Suggested Article: State Not Processing Contracts With Not-for-Profits on Time

AVRE ED Bob Hanye provided the following article for EDs:

Issues New Regulations to Ensure Organizations are Paid Interest Owed to Them
Provides Breakdown of Late Contracts by Geographic Region and Organization

State agencies report that state contracts with not-for-profit organizations were approved late 63 percent of the time. However, the Office of the State Comptroller's (OSC) data shows that the rate of late contracts may be as high as 87 percent, according to a report released by State Comptroller Thomas P. DiNapoli. This is forcing many not-for-profits to take drastic measures to keep their doors open. DiNapoli proposed new regulations to ensure not-for-profits are paid interest required by law when their contracts are processed late as well as recommendations to reduce late contracting.

"Not-for-profits operate on very thin margins,"DiNapoli said. "Those margins can disappear completely when contracts for services are held up. New York has an implicit compact with these organizations. They provide vital services for vulnerable New Yorkers and the state should ensure they get their funding on time. It's time for the state to live up to its end of the bargain. Our new regulations will help, but state agencies need to step up and act responsibly.

New York relies heavily on not-for-profits to provide services through grant contracts such as health care clinics, workforce development and mortgage foreclosure programs. The state currently has 30,764 active contracts with not-for-profits totaling $14.6 billion.

Persistent problems led the state to adopt a prompt contracting law in 1991 to expedite the contract process and payments for not-for-profits to help them avoid service interruptions and financial hardships. State law requires that these contracts be processed by state agencies within 150 to 180 days. Under a 2007 amendment to the law, DiNapoli's office is required to report annually on how quickly state agencies process contracts for not-for-profits based on data that is self-reported by state agencies to his office.

DiNapoli found in 2008 that 87 percent of not-for-profits "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, OSC found 5,260 of 6,033 contracts, valued at $2.7 billion, were approved late in 2008 "an average of 184 days late" (see late contracts breakdown by region and organization). In recent months, an increasing number of organizations who were unable to make payroll, faced eviction or risked losing other funding because their state contract was significantly delayed contacted OSC about their problems. Only $144,906 was paid in interest to not-for-profits by state agencies for processing their contracts late in 2008, a 29 percent decrease from last year.

Senator Craig M. Johnson (D-Nassau) said "These critically important organizations fulfill vital services to our communities, while oftentimes operating on the thinnest of margins. This apparent institutionalized lack of sensitivity to them is inexcusable. I thank Comptroller DiNapoli for taking up this cause. With his leadership, I am confident that we will be able to force these much-needed changes.

"It is certainly disappointing to hear how significantly agencies are struggling to fulfill their obligations to renew contracts in a timely manner with not-for-profits, as well as to pay out the interest those not-for-profits are entitled to under law in cases of such delays. The state needs to start living up to its legal and moral obligation to treat these partners in government fairly, Assemblywoman RoAnn M. Destito (D/WF-Rome) said. "I am proud to support Assembly legislation to make permanent the Comptroller's oversight over agency compliance with the Prompt Contracting Law. The Assembly Committee on Governmental Operations held a hearing in Albany on June 15 to identify how we can take the findings of this report, and the experiences of not-for-profit institutions across the state, and work towards a truly equitable system where the community-based organizations who do so much critical work on behalf of our state agencies are no longer financially penalized for doing so.

Assemblyman Jonathan L. Bing (D-Manhattan) said "As the author of the 2007 legislation which attempted to strengthen the prompt payment law, I know the severe burden New York not-for-profits face in these uncertain economic times. These organizations are operating crucial social service functions throughout New York and deserve to know in a timely manner whether the state will be renewing their contracts to avoid suspension or termination of these important programs. I applaud Comptroller DiNapoli for bringing attention to this vital matter."

Ronald D. Soloway, chair of the State Non-Profit Contracting Advisory Committee and managing director of Government and External Relations for UJA-Federation of New York, said "UJA-Federation applauds State Comptroller Tom DiNapoli for his continuing resolve to improve the contracting process for non-profits in New York. This latest report, documenting that up to 87 percent of contracts are not processed on time, is a clarion call to fix this longstanding problem. In this very difficult economic environment, non-profit organizations do not have substantial access to the commercial credit markets and cannot self fund the state's obligations. As such, late contracting threatens the ability of the non-profit sector to meet the needs of the poor and the vulnerable. State government must act now and UJA-Federation is very pleased that Comptroller DiNapoli will take one step shortly by issuing regulations that will clarify requirements that state agencies must pay an interest penalty when contracts are not processed timely."

