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Nonprofits already operating under a heavy financial burden are urging City Hall to remove contractual performance targets they will likely be unable to meet amid the coronavirus outbreak.

Attendance has dropped at everything from citizenship classes to youth programs, according to multiple nonprofit operators, while some services, like senior centers, have been ordered closed.

Some city contracts only pay providers if they hit certain metrics, such as the number of clients who participate in a program, that groups say are now impossible to meet due the pandemic.

“What happens if we can’t serve people?” asked JoAnne Page, the CEO of The Fortune Society, which assists formerly incarcerated people. “We could lose our shirts.”

At least half of the organization’s close to 300 employees are paid via city contracts, connecting clients with housing, job training and substance abuse treatment.

The organization, like other city employers, is struggling whether to instruct staff — especially those who are older or have existing health conditions — to stay home.

On Sunday, City Comptroller Scott Stringer asked Mayor Bill de Blasio’s administration to “forgive missed contract obligations if they are related to COVID-19.”

In a letter to First Deputy Mayor Dean Fuleihan, Stringer also asked city agencies to “delay their efforts to recoup contract advances until the end of the fiscal year.” The city gives multiple nonprofits a cash advance at the start of the fiscal year in the summer and asks for money back around six months later.

Chronic Delays

Nonprofits across the city that rely on city funding have long complained that it takes months, if not years, for contracts to be finalized. The problem is particularly bad with City Council grants, they say.

Vendors are only paid after the contract is formally registered with the city comptroller by various city agencies. As a result, nonprofits like the Fortune Society have routinely been forced to scramble and take out loans to pay bills.

The Fortune Society has paid an estimated $150,000 in interest over the past year, tied to approximately $2.5 million in loans, according to Page. The organization provides housing for 80 formerly incarcerated people at its flagship Castle location in upper Manhattan on 140th Street and for another 400 at other sites.

The group has $15 million in contracts that have not been officially registered by the city, some of which date back to last year, Page said.

“We are already in a fragile state,” Page said. “Are we going to see a slowdown on what’s already catastrophically slow?”

Stringer’s office last January released the results of a review that found 89% of contracts for human services were submitted late for registration and after the contract began.

The Chinese-American Planning Council has had to take out loans to cover $150,000 in interest payments tied to prior loans, said Carlyn Cowen, its chief policy and public affairs officer.

The group with 5,000 employees is now worried its payments from the city will be greatly cut or even eliminated due to a sudden drop in attendance at after-school programs, citizenship classes and adult literacy courses.

The nonprofit Chinese-American Planning Council hosts a literacy class. Credit: Courtesy of the Chinese-American Planning Council

That would make it difficult for the nonprofit to continue to pay staff dedicated to those jobs.

“What we have seen is all the issues that we face are really being amplified,” Cowen said. “Nonprofits like us have already been struggling.”

Borrowing to Stay Afloat

Good Shepherd Services, which operates foster care and after school programs, will likely have to borrow money in the next few weeks to cover costs, said the organization’s executive director, Michelle Yanche.

The group has a $6 million line of credit with a bank to draw upon, she added.

Yanche and other nonprofit leaders are asking city officials to give them some flexibility to move staff around. For instance, the group wants to be able to shift after-school personnel to home care facilities that house young women with serious trauma who can’t be placed in foster homes.

Yanche is worried that staff at those facilities may be hit hard if some come down with COVID-19.

“The most significant challenge is our home care, in particular, young people in foster care is an essential program that must remain open,” she said.

Nonprofits like the The Fortune Society are facing challenges delivering services during the coronavirus outbreak. Credit: Courtesy of The Fortune Society

The after-school staffers have already passed background checks and cleared with the state’s child abuse and neglect registry.

“It’s not exactly the same level or clearance or training or credentials to work in a residence, but being able to redeploy those staffers is better than no staff,” she said.

De Blasio created a Nonprofit Resiliency Committee in 2016 to “expand lines of communication between the city and the nonprofit human service sector.”

Some organizational leaders say that has done little to speed up payments to nonprofits, which are now looking to move their services online or to a home delivery model.

“The nonprofit sector has been dealing with underfunding for decades,” said Michelle Jackson, acting executive director for the Human Services Council, an umbrella group that represents 170 nonprofits in New York City.

“A lot of organizations have three months or less of resources,” she added. “They are coming into a major health crisis already two steps behind.”

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