Nonprofit Financing: This is OUTRAGEOUS!

More on what’s happening TO nonprofits around the country: This time in the State of New York:

A short article by Rick Cohen:
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March 30, 2010; The Business Review | Our reviews of the state budget crises’ impacts on nonprofits have tended to focus on budget cuts and on late payments. But New York State Comptroller Thomas DiNapoli just issued a report [PDF], produced with the help of the New York Council of Nonprofits, the nonprofit state association in New York that is a member of the National Council on Nonprofits, about the delays in state contracts.

According to DiNapoli’s report, 87 percent of nonprofit contracts (of more than $50,000) were not approved prior to the nonprofits’ beginning their work. On average, new contracts were approved nine months after the contract start dates and renewals were five months late on average (state law required that the nonprofits be paid interest on the costs of services they delivered pursuant to late contracts, but New York State has not paid up to the nonprofits in the Comptroller’s study sample and it’s unclear whether it ever will).

Delayed contracts mean that nonprofits are floating the costs of state services without a guarantee that they’ll even have contracts, much less that the contracts will be retroactive to when they started delivering the services. In speaking to Utica Observer Dispatch, Comptroller DiNapoli showed that he gets it: “Not-for-profits are struggling to provide crucial services to New York families. When state agencies fail to approve contracts and make payments on deadline, they make the problem worse.”

The Comptroller’s report contains several important recommendations including standardizing contracts, centralizing contract monitoring and audit management, reducing processing time on nonprofit contracts, establishing performance-based or outcome-based contract measures, prioritizing state funding to reduce or eliminate funding for programs that are inefficient or not cost-effective, and making contract payments more timely.—Rick Cohen

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Using knowledge for success
Dr. Rick Hoefer

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