Opinion: How to help New Yorkers by reducing red tape for nonprofits

Last year, city leaders finally began to take meaningful steps to improve the deeply flawed contracting process for New York’s human services nonprofits. Mayor Eric Adams cleared a $4.2 billion backlog in unpaid contracts, an important effort to address the city’s longstanding failure to pay nonprofits on time for the vital safety net services they provide. The Mayor also established an Office of Nonprofit Services, tasked with helping nonprofits navigate the challenging contracting process.

But there is another important way city and state policymakers can help strengthen and stabilize the financially vulnerable nonprofit sector: by reducing the unnecessary administrative burdens that government agencies impose on nonprofits.

A report released last month by the Center for an Urban Future finds that social services nonprofits that contract with city agencies are routinely forced to divert resources and staff time to satisfying maddening and duplicative administrative requirements. The report describes a “Kafkaesque” contract registration and reporting process that forces nonprofit employees to routinely waste hours at their desks, navigating antiquated, opaque, and inconsistent bureaucratic systems.

This isn’t just an abstract government-reform issue. These unnecessarily complicated processes take hundreds of thousands of hours to perform annually and likely cost taxpayers millions of dollars. Crucially, the red tape is siphoning critical resources away from developing programs and providing services that New Yorkers desperately need.

And more New Yorkers need help. A recent survey from the Brooklyn Community Foundation shows that more than 90% of nonprofits have experienced increased demand for their services in the past twelve months. At the same time, nonprofits report declining donations and dramatically increasing costs.

There will always be red tape in government systems. But there are a handful of egregiously burdensome requirements in the city contracting process which could be eliminated or reduced without comprising accountability. Making these changes would have little or no impact on the city’s budget.

Mayor Adams and the City Council should commit to reforming at least a half dozen of the most maddening contracting requirements by the end of 2023. They should start by taking these four steps:

1. Ensure all agencies are using the same procurement platformBoth the city and the state have developed digital platforms to streamline contracting. However, several straggler agencies have yet to adopt the platforms and nonprofits must create multiple iterations of essentially identical documents.
2. Eliminate duplicative, manual submission processesEmployees at organizations like Heights and Hills, a nonprofit that supports older adults, must resubmit standard documents – like a list of board members – for each contract, even if they have already been submitted for other contracts at the same agency. Likewise, some agencies require nonprofits to manually enter data, field by field. Instead, the city should invest in secure digital document storage and API’s that will allow nonprofits to streamline importing and exporting data and documents into government systems.
3. Reduce the number of annual auditsFederal guidelines require testing 15-20% of contracts, but state and city agencies routinely audit 100% of a nonprofit’s contracts each year. One organization holds 25 contracts with the city and receives audits every year for all 25 contracts. This is overkill, and extremely costly to both the government and the nonprofit sector.
4. Simplify and standardize discretionary funding from the City CouncilAccessible, flexible grants from the City Council are absolutely critical to nurturing the city’s smallest and most vulnerable nonprofits. But the applications and reporting requirements are often more costly than the grant itself. One education nonprofit, Bridge to Enter Advanced Mathematics, was awarded a $5,000 grant, but had to submit 37 documents to process the contract. Perhaps not surprisingly, BEAM no longer pursues discretionary funding from the City Council.

These measures are low-hanging fruit that would save government agencies and nonprofits a massive amount of staff time and taxpayer dollars over the long run. Reducing the thousands of hours nonprofits spend uploading duplicate contract documents, manually entering data, and tracking down paper receipts, will allow nonprofits to do more of what they do best: provide direct services to New Yorkers who need it most. It will also offer a lifeline to the city’s increasingly vulnerable and essential nonprofit industry.