Unfunded Mandate of Minority and Women-owned Business Enterprise Participation Goals

The story of the unfunded mandate is one that nonprofit organizations know all too well. When a policy requires agencies to allocate resources towards compliance and is implemented without additional funding, it is an unfunded mandate. The Minority and Women-owned Business Enterprise (M/WBE) participation goals set by Governor Cuomo is a prime example of the significant potential for negative effects from business-oriented regulations that are also enforced in the nonprofit sector without input from our sector.[1]

The 30% target set by Governor Cuomo for M/WBE participation is an attempt to incentivize businesses and nonprofits under government contracts to vend out to minority or women-owned business enterprises. This goal should be lauded as a socially progressive policy and a positive step in the effort to support economic development for these groups. However, it is one that the human services sector may find difficult to comply with and could potentially hurt the providers and beneficiaries of their services. Due to the financial difficulties faced by the human services sector, additional burdens or operational constraints with regards to compliance with new policies without appropriate funding can be detrimental to the services provided.

Nonprofit organizations want to be compliant with the M/WBE goals; however, the State has not created an environment where compliance is simple to accomplish for many organizations. Compliance can be difficult for nonprofits as compared to for-profit businesses because our subcontracting practices are drastically different. Usually, there are significantly more opportunities for for-profit businesses to subcontract to M/WBE firms in comparison to nonprofits. Despite this difference, the policy does not differentiate between the nonprofit sector and for-profit businesses.[2] Unlike for-profit enterprises, nonprofits do not have proprietorship; meaning they cannot be considered M/WBE’s themselves, so there is no way to include nonprofit subcontracts into these quotas. Allowing nonprofits to subcontract to other nonprofits within the M/WBE structure would increase their opportunity for compliance.

In addition, for human services organizations, it is not usual to have staff directly focused on dealing with reporting on M/WBE participation or other regulatory paperwork. An organization might need to reallocate or invest additional resources that could be used to provide services into the bureaucratic process of filing the required data on vendors and subcontracting plans in order to reach compliance.[3] This leads to an unfunded mandate if the funding levels provided by these State contracts do not increase, forcing organizations to use additional resources to be compliant. The regulations in their current state show how operating under the same regulations as a business can be detrimental to service provision if there is no additional funding to balance a mandate for increased investment of resources. Unfortunately, the State did not include our sector in the dialogue when creating these participation goals.

When it comes to the daily operational costs of a nonprofit, the best investment for a contract to provide services are in the workers providing direct services. The State should recognize that the human services sector mainly employs women and minorities, with its services largely serving to women and minorities. There should be more effort to adequately integrate nonprofit organizations into minority-owned and women-owned business initiatives without imposing business-oriented regulations that could prove to be detrimental to our vital sector.

[1] http://cityandstateny.com/articles/politics/new-york-state-articles/exclusive-for-the-first-time,-mwbe-contracting-drops-under-cuomo.html#.WIYmiNIrLcs

[2] https://cdn.esd.ny.gov/MWBE/Data/01282015_OFFICIAL_COMPILATION_OF_MWBE_REGS.pdf

[3] http://www.nydailynews.com/opinion/n-y-s-unfair-new-policy-underpays-nonprofits-services-provide-article-1.944833

Andrea Parejo, Government and External Relations Intern

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State Wage Order Raises Minimum Salary Levels for Overtime Exemption


The New York State Department of Labor finalized a wage order on Wednesday, December 28, that increases the weekly salary thresholds for administrative and executive work (the so-called “white collar exemptions”) effective Saturday, December 31, 2016.  This wage order will increase the number of workers who qualify for overtime pay.

The new salary thresholds will increase on a yearly basis as follows:

