Crisis level decline of the non-profit sector approaches criticality in opinion piece

In the heart of America's bustling city, a silent crisis is unfolding. Over the past two decades, several significant not-for-profit (NFP) agencies have closed their doors, including Hull House, the nation's first Settlement House, and FEGS (Federal Employment and Guidance Services), one of America's largest NFPs.

The closure of these organizations has been met with insidious references to inadequate administrative oversight or potential corrupt practices, rather than addressing the broader failure to appreciate and support the human service community.

One of the primary reasons for the closure of these NFPs is the inability to meet real costs, as reimbursement rates fail to keep pace with escalating expenses. This has led to the elimination of pensions for NFP staff and the burdening of employees with escalating healthcare costs.

The City of New York has repeatedly failed to reimburse NFPs for contracted services in a timely manner, despite recent advancements in accelerating payments. This financial strain has forced NFPs to make tough choices, such as reducing health coverage, charging a portion of costs to underpaid staff, or going broke due to rising healthcare costs.

The FEGS bankruptcy revealed several systemic problems facing not-for-profits, including inadequate government reimbursement models, increasing government regulatory standards, and failure of reimbursement rates to meet real market expenses. These issues, if left unaddressed, reflect critical problems confronting NFPs throughout the city and nation.

Real estate and insurance costs are skyrocketing for NFPs, forcing them to navigate these challenges with limited resources. Increasing government regulatory standards have also burdened NFPs with the added expense of hiring quality assurance personnel, significantly impacting their capacity to focus on quality service provision.

Government reimbursement models have failed to cover escalating healthcare, liability insurance, and real estate costs for NFPs. This is particularly evident in the case of NFPs funded through the Department of Youth and Community Development, which are expected to maintain 2015 established budgets in 2025, despite inflation rates of 30% to 50% over this period.

The demise of New York City's NFP sector has reached a crisis point. Despite the collapse of Hull House and FEGS, and the subsequent turmoil experienced by NFPs, government reimbursement rates remain inadequate, and there has been little effort to address the underlying factors identified in the demise of these organizations.

Media attention has focused on the current fiscal crisis at the doorstep of city governmental agencies' failure to timely reimburse NFPs for actual services rendered. However, the broader issue of inadequate support for the human service community remains largely unaddressed.

It is time for a change. The human service community deserves better. It is crucial that government reimbursement rates are adjusted to meet the real costs of providing essential services, and that NFPs are given the resources they need to thrive and continue their vital work.

Crisis level decline of the non-profit sector approaches criticality in opinion piece