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City Nonprofits Face 'Financial Catastrophe' Due to Pandemic’s Demands
By
Beth Fertig
Published Apr 21, 2021
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Citymeals on Wheels / Facebook
By
Beth Fertig
Published Apr 21, 2021
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New York City’s human service nonprofits stepped in to fill a myriad of gaps during the pandemic, from feeding the hungry to getting cash assistance to undocumented immigrants who didn’t qualify for federal stimulus payments. But a new survey by the Center for an Urban Future finds many of these same organizations are now “on the precipice of financial catastrophe” because they spent so much additional money.
The think tank surveyed two dozen of these nonprofits and found most are now experiencing a yearly budget deficit between 15 and 50%. These include the YMCA of Greater New York, which lost more than $100 million in revenue (half of its operating budget), and Citymeals on Wheels, which spent $3.5 million more than it budgeted last year because it delivered 26% more meals than during the previous year, due to COVID-19.
Jonathan Bowles, executive director of the Center for an Urban Future, said nonprofits were the “unsung heroes” of the pandemic. But he said they were badly battered.
“They had to cancel galas and other fundraisers that impacted their bottom line in an enormous way,” he said. “Many of them lost government contracts or saw government funding reduced during the pandemic. And all the while they were serving an unprecedented new demand for safety net services.”
At RiseBoro Community Partnership in Bushwick, Brooklyn, CEO Scott Short said his organization served 50% more home-delivered meals, and also spent extra on hazard pay for its staff, hoping for reimbursement. But then, “the city ultimately decided that they would not reimburse the class of workers that we had providing those meals.”
RiseBoro provides services for youth and seniors, as well as healthcare and homelessness prevention. It also manages about 2,000 affordable housing units. Short said these tenants started falling behind on their rent after the pandemic struck, and overall rent collections are still down by 18%, a loss of $4.5 million.
“Many of our tenants are immigrants,” he explained. “Many of our tenants are essential workers working in the service sector, and many of them lost their jobs as the pandemic took hold.”
That lost rental income could be reimbursed now that New York is receiving billions of dollars in federal stimulus funds. But other expenses haven’t been covered.
At the Chinese-American Planning Council, which serves 60,000 New Yorkers, president and CEO Wayne Ho said his organization spent extra money during the pandemic on homecare, meals, and then transportation and training to cope with the rise in anti-Asian violence. There were also costs for personal protective equipment (PPE).
“While the state mandated PPE for employers, on calls we had with the state and the city, we were told that there was no supply chain,” he explained. “We are on our own to find PPE for our contractually-obligated services that were in person,” in addition to equipment for virtual programs.
Ho said his organization also raised money to help undocumented immigrants who didn’t qualify for unemployment or federal stimulus payments, and used some fundraising to avoid layoffs. But Ho said he had to furlough about 200 staffers, out of its total headcount of 700, last summer. About 70% came back in September. He said his organization still has a deficit, largely due to overhead and administrative expenses that haven’t been reimbursed.
These items fall into a separate category with a tortured name known only to city budget wonks: the Indirect Cost Rate Initiative, or ICR. In short, it’s a pot of money that was created in 2019 to help nonprofits pay all the expenses they incur when they contract with New York City, in recognition of the fact that they were historically not paid enough to make them whole.
Expenses covered by the ICR include, “your accounting software, your accountants, your security, the people who work the front desk,” explained Michelle Jackson, executive director of the Human Services Council, which represents many nonprofits.
During the pandemic, she said the city cut this $54 million fund by $20 million, leaving providers with a much lower rate of reimbursement. Mayor Bill de Blasio has not restored this in his latest budget for the fiscal year that begins in July.
Jackson has been urging the city to restore these and other funds. She said the City Council is on board and nonprofits are hoping the mayor will use money from the latest federal aid package. They’re asking for $171 million over two years to restore what was cut.
Mayor de Blasio has not commented on that figure. However, Deputy Press Secretary Laura Feyer said, “We value the work of our human service providers and we are committed to working with them to increase their financial stability. We will have more to say during the budget process.”
City Hall has also argued that it pushed out hundreds of millions in advance payments to keep nonprofits financially secure in the early weeks of the pandemic.
Jackson remains optimistic.
“We understand that there's a lot to work through with the state budget being a little bit late and seeing how the state budget was going to shake down for New York City,” he said. “And then also the direct federal stimulus.”
Without more aid, Bowles said he worries many nonprofits won’t be able to make up for all the money they lost in the pandemic — leaving them on shakier ground if the recovery drags out.
“It’s not just enough to provide the food,” he said. “You've got to make sure that the organizations that are on the front lines of getting the services to New Yorkers are able to do it.”
There are also worries about how nonprofits will continue to serve people going forward. Judith Zangwill, Executive Director at Sunnyside Community Services, said her organization lost 20% of its revenue for home healthcare because aides and clients, alike, worried about catching COVID-19. She said programs for seniors had fewer participants, too, when they couldn’t access technology.
“My experience is there are less participants remotely and therefore all the targets the city puts forth we may not be able to meet,” she said, referring to city contracts.
English as a Second Language classes may lure more busy parents through remote instruction, for example, but she’s not sure about her other programs.
“We really need the city to be flexible with every contract,” she said. “Particularly if we adopt a hybrid model.”
Beth Fertig is a senior reporter covering the city’s recovery efforts at WNYC. You can follow her on Twitter at @bethfertig.
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pandemic
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Beth Fertig
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