Nonprofits have expressed their frustration with government contracting partners for years, including chronically late payments, lost documents and misunderstandings about program components. And these issues are not just nuisances. Nonprofits have to devote considerable time, expertise and money to navigating their relationships with government agencies.
To help address these challenges, the Human Services Council has announced a survey to inform the creation of GovGrader, the country’s first online scorecard for human services providers to share their feedback on government procurement and contract management processes. This scorecard will capture the business experience of nonprofit organizations that hold human services contracts with New York City and New York state agencies and give providers greater control in managing their own financial health by allowing them to analyze the viability of various opportunities.
The Human Services Council has extensive program, contract management and financial experience and served as the think tank and innovation lab for this new survey, which includes questions like: “How would you rate your experience and satisfaction with the agency’s approach to contract management?” It also asks providers to rank an agency’s responsiveness on a scale from very poor to exceptional.
The scorecard idea was born of findings gathered following the collapse of Federation Employment and Guidance Service, one of the city’s largest social services providers before it went bankrupt in early 2015. HSC convened a commission of nonprofit executives as well as civic and philanthropic leaders to examine the state of New York’s nonprofit human services sector and released a report that identified chronic problems and offered solutions to strengthen the sector.
One of the most important findings was that many organizations face extreme fiscal instability due to decades of underfunding. Much of this occurs because government contracts rarely cover the full cost of delivering services and the payments are often late and unpredictable. Many nonprofits are forced to take out lines of credit to cover late government payments, and financial and executive staff often spend time following up on repeated requests for information and re-signing documents that sat for too long in a government office and have expired.
When dealing with vendors in almost every other industry, the city bids out contracts based on the cost of performing services: It finds a company to do the work, and pays for supplies and labor. However, when it comes to the human services industry, that logic disappears and funding gaps result. Nonprofits are often stuck filling in the gaps at their own expense in order to ensure that communities are still supported.
Over time, this has eroded the stability of New York’s nonprofits. 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.
The Human Services Council’s FEGS report proposed a unique, crowdsourced solution that we are beginning to implement through the creation of this GovGrader survey. Organizations will anonymously provide feedback and ratings based on their experiences around four key dimensions of government contracting: responsiveness, proficiency, information management and overall user experience. The responses will be used to rate city and state government agencies based on a five-point scale. The resulting contract management performance scorecard will be released annually, giving nonprofits a tool to better understand the challenges among various government agencies and helping to highlight which agencies make better partners.
Recently, New York City Mayor Bill de Blasio and the City Council took the critical first step in addressing the extraordinary risks shouldered by New York’s human services providers by committing to increase the rate of reimbursement to more adequately cover the true cost of delivering programs and funding cost-of-living increases for human services employees. Albany must also act to ensure contracts from state agencies more adequately cover program costs. This is the solution that we need to reverse decades of underfunding that have threatened the survival of human services providers. Data from GovGrader will be essential as we continue this process of improving government contracting and instituting contract management reform.
We hope this tool will open new avenues for public dialogue, debate and advocacy, as we must work in partnership with government to find solutions that will guarantee the sustainability of the nonprofit human services sector.
Michelle Jackson is the Human Services Council’s deputy director and general counsel.