Opinion: Exposing the flaws of CapGrants and what can be done about them

I want to tell you a story about efficient governance. More simply, it’s about making city government more efficient by making it make sense. It focuses on an amazing city-run program called Capital Grants, better known as CapGrants, which are offered to nonprofits that help New York City operate and tackle its problems by investing in a nonprofit’s capital infrastructure – but the program is flawed. The flaws – and how to address them – are not complicated, but require stepping back, asking the purpose of the program, and then committing to making it work. 

The story begins with VOCAL-NY, a nonprofit that provides services to people who use drugs and are struggling with homelessness, and where I’ve worked for 16 years. After 20 years of operating at the same location in Downtown Brooklyn, towers begin to rise on all sides. Developers buy out our home, and we’re left trying to run programs and services without having a physical location. But there’s hope: nonprofits funded by the City of New York to provide critical front line services are eligible for capital funds. This tragedy of eviction could be an opportunity. For the first time ever, VOCAL-NY considers buying a permanent home to help it deliver on its mission of serving and supporting the most marginalized New Yorkers. If only it were that simple. 

After finding a suitable property for our forever home, the flaws in the program begin to show. Our desired property needs a gut renovation, and to be purchased. The city’s capital funds can be used to purchase property, or undertake a major capital improvement – but not both at the same time. In fact, the funds cannot be allocated to purchase a space that’s not ready to deliver services, or to renovate a space not owned by the nonprofit, leaving us without city funds for either the acquisition or the renovation. 

CapGrants is a reimbursement-based program, and despite costing a tremendous amount of money, both up front and eventually in dramatically larger mortgage payments, we move forward. We rent the space, get a bridge loan for renovations, and plan to buy the building once construction is complete. 

Finally, after three years of displacement, the day has come. We buy our building and take on massive loans for the renovation and another bridge loan to cover the reimbursement of city capital funds. Here emerges the second major flaw with the program. Despite having already been awarded the funds through the city budget, after an arduous bureaucratic process to prove our eligibility for the funds under the terms of the program, we must go through a second mountain of bureaucratic hurdles to receive the money.

It’s been over a year since we bought our permanent home, yet we’re still waiting for the city funds. The money that could be going to operations and vital, life-saving programs is being funneled into paying dramatically higher monthly mortgage payments due to our inability to access the city funds for renovation and acquisition. To this day, we are incurring fees just awaiting the long-overdue, approved CapGrant funds to reimburse us for a portion of the building purchase.

This story is not about uncommitted or lazy city workers. There are none of them here. If anything, it’s filled with overworked staff trying to operate within a flawed system. This story is also not about removing all bureaucracy. Paperwork plays a critical role in avoiding fraud, meeting critical environmental codes, and more. But it is a call to action to make policy changes and streamline the system to ensure CapGrants functions as intended, supporting – not financially harming – organizations dedicated to serving our city.

New York City has the opportunity to support the frontline organizations that serve our communities, while proving the value of government itself. CapGrants should be celebrated annually for their power to uplift the symbiotic relationship between government and nonprofits, and their ability to fuel city operations, navigate crises, and maintain neighborhood vibrancy by investing in a non-profit’s operating and programmatic infrastructure. But key policy changes must be made, and the process for receiving the funds must be simplified. 

Jeremy Saunders has worked at VOCAL-NY (formerly known as the New York City AIDS Housing Network) since 2007 and served as co-executive director with Alyssa Aguilera since 2016.