  • Employers in New York City
    • Large employers (11 or more employees)
      • $825.00 per week ($42,900 annually) on and after 12/31/16
      • $975.00 per week ($50,700 annually) on and after 12/31/17
      • $1,125.00 per week ($58,500 annually) on and after 12/31/18
    • Small employers (10 or fewer employees)
      • $787.50 per week ($40,950 annually) on and after 12/31/16
      • $900.00 per week ($46,800 annually) on and after 12/31/17
      • $1,012.50 per week ($52,650 annually) on and after 12/31/18
      • $1,125.00 per week ($58,500 annually) on and after 12/31/19
    • Employers in Nassau, Suffolk, and Westchester Counties
      • $750.00 per week ($39,000 annually) on and after 12/31/16
      • $825.00 per week ($42,900 annually) on and after 12/31/17
      • $900.00 per week ($46,800 annually) on and after 12/31/18
      • $975.00 per week ($50,700 annually) on and after 12/31/19
      • $1,050.00 per week ($54,600 annually) on and after 12/31/20
      • $1,125.00 per week ($58,500 annually) on and after 12/31/21
    • Employers Outside of New York City, Nassau, Suffolk, and Westchester Counties
      • $727.50 per week ($37,830 annually) on and after 12/31/16
      • $780.00 per week ($40,560 annually) on and after 12/31/17
      • $832.00 per week ($43,264  annually) on and after 12/31/18
      • $885.00 per week ($46,020 annually) on and after 12/31/19
      • $937.50 per week ($48,750 annually) on and after 12/31/20

The Department of Labor’s summary of the order can be found here.  The final rule can be viewed here (see § 141-3.2(c) on pages 141-14 through 141-16). Employers should seek counsel and take immediate steps to comply with the mandate.

As you know, these changes will have a significant impact on the nonprofit sector, which is why we submitted a public comment on the rule.  We continue to reach out to DOL staff and other relevant State officials and will keep you updated on our efforts.  We are also monitoring the federal Fair Labor Standards Act rule, which was enjoined (suspended) by a federal district court in Texas on November 22 and remains under court review.

As a reminder, the minimum wage will increase on December 31 as well. For certain New York City human services workers under City contract, the minimum hourly wage will increase to $12.00. The floor will increase to $13.50 on December 31, 2017, and $15.00 on December 31, 2018. This human services wage floor is fully funded.

In addition, the minimum wage will increase across the state. Beginning on the 31st, the minimum hourly wage for each region will be:

  • NYC – Large Employers (11 employees or more): $11.00
  • NYC – Small Employers (10 employees or fewer): $10.50
  • Long Island & Westchester: $10.00
  • Remainder of New York State: $9.70

The minimum wage will increase annually as follows.

General Statewide Minimum Wage Rate Schedule
Location 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 2021*
NYC – Large Employers (of 11 or more) $11.00 $13.00 $15.00
NYC – Small Employers (10 or less) $10.50 $12.00 $13.50 $15.00
Long Island & Westchester $10.00 $11.00 $12.00 $13.00 $14.00 $15.00
Remainder of New York State $9.70 $10.40 $11.10 $11.80 $12.50 **

Source: NYS Dept. of Labor

* Beginning in 2021, annual increases will be based on percentage increases determined by the Director of the Division of Budget, based on economic indices including the Consumer Price Index.

** Annual increases for regions outside of New York City, Westchester, and Long Island will continue until the rate reaches $15 (or $10 for tipped wages).

HSC continues to press for adjustments to human services contracts to cover the cost of these increases. For more details, visit the New York State Department of Labor website.

-Tracie Robinson, Senior Policy Analyst


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HSC’s 2016 Leadership Awards Reception

Tuesday, December 13 marked HSC’s 21st annual Leadership Awards Reception. The event was held at The Jewish Museum on 92nd Street and Fifth Avenue. We had over 250 guests in attendance and met our fundraising goal of $150,000. Thank you to everyone who was in attendance and for your support of HSC.

hsc-12-13-16_064The evening began with Jeremy Kohomban, HSC’s new Board Chair and President and CEO of The Children’s Village, welcoming our guests and introducing New York City Comptroller Scott Stringer and Deputy Mayor Richard Buery for opening remarks.


HSC recognized the following individuals for their service and dedication to the sector:

Advocate of the Year

  • Oliver Wyman & SeaChange Capital Partners

Equity Champion

  • Maya Wiley, Senior Vice President for Social Justice & Henry Cohen Professor of Urban Policy and Management, Milano School of International Affairs, Management, and Urban Policy

Next Generation Leaders

  • Nicole Bramstedt, Director of Policy, Urban Pathways
  • Jose M. Medellin, Director of Communications, Goodwill Industries of Greater NY and Northern NJ, Inc.

