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March 30, 2010

DiNapoli: Not-For-Profits Continue To Suffer As Great Recession Lingers

The Great Recession is creating significant challenges for not-for-profits including substantial losses in public and private funding and charitable donations, as well as increases in clients and demand for services, according to a report released today by State Comptroller Thomas P. DiNapoli. In addition, state agencies continue to exacerbate the problem with contract delays and late payments to not-for-profits.

“Not-for-profits are struggling to provide crucial services to New York families,” DiNapoli said. “When state agencies fail to approve contracts and make payments on deadline, they make the problem worse. Many NFPs operate on a shoestring, and when contracts are delayed and payments aren’t made, the shoestring can break.”

DiNapoli’s auditors found that 87 percent of not-for-profit contracts valued at more than $50,000 were not approved by the start or renewal date, forcing not-for-profits to perform services without a contract in place and without any payments. In total, auditors found 5,260 of 6,033 contracts, valued at $2.7 billion, were approved late in 2008 by an average of 184 days.

To improve accountability and oversight of contracts, and stabilize the financial viability of the for not-for-profit sector, DiNapoli recommends the state should:

  • Standardize contracts to enable greater coordination and efficiency in monitoring and oversight of not-for-profits that contract with multiple state agencies;
  • Establish performance-based contract measures collaboratively to ensure state policy makers make informed, strategic decisions on program funding;
  • Implement a centralized monitoring and audit management system to provide for more efficient use of state and not-for-profit resources and decrease processing time;
  • Make contract payments timely to ensure that not-for-profits can properly plan and start newly approved and funded projects; and
  • Encourage financial support from nongovernmental entities.

“Comptroller DiNapoli clearly recognizes the importance of this sector and the challenges it faces. These recommendations can go a long way to improving conditions at this critical time,” said Susan Hager, President of United Way of New York State.

DiNapoli indicated that his office is committed to assisting the not-for-profit sector and its consumers in whatever way possible. DiNapoli’s office reviews and approves contracts as quickly as possible and has developed online resources like Open Book New York that allow New Yorkers to track state spending and contracts.


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