Susan K. Hager, president and CEO, United Way of New York State, said "United Ways urge Governor Paterson to eliminate lengthy contracting and payment delays to not-for-profit organizations. The not-for-profit sector is in the midst of a 'perfect storm' including major cuts in public funding and philanthropic contributions, loss of valued staff and volunteers, increased pension costs, new state disincentives to charitable giving for wealthy donors, and continued delays for contracts and payments. These challenges converge against the backdrop of a veritable tsunami of requests for help from New Yorkers in need. Not-for-profits look to state leaders for a solution."

Richard E. Barnes, executive director, New York State Catholic Conference, said "New York State Comptroller Tom DiNapoli has again demonstrated his commitment to resolving the problems surrounding the state's contracting for services provided to people of this state. When state government addresses a need of the people, both lawmakers and the recipients of the services expect efficiency in the process of providing those services. Delays in the processing of contracts, and the resulting financial burdens placed on nonprofit providers who have to borrow money to cover the cost of the delays, should not be the enduring hallmark of how this system operates."

After issuing the first Prompt Contracting Annual Report in June 2008, DiNapoli's office initiated a wider probe into the persistent problems that not-for-profits experience when contracting with state agencies. His office examined a sample of 95 late contracts between not-for-profits and state agencies approved over a four-month period in 2008 and found:
• New contracts examined were approved almost nine months after the contract start date;
• Renewal contracts were approved in 233 days, far exceeding the 90-day time frame in state law;
• State agencies failed to notify not-for-profits within 90-days whether their contracts would be renewed leaving these organizations with little time to plan for the funding loss; and
• No interest was paid to organizations. OSC estimated that approximately $102,000 in interest should have been paid to not-for-profits, as required by state law. However, because of ambiguities in the law, state agencies failed to make these payments.

DiNapoli's office has filed regulations that would clarify these ambiguities and should result in increased interest payments to not-for-profits. There is a 45-day comment period before the regulations may be finalized. DiNapoli also made several recommendations to improve the process including:
• State agencies must prioritize not-for-profit contracts and ensure sufficient resources are available to allow for contracts to be approved prior to their start dates;
• State agencies should change the April 1 start dates for grant contracts so that the processing of contracts is not affected by the timeliness of the state budget;
• State agencies should work to clarify and simplify contract submission instructions for not-for-profits through increased outreach and guidance;
• State agencies should document common mistakes made by providers during the contracting process and propose solutions;
• The Prompt Contracting Advisory Committee should continue to meet regularly to identify ways to improve the process;
• The Office of Technology and the Division of the Budget should ensure that future state agency financial management systems are designed to assist state agencies in the timely execution and reporting of grant contracts; and
• State agencies should provide OSC with the notification letters of their intent to renew or terminate contracts, as required by law.

Nonprofits Employ Tougher Measures as Downturn Deepens

The Nonprofit Times has reported on a new Bridgespan survey (carried out in November 2008 and updated this past May) that reveals the negative effects of the economy on nonprofits has accelerated during the past six months.

Some of the key study findings in regards to nonprofits' responses to the downturn are:

• Working closely with existing funders to address challenges 79 percent this past November and 81 percent this past May;
• Redesign programs to achieve outcomes in a less costly manner: 59 percent in November and 67 percent this past May;
• Examine and improve key processes and structures in increase organizational efficiency 48 percent in November and 62 percent this past May;
• Have a clearly defined contingency plan 59 percent in November and 67 percent this past May; and,
• Consciously identify key positions and shift resources to keep these positions filled.

Read the Nonprofit Times article here.

CHOW Expansion

Volunteers with the Community Hunger Outreach Warehouse (CHOW), a program of the Broome County Council of Churches, have spent a productive spring planting vegetables in Endwell, Union, and on Binghamton's South Side. All of the fresh produce grown will be donated to CHOW's clients. In addition to the produce itself, CHOW is also planning on offering cooking classes to their clients. Next year's harvest will be even more bountiful, with the addition of new growing space in Conklin. You can read more about CHOW's expected expansion here. To learn more about the Broome County Council of Churches and the different programs they offer in our community, check out their website.

