Although the city currently advances up to 25% of a contract up front, a spokesperson for the mayor, Zachary Nosanchuk, couldn’t answer questions about how much of an advance providers could now receive. He also didn’t answer questions about how the $5 billion figure was calculated.
Historical Context of Payment Delays
THE CITY previously reported on years-long delays that forced vital service providers working to offer free legal help or connecting New Yorkers to shelter to come up with new ways to pay staff and fund programs — in some cases resulting in organizations shutting down entirely.
Ongoing Problems and Proposed Solutions
The longstanding problems have prompted audits, task forces, reports, and proposed changes, but they still persist. Comptroller Brad Lander, who is running for mayor, also on Tuesday released a new report on nonprofit funding delays and the ways in which the federal government could further threaten payment.
Audit Findings and Recommendations
That follows a February audit by his office that found delays had worsened under the Adams administration, despite announced efforts to improve payment. One common problem is that many of the contracts are registered late, which means they wouldn’t even benefit from Adams’ new advance payment initiative.
Examination of Unpaid Invoices
Lander’s latest report looks at nine city agencies with more than $100 million in active contracts with non-profits — Department of Homeless Services, Department of Health, ACS, Department of Social Services/Human Resources Association, and Department of Youth and Community Development. It found more than 7,000 unpaid invoices worth more than $1 billion, with at least $675 million in unpaid invoices for work done two years ago or longer.
Upcoming City Council Hearing
Meanwhile, the City Council on Wednesday is set to hold a hearing on nonprofit payment delays, following a report and proposed legislation released earlier this month by Speaker Adrienne Adams. The bills suggested paying providers early and also restoring funding to the Mayor’s Office of Contract Services, which is an important part of the contract approval process.
Reaction to the Proposal
Commissioner Lisa Flores resigned last month and the agency recently promoted Kim Yu as its new head. In response to the mayor’s proposal, a spokesperson for Speaker Adams called the mayor’s plan “half-baked.” “Scrambling to release a half-baked announcement ahead of a Council hearing isn’t how to achieve real solutions for nonprofits and the New Yorkers they serve,” Julia Agos said in the statement, taking credit for the plan after Speaker Adams announced her own proposal last month.
Nonprofit Perspective
Michelle Jackson, CEO of the Human Services Council said any advance helps, but it’s not a silver bullet — noting that the newly announced measure is just one of many steps that needed to be taken to ensure nonprofits are paid on time. “It doesn’t fix what people are owed now, and it will only help organizations that have their contracts registered on time,” she said. “They have eight weeks to register all the contracts for that to actually matter.”
Conclusion
The move to float nonprofits more money upfront is a step towards addressing the longstanding issue of payment delays, but it is only the beginning. With thousands of unpaid invoices and millions of dollars owed, it will take more than just advance payments to fix the system. The city must work towards implementing comprehensive reforms that ensure timely payments and support the vital work of nonprofit organizations.
FAQs
- Q: What is the new initiative announced by Mayor Eric Adams?
A: Mayor Eric Adams announced that nonprofit organizations working under city contracts will soon be able to receive up to half of their payments upfront. - Q: How much are the estimated advance payments for the next fiscal year?
A: The estimated advance payments are more than $5 billion. - Q: What is the current advance payment percentage for contracts?
A: The city currently advances up to 25% of a contract up front. - Q: How many unpaid invoices were found in Lander’s latest report?
A: More than 7,000 unpaid invoices worth more than $1 billion were found. - Q: What is the proposed solution by the City Council?
A: The City Council proposed paying providers early and restoring funding to the Mayor’s Office of Contract Services.
