National Study Shows Government's Unfair Business Practices Hurt New York State Charities

Albany, N.Y. – October 6^th, 2010 – The Urban Institute will be releasing a ground breaking national study this morning regarding government contracting and payment practices with human service nonprofits. The report, Human Service Nonprofits and Government Collaboration: Findings from the 2010 National Survey of Nonprofit Government Contracts and Grants, provides essential national and New York State data on contracting practices.

The study is based on survey data for 2009. It ranks late government payments to nonprofits in New York State as being the 9^th worst in the country. Payments were commonly late 90 days or more despite the fact that New York is the only state in the country with a “Prompt Contracting” law designed to protect nonprofits from late contracts and payments. This finding reinforces data produced by the State Comptroller that shows that 90% of all state payments are late. The study also revealed that the processes of applying for and reporting on state contracts is seen as problematically complex and time consuming by over 70% of the nonprofits.

Other rankings specific to New York State include:

· Ranked 11^th in the list of worst offenders with respect to
mid-term changes to contracts.

· Ranked 20^th in having contracts that do not cover the full cost of the services being performed. Related findings include that 47% of the nonprofits report contracts requiring them to share the cost of full service and over 60% reporting limitations on reimbursement for administrative or overhead expenses incurred.

"Our state’s nonprofits have, historically, been resilient when it comes to putting mission and people first, often absorbing the financial loses and risks associated with doing business with government,” states Doug Sauer, Chief Executive Officer of the New York Council of Nonprofits (NYCON). He further observes, “These are very difficult times for all. Community-based nonprofits are on the front lines of the crisis in human needs that people across the state are facing. Sadly, the inability of our government leaders to responsibly manage their budgets and be fair in their contractual commitments, are now pushing many charities to the financial breaking point. In essence, government appears to be expecting charitable donors, who are also taxpayers, to subsidize its cash flow. ”

The problem has worsened. A recent survey conducted by NYCON shows that the over 80% of nonprofits report that the contracting and payment problems with the State of New York have worsened in 2010 over 2009. To cope with the state´s business practices, over 60% of charities have reduced services or eliminated programs. Most have had to draw on their charitable reserves and/or borrow money.

To help strengthen the partnership between government and nonprofits NYCON, working closely with the Comptroller’s Office and other State agencies, launched an “Ombudsman Program” to help nonprofits navigate the New York State contracting and payments process as well as, over time, improve the efficiency and timeliness of the State’s processing of nonprofit business.

“Not-for-profits are struggling to provide crucial services to New York families,” said New York State Comptroller Thomas DiNapoli. "When state agencies fail to approve contracts and make payments on deadline, they make the problem worse. Many not-for-profits already face significant challenges, and when contracts are delayed and payments aren’t made, the situation gets even tougher."

"We need to fix this system,” stated Doug Sauer. “We call on all parties, including candidates for office, to commit to working together for responsible solutions.”

Complete study available now at www.nycon.org.