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Over 700 Nonprofits Call on Governor Hochul to Sign Contracting Reform Legislation
Broken contracting system, Federal threats pushing New York nonprofits to collapse amidst rapidly increasing demand for safety net services
A letter endorsed by an array of non-profit organizations was delivered to Governor Hochul today, urging her to sign S.7001 (Mayer) / A.7616 (Paulin) into law. Per the letter, “Chronic contracting delays, inefficiencies and inconsistencies across agencies, burdensome processes, and reimbursements regularly delayed by six months or more totaling hundreds of millions of dollars are pushing New York’s nonprofits to the breaking point.”
The over 700 signatories, representing an array of sectors including civil legal services, domestic violence support, civil rights advocacy, arts & culture, education, health, community services, environmental and more, echo the Coalition's urgent call to the Governor for contracting reform in New York state.
Momentum has been growing on the issue. The coalition held a well-attended webinar earlier this month, with over 200 organizations RSVP’ing.
The Executive’s SFY 2027 Budget Call Letter released earlier this month, noted economic burdens on non-profits and urged state agencies to review outdated and obsolete rules, regulations, and policies to streamline processes to alleviate such burdens.
State Senator Shelley B. Mayer said, “Not-for-profit organizations across New York State provide essential support, resources, and services to our communities but they often face significant challenges due to complex contracting processes that delay reimbursement from state agencies. This legislation, which I sponsor with Assembly Member Amy Paulin, offers a common-sense solution to streamline the reimbursement process and thus strengthen New York’s not-for-profit organizations that serve thousands of New Yorkers. I thank Empire Justice Center, Human Services Council of New York, New York Council of Nonprofits, New York Legal Services Coalition, Nonprofit New York, and Nonprofit Westchester for their leadership and I join the hundreds of not-for-profit organizations across the state in urging the Governor to sign this important bill into law.”
New York State Assemblywoman Amy Paulin said: “New York’s nonprofit organizations deliver essential services that the state and New Yorkers rely on every day. Yet our nonprofits are forced to operate in a system that delays payments and undermines their ability to serve. This bill will bring long-overdue fairness to the state’s contracting process. I’m grateful to the organizations that have joined together to call for change, and urge Governor Hochul to sign this legislation and lift the bureaucratic burden on our nonprofits so they can focus on their mission of helping New Yorkers.”
"If there was ever a moment when New Yorkers needed consistency and stability from our state government, this is it. Service organizations depend on funding from our state so we can deliver life-changing and life-saving services. Improving the contracting process would not only fortify the future for nonprofits across the state, but it would send a powerful message that our state government is here in this moment to ensure that our safety net is preserved," said Jessica Rose, Executive Director, Build Up Justice NYC.
“The delays and inefficiencies in New York's nonprofit contracting process were inherited by Governor Hochul but they have now reached crisis levels. We are grateful that our bill sponsors and legislative leadership recognized the urgency and passed the bill quickly and unanimously. Signing this bill provides a unique opportunity for the Governor to stand with both houses and both parties to implement simple, common sense efficiencies that will take a burden off New York’s nonprofit sector and the communities we serve. In fact, this bill is exactly the type of action that aligns with the direction in the Division of Budget call letter to agencies, to look for ways to alleviate duplicative and burdensome policies that have a negative impact on the State and nonprofits alike. We look forward the Governor's action on this bill before the end of the calendar year, and we urge her to sign it as soon as possible,” said Kristin Brown, President and CEO of Empire Justice Center and President of the Board of the New York Legal Services Coalition.
“At a time where nonprofits are navigating federal cuts and assisting those impacted by the shutdown, Governor Hochul has the opportunity to ease some of the burdens nonprofits face by signing bill S7001/A7616 into law. Nonprofits contract with the State to provide essential services to communities across the state but are often paid laid and are slowed by antiquated processes. This bill addresses these issues, and we urge the Governor to sign it into law and help nonprofits help our communities more effectively,” said Michelle Jackson, Executive Director, Human Services Council.
