Ariane Cruz Represented Philanthropy New York with City Council Testimony to Improve Contracting for Nonprofits
As a part of Philanthropy New York's ongoing efforts to serve as an ally to nonprofits and advocate for a stronger nonprofit ecosystem, Ariane Cruz, our Sr. Manager of Public Policy & Collaboration, testified in front of the New York City Council to support their leadership in streamlining NYC's nonprofit contracting process.
Read her written testimony here:
TO: Committee on Contracts (Julie Won, Chair, and Members: Erik D. Bottcher, Sandy Nurse, Althea V. Stevens and Inna Vernikov)
FROM: Ariane Cruz, Philanthropy New York
DATE: April 30, 2025
SUBJECT: Philanthropy New York Supports City Council’s Leadership to Improve Contracting Services for Non-profit Organizations
Good afternoon, Chair Won, and esteemed members of the Committee on Contracts.
My name is Ariane Cruz, and I am testifying today on behalf of Philanthropy New York (PNY). Our membership comprises over 260 grantmaking institutions across the New York City metropolitan area, a powerful collective that annually invests over $7 billion in the well-being of our communities. Our message today is focused and urgent: PNY supports the City Council’s leadership and proposed legislation to improve city contracting. We believe the swift passage of this legislation is vital for the strength and sustainability of the nonprofit sector, the very organizations that form New York City's essential social safety net and the foundation of our overall nonprofit ecosystem. This legislation, which would mandate the immediate release of 80% of a fiscal year's contract funds, create a Department of Contract Services, and require annual reporting from city agencies on contract registration, is, in our view, a crucial step toward resolving the devastating crisis of delayed payments that is currently undermining these vital organizations.
We sincerely appreciate the City Council's recognition and vocalization of the profound impacts of delayed contract payments in New York City, especially from Chair Won and Councilmembers Stevens and Brannan over the past year. Your acknowledgment that nonprofits are essential to New York's functioning, yet face actions pushing them to a breaking point, deeply resonates with the experiences of our membership and nonprofit partners. We commend your efforts to address the systemic inefficiencies that fuel this crisis, including the range of bureaucratic bottlenecks such as contract registration backlogs, staffing shortages at city agencies, issues with the city’s procurement system, and invoicing complications. Your commitment to tackling these root causes, alongside the recent success in securing crucial COLA increases for human services workers, offers a vital step towards recognizing the invaluable contributions of the nonprofit sector. We firmly believe that the legislation you have introduced today offers a critical opportunity to dismantle these pervasive barriers, and we urge its swift passage.
Philanthropy New York is deeply invested in the strength and sustainability of our city's nonprofit ecosystem, and we stand in allyship with our nonprofit colleagues. As highlighted in the NYC Comptroller's report, this vital sector of over 13,000 organizations functions as a critical social safety net, generating a substantial $77.7 billion for our local economy and employing more than 18% of New York City's workforce. While PNY members offer essential grant funding, we know that philanthropy alone cannot compensate for shortfalls in public sector resources. Consistent and prompt government contracts, which for human services alone amount to roughly $12 billion annually and frequently represent the largest portion of a nonprofit's income, are even more crucial for their ability to effectively serve our communities.
The analysis conducted by our colleagues at SeaChange using the city's own PASSPort Public data reveals a deeply concerning reality that has persisted for at least the last five to six years. Nonprofits are too often forced to operate under unregistered contracts, enduring months-long waits for reimbursement of critical expenses, including payroll. The data also reveals that contracts are frequently unregistered for eight to nine months after the work has begun, leading to reimbursement delays of up to nine months. In some unconscionable instances, payment is only rendered after the services have been entirely completed.
As you know, this chronic dysfunction creates a catastrophic domino effect. When the government fails to meet its financial obligations promptly, the very organizations designed to provide vital support are forced into impossible choices, resulting in demoralizing staff pay cuts and devastating layoffs. As the Council’s proposed legislation recognizes, the current government contracting system is not just inefficient; it traps countless nonprofits in a perpetual cycle of financial insecurity.
These systemic shortcomings have significant and widespread repercussions. They not only hinder funders' ability to strategically support their nonprofit partners and deeply impact the well-being of dedicated nonprofit staff, but they also hurt the very communities these organizations are dedicated to serving. The health of our nonprofit ecosystem and the strength of the partnership between philanthropy and the nonprofit sector are intrinsically linked to a government contracting system that operates reliably and efficiently. We value the Council's ongoing efforts to connect and converse with us and our partners at the Human Services Council and Nonprofit New York and their members, allowing meaningful dialogue and collective action on this urgent issue.
In closing, Philanthropy New York strongly supports the City Council’s leadership and proposed legislation to streamline the city’s contracting process and address the devastating effects of delayed payments. We trust that this Committee will remain steadfast in recognizing the urgency of this crisis and taking decisive action to resolve it. Meaningful progress will strengthen and revitalize the nonprofit ecosystem—one where nonprofits, foundations, and government partners collaborate effectively to advance our shared mission: serving all New Yorkers with the dignity and support they deserve.
Thank you for your time, your attention, and your commitment to the nonprofit ecosystem.