JCC receives grant for daycare

The Press & Sun-Bulletin reported that the Binghamton Jewish Community Center’s Early Childhood Center was awarded a $12,000 grant from the Community Foundation for South Central New York. The money will go towards the $115,000 in daycare subsidies the center provides to needy families. Read the announcement here.

Program Meeting Focuses on Saftey and Emergency Planning

The recent SCNY ED Group meeting drew over 27 participants to hear Richard D. Keehle Jr., the Manager of Safety and Security Services/Emergency Preparedness Coordinator from United Health Services. Mr. Keehle's presentation (available here) was all inclusive and covered the core areas of:
•Safety Planning
•Police/Fire Involvement
•Emergency Planning
•Evacuation Planning
•Actual Events
•Personal Protection

The program highlighted the need for nonprofits and their staff to carry out a risk assessment and have a plan in place to deal with emergencies (such as flooding, workplace violence, or even loss of power). Many nonprofits believe they don't have the expertise and resources available to address the areas outlined in this program, but the speaker highlighted some invaluable resources and related online free training available for any sized nonprofit.

Suggested resources:

• Link for NIMS ICS Courses: http://training.fema.gov/emiweb/is/crslist.asp
• www.ready.gov: a source for emergency templates and plans

Have other suggestions? Add them here or e-mail us.

Special Projects Committee
The Program ended with business meeting, which featured an update from the Special Projects Committee about the planned nonprofit economic impact study. Joe Sellepack, the Committee Chair, introduced the two Binghamton University interns, Katie McDonald and Mike Kvassay, who will be helping develop this effort. Joe also introduced a letter that will be going out to area nonprofit directors about this project, which will ask for their support. The meeting ended with a request from Katie to send thoughts and feedback about misperceptions/misconception/myths about their particular nonprofit organization and/or nonprofits organizations in general to her at kmcdona1@binghamton.edu. The information will be compiled and used to inform the qualitative portion of the Special Projects Committee project regarding the social and cultural benefits of nonprofit organizations.

Membership Committee Meeting Set

The next membership committee meeting of the SCNYED group will be held onJuly 1, 2009, 8:30am at Mental Health Association of the Southern Tier, Inc.- 153 Court Street, Binghamton. Agenda to follow. Please RSVP to Keith W. Leahey, MSW
Executive Director
MHAST
153 Court Street
Binghamton, NY 13901
607.771.8888 ext. 349

Call for Nominations for BCAC's 2009 Heart of the Arts and Lifetime Achievement Awards

YOU are invited to download submission instructions and official forms NOW and submit your nominations by 12:00 Noon, Friday, July 10th!

The annual Heart of the Arts Awards and Lifetime Achievement Awards honor those who have made significant contributions to the arts in Broome County. Nominated by YOU, the community, and chosen by the ballot votes of BCAC members, recipients truly represent the 'heart of the arts' in Broome County. 2009 recipients will be announced in late August and awards bestowed at this year's Heart of the Arts Awards Celebration on Friday, October 2nd at the Forum Theatre Recital Hall in downtown Binghamton. Save the Date and Voice YOUR choice! Heart of the ARTS to YOU!

Charitable Giving Declines, a New Report Finds

The NY Times reported that charitable giving fell last year by the largest percentage in five decades, according to a new study by the Giving USA Foundation.

Individuals and institutions made gifts and pledges of $307.65 billion, a decrease of 5.7 percent on an inflation-adjusted basis over the $314 billion given in 2007, according to the foundation, a research organization backed by the fund-raising industry.

Some experts said they were surprised the drop was not even bigger, given that endowments fell by as much as 40 percent, the stock market declined by a similar margin, corporations posted unheard-of losses and unemployment was rising at a fast clip.

“So far, my clients are holding their own, by and large,” said Robert F. Sharpe, a fund-raising consultant whose clients include St. Jude’s Children’s Research Hospital and Memorial Sloan-Kettering Cancer Center.

The Giving USA Foundation study found that the drop in giving accelerated in the fall, as the impact of the economic crisis and the steep decline in stock markets took hold.

“In the first half of the year, it was more or less business as usual for our clients, which is to say pretty good,” said Del Martin, the chairwoman of the foundation and a partner at Alexander Haas, a fund-raising advisory firm in Atlanta. “Then, as we got into the last quarter, we saw corporations begin rethinking their giving in greatly different ways, and we saw individuals begin to revisit their philanthropic priorities.”

Even with the steep drop, charitable giving remained strong. Last year’s giving outstripped all previous years on record except 2007, though the outlook for next year remains uncertain.