“Actions at the federal level – including major cuts to SNAP and Medicaid benefits – mean that more New Yorkers than ever are going to be seeking crisis support from nonprofits in the near future. This is on top of the increased community need many nonprofits have seen continue to rise since the pandemic. Bottomline: New York State’s nonprofits need help more than ever so that they can meet the growing need among residents everywhere,” said Megan Allen, Chief Executive Officer, New York Council of Nonprofits (NYCON).
"Nonprofits are integral to every facet of New York’s infrastructure, economy and democracy, benefiting all New Yorkers. Despite this significance, nonprofits continue to face unprecedented funding delays, rising competition for resources, workforce shortages, and shifting policy environments that create immense organizational pressures as community needs grow. Now more than ever, we urge Governor Hochul to sign S7001/A7616 into law. Doing so will help ensure that nonprofits can continue to provide critical safety net services at a time when their very existence is being threatened by federal funding cuts and harmful administrative actions," said Jacqueline M. Ebanks, President and CEO of Nonprofit New York.
“Nonprofits are the backbone of New York’s social and economic infrastructure, yet we are being asked to hold up the safety net with fraying threads. Systemic contracting delays and late payments from New York State are pushing nonprofits to the brink, compromising our ability to deliver government-mandated and other essential services. Our workforce represents Westchester’s working families, and the current system is filled with inequities and threats that put their jobs and livelihoods at risk. Governor Hochul has recognized these challenges. Now we urge her to join with the New York State Senate and Assembly to act decisively by signing this critical legislation into law,” said Jan Fisher, Executive Director of Nonprofit Westchester.
“State delays in executing contracts and making payments mean that nonprofits often are owed 50% of their annual operating budget at any time by the state. This means nonprofits are spending money that could be used to serve those in need to pay for interest on lines of credit and loans. This Bill creates a simple solution to a complex series of issues – make sure that nonprofits have money up front to pay for staff to provide services. This will cost the state nothing but save nonprofits hundreds of thousands of dollars a year, and make sure more money goes to providing critical services.” Sal Curran, Executive Director, Volunteer Lawyers Project of CNY, Inc.
About the bill
The bill updates the Prompt Contracting Law to: create consistency in contracting across all state agencies; expand and clarify renewal contracts; mandate advance payments and de minimis administrative costs in all contracts, and require the payment of interest by the state when reimbursements are late. The bill passed both chambers unanimously, just months after its first introduction. The provisions will help ensure nonprofits can keep providing critical safety net services at a administrative actions.
New York’s Broken Nonprofit Contracting System
Earlier this year, a white paper was released that highlighted persistent delays in payment, an over-reliance on nonprofits to front costs, and a burdensome contracting process are undermining New York State’s nonprofit sector and its ability to serve. It was co-authored by Human Services Council, the New York Council of Nonprofits, New York Legal Services Coalition, Nonprofit New York, and Nonprofit Westchester. While New York State Finance Law requires that reimbursements should be paid within 30 days, in practice, delays in payments consistently last months and can last more than a year. Nonprofits often need to take out interest-bearing loans and then absorb the interest payments themselves.
The white paper also highlights that:
1 in 3 nonprofits with State contracts are owed funding for services already provided,
At least $650 million is owed by the State to nonprofits
65% of nonprofits expressed concern about funding basic operation
Examples
Anonymous responses to a recent survey of New York nonprofits highlighted examples of strains and inconsistencies across agencies. A sampling included:
“Stop the clock” notice (which stops interest from accruing for the nonprofit) being put on a quarter-million dollar voucher for a rounding discrepancy of less than a penny;
“Stop the clock” being used because the pages of the voucher were in a different order than the budget statement;
Being given unclear directions on how to report outcomes, then having to redo 8 months of detailed reporting; and
Having to mail hard copies of invoices, multiple times, because there is not an online option to submit.
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