Thomas DiNapoli: Nonprofits are a pandemic lifeline for New Yorkers

As we maneuver through these unprecedented times, our state must do everything possible to ensure all New Yorkers come out of this pandemic, and the painful economic recession it has produced, safely and together. Among the priorities of critical importance must be supporting the thousands of not-for-profit organizations across New York State that employ more than 1 million people and provide essential services to vulnerable children, adults and families.

A July 2019 report on nonprofit employment by my office found that not-for-profits designated as 501(c)(3) organizations provided more than 1.4 million jobs, nearly 18% of private employment in the state as of 2017 (the latest data available). Providing at least one of eight jobs in New York, nonprofits helped stabilize employment in the state during and after the Great Recession and play an important role in our regional economies.

Nonprofits on Long Island employed more than 152,000 people in 2017, nearly one in seven jobs. They paid $9.5 billion in wages, 15% of all wages paid, and average annual wages of more than $62,000 were higher than those paid by other private sector employers in the region. The health and social assistance industry comprises the largest portion of nonprofit employment, more than 71%. In addition, nonprofits made up more than half of total private sector employment in this industry.

NFPs are often tightly integrated into the very fabric of our neighborhoods. They provide essential support for our most at-risk populations in ways that are trusted and culturally relevant. But, a growing number of these organizations face an uncertain future at a time when demand for their services is increasing drastically because of COVID-19.

Many of these organizations were struggling financially before the pandemic. They are now coping with a surging need for services and shouldering significant unexpected expenses just to keep their doors open. While the federal Paycheck Protection Program provided relief for some, it look a long time for the federal government to put additional money into the program. This left many NFPs in financial peril.

Adding to these pressures, my office found that state agency contracts for many of these NFPs continue to be delayed. In recent months, many of these organizations have not had their contracts with the state renewed, and yet are still providing the services on which their clients depend. These contracts are an important source of revenue to help nonprofits pay for services.

In 2019, my office approved more than 8,300 new or continuing grants for more than 2,800 NFPs and other entities totaling about $10 billion. In contrast, in 2020 through November, approximately 3,000 new or continuing grants were approved with more than 1,400 NFPs and other entities totaling more than $2.3 billion.

These organizations face difficult choices, including closure, if federal or state support does not come quickly enough or at all. The results could be catastrophic.

According to a July 2020 report by the Partnership for New York City, it is estimated that as many as 2,000 nonprofits in the metropolitan region are at risk of closure due to the COVID-19 pandemic. Based on this analysis and other reports on this sector, it’s likely that many others across the state are facing the same grim prospects, particularly those located in already underserved rural areas.

It’s important to underscore that should these organizations close, state and local governments may be called on to fill the void at a higher cost to taxpayers, as those in need turn to government programs for assistance. Nonprofit leaders frequently advise that government grants don’t fully support the cost of services, and that program costs are frequently offset by generous benefactors — a funding source that New York’s governments cannot easily access.

The federal government must provide additional direct support to states including the need to avoid budget cuts that would adversely affect NFPs. Preserving and protecting the invaluable safeguards that our not-for-profit partners provide is among the most critical.

With President-elect Joe Biden and Vice President-elect Kamala Harris coming into office soon, there’s hope that additional federal funding will be forthcoming. It is incumbent upon New York’s leaders to ensure that when we emerge from the COVID-19 crisis, we have a strong and viable safety net.

Thomas P. DiNapoli is the comptroller of the State of New York.