Amherst College, for example, had a “banner year” last year, said Megan Morey, the institution’s chief advancement officer. The college received the largest bequest in its history, $23 million, and several donors responded promptly to a new $425 million capital campaign, enabling Amherst to raise a total of roughly $70 million.

But like other nonprofit organizations, Amherst has found fund-raising in the current year tough. Ms. Morey said the annual campaign, which ends in a few weeks, is down by roughly 15 percent compared with the 2007-8 effort. “Over all,” she said, “we’re tracking comparable to what we were in 2007, which I feel good about.”

Giving USA estimated that donations to educational institutions fell 9 percent on an inflation-adjusted basis to $40.94 billion. Colleges, universities and private schools, including Amherst, have also been hit by sharp declines in their assets.

About two-thirds of public charities saw donations decrease in 2008, the foundation said. Most surprising, Ms. Martin said, was the decline in gifts to organizations working to meet basic needs, like food banks and homeless shelters, which are seeing a big increase in demand for their services. Read the full article here.

SCNYED Special Projects Committee Meeting Notes

5/15/09
Present: Joe Sellepack, Allison Alden, Joe Slavik, Daryl Newvine,David Karre, Ron Charsky, Katie McDonald, Mike Kvassay

Joe provided an update from the last meeting of the entire group. He reviewed basic information concerning our interns – Katie and Mike. He noted that it is important for both Katie and Mike to be working together with our group and their projects. Darrel began a conversation about research. What needs to be considered and what might be included in the results. Also, how will this information beshared with the entire group and how can methodology be made useful for smaller NPOs.

We discussed classification schemes. Katie has researched some information and shared that electronically with the group. We again discussed some of the issues relating to the New Hampshire and Michigan studies, noting that the NH study is likely very similar towhat we’d like to do.

We also wondered – have we defined what our “service area” is? NO! Considered it to be 4 counties – Broome, Tioga, Chenango and Delaware

Allison mentioned topics we need to be certain re included: benefits to individual; benefits to organizations, and benefits / inputs to larger social issues, such as short-term and long-term solutions to hunger. Ron mentioned we also need to consider “who is our customer”.Joe S. noted this is important, but we also need to balance “customer wants” with the concept of “public good”. Allison noted we also need to have a “face” to represent the public good. She also noted we need to identify our assets that help us meet our goals. Joe S. mentionedwe need to look at Community events that help us meet our goals, such as SpeidieFest and CHOW walk, etc. It was noted that the Harwood document relates to this issue.

ITEMS TO DO:

• a draft of a 1-page “flyer” outlining the program (David will do)
• a draft of an “ask letter” for financial and organizational support(Joe S. will do)

Allison began a conversation about the funding issue for the project... It was noted that Jerry Putman from Decker noted that foundations will be looking for impact. The idea was also discussed with Donna Hill. She felt it might be a tougher sell than we thought, as foundation’s are more focused on the outcome that might identify where there’s duplication of services which could lead to possible consolidation. She did note however that foundations were open to additional information gathering. Allison noted that it is critical to remember that “shared services” does not mean the same as consolidation. Darrel noted that we may not need foundation funding if enough participants help underwrite the cost of the entire project. David mentioned we also need to look a6t corporate funding, the way NH did.

Darrel began a conversation of the project, noting we have 2 internsfor 300 hours. And he asked – what do we want them to produce? Joe S.mentioned that Broome Council of Churches is looking for Katie to create a framework / design plan to pass on to the next person. Allison noted that Katie’s project is more “qualitative” while Mike’s project with Darrel and Family Enrichment Network is more “quantitative”. It is anticipated that we will need 1 intern in the fall, 1 intern in the spring and 3 interns in the summer to “complete”the project

Darrel asked – what do we want Mike to do re: financial impact? We will need local demographics (population, homes, ethnicity, etc). Allison noted we need to see what has been done and is available sothat we might borrow methodology from that and determine what might be consistent with what we want. Ron noted we need to have interim reports to be sure we’re all moving forward together. Allison wondered what local data might be currently available, and Katie will followup.

Katie noted she’s been reading lots of information / articles and will be posting some to the group next week. Some of these will relate to a “philosophical overview” of such studies.

Next meeting of the Special Projects group will be 6/2 at 2pm atBroome County Council of Churches. The next meeting of the entire group will be 6/16 at 8:30am at AVRE.