Leaders of Influence

  • Don Crocker, Senior Fellow, Support Center/Partnership in Philanthropy
  • Igal Jellinek, former Executive Director, LiveON NY
  • Nancy Kolben, Executive Director, Center for Children’s Initiatives
  • Peter Pierri, former Executive Director, InterAgency Council of Development Disabilities Agencies, Inc.
  • John A. Sanchez, Executive Director, East Side House Settlement
  • Robert S. Schachter, DSW, Executive Director, National Association of Social Workers, New York City Chapter

HSC’s Leaders of Influence: Don Crocker, Igal Jellinek, Robert Schachter, John Sanchez, Allison Sesso, Nancy Kolben, Joel Copperman

Special Recognition for Outgoing Board Chair

  • Joel Copperman, Chief Executive Officer, CASES

Allison Sesso and HSC’s former Board Chairs: Joel Copperman, Nancy Wackstein, Gordon Campbell

We would like to thank everyone for their continued support of HSC and the work we do!

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First in a Series

The time has arrived for a set of damaging practices to be remedied.

For decades, funding from government to provide human services has fallen well short of covering actual costs – resulting in a continual struggle by human services leaders to operate high-caliber programs, maintain skilled and fairly compensated workforces, and exercise strong management functions.

Let us consider major aspects of this dilemma.

            Inadequate Salaries and Salary Disparities      

The budgets of contracts between human services organizations and government frequently do not allow for compensation for staff consistent with responsibilities and necessary qualifications. This occurs with such positions as early childhood education teachers, social workers, youth development specialists, and family counselors. Ironically, many human services staff, who have dedicated themselves to helping people contending with serious challenges find that they themselves are in need of the same sorts of services they are providing.

These insufficient salaries and benefits translate to a difficultly in recruiting and retaining high-performing staff, leading to disruptions in care and low morale among staff.  Moreover, in a number of cases, government agencies, hospitals, and universities offer compensation for these sorts of positions that is considerably more generous than that which human services organizations can afford.

Strong applicants continually express an interest in joining the human services field but indicate that given personal financial pressures, they often feel compelled to opt for employment in these other sectors.

            The Under-Funding of Overhead

When contracting with human services organizations, city and state government usually limit the amount of funds that may be expended on overhead, also known as “indirect expenses,” for such functions as financial management, human resources, information technology, and facilities management. The large majority of human services contracts allow for overhead rates of between 8% and 10% – but actual overhead rates for human services organizations usually range between 12% and 20%. This results in sizable deficits, compelling human services organizations to function without adequate management capacity and to scramble to raise supplemental funds.

However, the federal government employs a far more rational approach. It allows human services organizations, based on review of their financial data, to obtain standard overhead rates that are automatically applied in all cases in which they make use of federal funds. Human services leaders report that the process by which rates are determined is reasonable, and that receiving reimbursement for overhead that aligns with actual expenses goes far toward enabling high performance and financial stability.

We are, therefore, calling on the city and state government to adopt the federal practice.

             Innovation and Impact

Human services organizations aim to embrace bold ideas and forward thinking. Regrettably though, because they are so strained by insufficient funding from government, they too often lack the wherewithal to engage in innovation. If properly resourced, human services organizations would make use of philanthropic support to incubate, pursue data-driven strategies, and ensure superior services.

To achieve the highest impact, human services organizations must be enabled to stop operating in a climate of constant crisis. Like the people they support, they cannot be expected to thrive while their basic needs go unmet.

             A Renewed Partnership with Government

The relationship between the human services sector and government is symbiotic.  Government calls upon human services organizations to deliver the indispensible services that it itself is not equipped to provide. And human services organizations are equally dependent on government – indeed, government funds are the primary source of income for most human services organizations, often comprising more than 80% of their budgets.

We believe that public officials making decisions about funding for human services are well intentioned and that we share goals and ideals with them, and that fiscal austerity has been the primary factor limiting investment in the sector. But we must now address the fact that this practice is injurious: it jeopardizes the quality of services and the very viability of the organizations entrusted to deliver them, setting up a situation that will result in continuing social problems and increased costs later.

We are pleased that the city and state governments have taken steps to begin strengthening the human services sector. The city has established a Nonprofit Resiliency Committee designed to enable us to arrive collaboratively at solutions and we will take part fully in this effort. The state has created the Nonprofit Infrastructure Capital Improvement Program and is refining systems like Grants Gateway, which simplifies the process by which human services organizations engage in contracts with the state.

