Nonprofits Want New York To Pay On Time

A letter signed by executives at 715 individual nonprofits and 14 umbrella organizations requests New York Gov. Andrew Cuomo deliver promised payments to the nonprofits.

The letter, which was sent in late July, is in response to Cuomo’s March 7 Executive Order 202.48, “Continuing Temporary Suspension and Modification of Laws Relating to the Disaster Emergency.” The order suspended a variety of laws, but nonprofit leaders are most concerned about language that enabled New York State Budget Director Robert Mujica to delay contracted payments and freeze contractual commitments.

“We understand and are attuned to the budget challenges that the State faces due to the pandemic,” the letter states. But given the financial perils many nonprofits face, “the recent announcement suspending prompt payment laws… will make the situation for nonprofits much more untenable.

“The fact that this executive order was put out with no advance notice or consultation from those impacted is gravely disappointing and not respectful of importance and value [sic] of nonprofits across the State,” the letter continues. “The sector cannot provide the necessary services and jobs New York needs to recover if the State is unwilling to honor its financial commitments to pay for the services it has contracted nonprofits to provide, while also asking nonprofits to continue to provide those services at great financial risk.”

The executives outlined in the letter a variety of operational stresses nonprofits currently face, including “underfunded and late contracts, late payments, high staff turnover, stagnant wages, fully tapped out credit lines, and limited or nonexistent cash reserves.” All at a time, the letter continues, when the COVID-19 pandemic has created additional need for the work of many nonprofits.

The executives also make a series of requests in the letter:

  • Make prompt contracting by state agencies a priority;
  • Require the Not-for-Profit Contracting Advisory Committee to meet regularly and address barriers to prompt contracting;
  • Urge state agencies to use the tools in the Grant Gateway, New York State’s online grant application and contract management system, to identify and address processing delays;
  • Pay interest due with the first payment to help nonprofits stave off cash flow problems;
  • Rescind Executive Order 202.48;
  • Register all pending contracts and not impose retroactive cuts;
  • End the practice of financially penalizing nonprofits that have secured bank loans from the Payroll Protection Program (PPP). According to the letter, some New York State agencies have told nonprofits they will attempt to recoup PPP loan money when the loan is based on employees being covered under state contract.
  • Streamline the approval process for licenses program transfers, mergers, acquisitions and dissolutions and processing applications within 90 days; and,
  •  Create a nonprofit COVID-19 recovery advisory committee and installing a nonprofit representative agency as co-chair.

While Cuomo’s office had not responded to the letter at deadline, it has attracted the attention of New York State legislators. State Sen. George M. Borrello (R-Sunset Bay) issued a statement in support of repealing the Executive Order, writing “I’ve heard from nonprofits in my district who are struggling to cover expenses while they wait for long-overdue payouts on invoices and contracts.

“While recognizing the difficult budget situation that New York is grappling with, we cannot ask financially-strapped service providers to essentially subsidize the state to help bridge our budget gap.