August 21, 2017; New York Nonprofit Media

NPQ closely examined the bankruptcy of the Federation Employment and Guidance Service in 2015, better known as FEGS, including this update a few weeks ago. Writing for NYN Media, Michelle Jackson, the New York Human Services Council’s deputy director and general counsel, informs us of a new HSC report on how this behemoth nonprofit human services provider with an annual budget of $250 million failed and closed.

Their report also serves as a call to action for the nonprofit community to help others avoid such catastrophes by participating in their GovGrader Survey, live online until October 1, 2017. Here is a PDF version of the survey that offers an at-a-glance look at the questions.

GovGrader is the nation’s first online scorecard for nonprofits that hold human services contracts with New York City and New York state agencies to share their anonymous feedback and ratings on government procurement and contract management processes. The scorecard, covering the current year contracting cycle, is intended to help nonprofits fully consider the viability of government funding opportunities before pursuing them, and perhaps warn those already engaged.

The goal of our survey is to create a data set and annual state-of-the-sector scorecard that will spur a public conversation about government contracting and contract management reform and overall improvements needed in the business environment for human services in New York City and New York State.

NPQ regularly addresses the manifold difficulties and fiscal instability nonprofits face when contracting with the government, particularly because these contracts and grants are rarely paid on time and almost never meet the full cost of delivering services. Jackson notes that some of the consequences of this fraught relationship include nonprofits having to take out lines of credit and the enormous investment of time and energy required to follow up on “repeated requests for information and re-signing documents that sat for too long in a government office and have expired.”

Nearly 20 percent of New York City’s nonprofit human services organizations are insolvent and 40 percent have little or no cash reserves. Meanwhile, most do not have the tools to adequately assess potential contracts and programs, so they aren’t able to identify and respond to the financial, operational and administrative liabilities that arise as they do business with the city and state. Not to mention that many nonprofits are understandably hesitant to challenge the administrative processes of an agency they’re hoping to partner with.

HSC worked closely with the city to help Mayor Bill de Blasio and the City Council reach an agreement on the City’s Fiscal Year 2018 $85.2 billion budget, “the first in recent history to begin to address the systemic, long-term underinvestment in the City’s nonprofit human services sector in a comprehensive way.”

HSC is not alone in its effort to equip the nonprofit community with information on best practices in government contracting and other types of public-private agreements, and to encourage public dialogue and advocacy. In The Public Interest (ITPI) is referenced occasionally by NPQ. ITPI offers this Weekly Privatization Report along with its many other important services. But GovGrader is the first initiative to survey New York’s nonprofit practitioners on their real-time experience. This annual “state-of-the-sector scorecard” is a most welcome contribution to the needed effort to achieve government contract management reform.—James Schaffer