August 29, 2011; Source: New York Daily News | The Union Settlement Association’s David Nocenti has an important op-ed in the New York Daily News about a consistent problem nonprofits face around the nation—deliberate governmental underfunding of nonprofit services. Now, apparently, structural underfunding is also official policy in Mayor Bloomberg’s New York City. Nocenti says that the Administration for Children’s Services directed nonprofits this past May to submit proposals for child care funding, with the proviso that the City “will only pay for 93.3% of the costs and that the nonprofits must come up with the remaining 6.7% themselves.” In other words, over four years, the Bloomberg Administration will pay for $486 million in child care services and the contracted nonprofits will have to generate $35 million more on their own.
This is exactly what the Urban Institute discovered in its 2010 study of government practices in contracting with human service nonprofits. Specifically, 68 percent of surveyed human service nonprofits said that government practices of not paying the full cost of service delivery was a problem. More than half of the surveyed groups had one or more government grants or contracts requiring some sort of match or sharing of costs.
Nocenti points out the problems with this form of municipal cost savings on nonprofit contracts. He says that the need to use foundation grants or private contributions to cover the 6.7 percent government shortfall means that the nonprofits can’t use those private dollars to enhance services that wouldn’t have been covered by government contracts in any case (for example, adding music and arts to day care classes).
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He also suggests that the 6.7 percent gap-filler is actually less than what nonprofits will really have to ante up, because the city is calculating the nonprofits’ health insurance costs at lower levels than what the nonprofits are required to pay per union contracts.
Because they are mission-driven, Nocenti says most nonprofit service providers “can’t simply refuse to ‘play’ under these circumstances.” He charges that the City’s policy “risks turning foundations and individual donors into arms of the government. Rather than funding programs donors think work best, they will be funding programs that the government has created—but is only partially paying for.”
Call it an “unfunded mandate” of sorts, the kind that Mayor Bloomberg’s people rail about when imposed on cities by state legislators in Albany, but apparently acceptable to the Mayor when he’s the one doing the mandating.—Rick Cohen