With the protest slogan, “Pay on time every time!” may sound like a moderate demand.
But for many nonprofits hiring New York City to provide billions of dollars in social services, quick payments are a distant dream. Workers representing hundreds of nonprofits gathered outside the town hall last week, begging the city to just pay them what they owe.
According to a new report by the city’s auditor general Brad Lander, the city sits at least 7,000 unpaid invoices among nonprofits, some dating back to years, totaling more than $1 billion.
It is a group that shelters homeless people, provides children and the elderly, feeds hungry New Yorkers, consults with mentally ill people, protects victims of domestic violence and provides legal services to immigrants and defendants who cannot afford lawyers.
“The City said to these organizations, ‘Look, we don’t have the ability to do this lifesaving work – we need you to do that,” Justin Brannan, chairman of the Council’s finance committee, said at a rally Wednesday. “But when it’s time to get paid, they treat you like a parent who doesn’t answer the phone.”
Mr Rand said the $1 billion is likely to be a primer. His review found that as of April, nonprofits with active contracts may have completed $4.9 billion in work for the city’s unpaid jobs.
Here’s what you know about chronic late payments in the city.
Why is this city good at paying bills?
It’s not a cash flow problem – New York City has money. Instead, delays are built into the signing and payment process in each step.
The city registered more than 90% of human service contracts in the last fiscal year, which was later, a key step in legalizing the contract and having the contractor submit invoices.
When nonprofits even require modifications to small contracts (such as a few hundred dollars to repair a boiler), payments can be made for several months.
Staffing is also a big problem. After abuse, new paperwork requirements were proposed after the increase in workload of many vacant urban institutions that had been dealt with.
The auditor general said a new payment portal launched last year was plagued by failures.
How late is it to pay?
The Auditor General found that over 4,000 overdue payments were accounted for in the slowest city institutions, with an average delay of 49 days for unpaid invoices. The slowest Homeless Services Department holds more than 1,300 unpaid invoices, an average of 82 days. It has 72 unpaid invoices, which date back more than a year.
New York U.S. volunteers provide shelter for victims of domestic violence, veterans and people with disabilities and owed $32 million, he said some fees remain unpaid in 2017.
How do nonprofits keep lights while they owe millions of dollars?
It’s mainly borrowing money, which will cause your own problems. Some organizations have annual interest on debts as high as one million dollars. The city doesn’t have to repay their interests for their interest, so the money needs to come from somewhere, sometimes to serve those in need.
During a city council hearing in March, Rev. Terry Troia, president of housing operators program hospitality for Staten Island, said her organization “owed only $4.5 million,” down from $16 million last year. Still, it faces an interest bill of $100,000, which must be paid.
“You can do this by raising money in the community, but people would rather donate to our pantry,” she said.
Did late payments ever shut down nonprofits?
It happened. In 2023, Husth Arms is a 200-year-old youth service organization that provides child care and foster care, partly due to payment delays.
Other nonprofits have expanded their return services. The promised thousands of employees have not received the cost of living.
Kristin Miller, executive director of the Federation of Homeless People, said the providers no longer bid for city contracts, “because the risk of further business with the city is too high.”
But for many of them, the city is the only game in the town, the only source of work the organization performs.
What is City Hall doing to solve the problem?
Last Tuesday, Mayor Eric Adams, who is to be re-elected, announced that the city is expected to pay more than $5 billion in advance to contractors in the next fiscal year, up to $2.8 billion this fiscal year. Nonprofit contractors can serve as 25% of the value of the contract in advance. The new fiscal year will begin on July 1.
City Hall has also launched a new tracking system “to bring data-driven accountability to nonprofit contracts across the city.”
Mr Rand, who runs for mayor, said the increase in advance payments was “a useful band-aid that helps resolve the immediate crisis” but stressed the need for deeper reforms.
What suggestions did other officials make?
Mr Lander proposed partial invoice payments as standard practice so that disputes about one order item do not pay the entire bill; expand grants and bridge loans to ensure nonprofits earn wages; and fix “pain points” in the new payment system Passport.
The City Council introduced several bills in the efforts of Speaker Adrienne Adams and Mr. Brannan. One person will require the city to pay 80% of the annual contract in advance. Another will establish a new urban agency, the Contract Services Department. One third will require agents to submit a “corrective action plan” if they are late for a contract. (Ms. Adams is also running for mayor.)
Mr. Brannan also filed a fee for interest payments required by the city for delays in payments.