While these efforts are important, we know there are further opportunities to strengthen human services.  And toward this end, our organizations will be among the primary participants in a campaign called Restore Opportunity Now that will vigorously make the case for key investments and systems improvements in the sector.

We look forward to cooperating with our many partners throughout government and the human services sector to make the critical changes necessary to equip New Yorkers to realize high aspirations and support the organizations that serve them!

-Contributed by Danny Rosenthal. Danny Rosenthal is a consultant to nonprofit organizations and a free-lance writer.

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With the largest population in the U.S., New York City has a variety of demands for essential social services ranging from after school programs and housing to medical care. Nonprofit human services providers meet this demand and provide critical interventions to millions of New Yorkers each year. They contract with government and leverage private dollars to build programs to meet community needs. The cost of providing these services is constantly increasing. They require the hard work, compassion, and dedication of an entire industry to implement them. For all of that passion and drive, the organizations providing programs throughout New York are impeded by a lack of funding.
More specifically, we must increase the funding for Other than Personal Services (OTPS) in order to help organizations provide these essential services. OTPS is a crucial part of nonprofit budgets and covers crucial things like rent, insurance, technology, and all other costs aside from salaries. These costs are imperative for any organization, nonprofit or otherwise, to function. A lack of funding for OTPS affects nonprofit programs and impedes them from providing the best services possible.

For example, let’s look at a nonprofit providing programs and services to children. Aside from the cost of staff, the organization has the cost of the facility where these services are located; the cost of health insurance for the staff providing these services; and the cost of liability insurance. Every year, more than 85% of the organization’s current leased properties sees an annual increase of 2% or greater. Their health insurance increases annually despite using brokers, going to market, and making plan changes/adjustments. Their liability insurance doubled over the course of five year, rising from $700,000 in FY10 to $1.4M in FY15. Additionally, government contracts have administrative requirements, like reporting and licensing, that cost money but are often not paid for as part of the contract. Reporting to the State Justice Center is an example of an important accountability requirement, but the costs associated with reporting and compliance continue to rise. When factoring in salaries for additional hours, paperwork, follow-up, and interviews, these processes cost at least $35,000 annually. As a result, the organization has had to postpone larger maintenance projects at sites.

bridgeAs this lack of investment continues, we will eventually see the quality of the program decline. The best solution is to invest in nonprofits. The 2.5% cost-of-living-adjustment increase that was implemented by Mayor de Blasio shows that the City is committed to the human services sector. To ensure that the sector continues to provide quality social services, we must also invest in OTPS as well. Now is a perfect time to take advantage of New York’s economy, which is expected to collect $53.4 billion in tax revenue for this year alone.

The current economic boom in the City as well as the uncertainty of the future of nonprofits in the face of the election results, makes this an important time to invest. Based on the campaign rhetoric of the President-elect, it is crucial we invest in the sector in the face of new federal policy under his administration. We do not know what the future holds and cannot assume for better or worse. What we do know is that the nonprofit sector needs an immediate change to survive whatever tomorrow holds.

Nicholas Galang, Government and External Relations Intern

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Building Well-being: Nonprofit Infrastructure Week

In a time of uncertainty and consternation, it’s heartening to look at something like the Governor’s Nonprofit Infrastructure Capital Investment Program (NICIP) and be reminded that our elected officials are doing vital and inspiring work every day, even if that work will never make national headlines. Last year, the State recognized the sector’s urgent need for improvements in infrastructure and pledged $100 million dollars to lend support to nonprofit organizations that enhance the well being of our communities.

Infrastructure is something that we all take for granted. No one spends much time thinking about bridges or electrical grids until the power goes out or the bridge begins to crumble. Likewise, nonprofit infrastructure is often overlooked . The nonprofit world has seen massive cuts in funding over the last few years, seriously constraining their ability to invest in the basic necessities that keep them in business. Things like working elevators, electricity, up-to-date technology, proper heating and cooling equipment, computer equipment, and functioning sprinkler systems and fire alarms. Funders want their dollars to go directly toward the services they are supporting, but oftentimes narrowly earmarked funds leave organizations with no way to deliver them [1].

The NICIP was created to help human services nonprofits address their infrastructure needs. The first NICIP request for applications (RFA), issued in 2015 [2], elicited over 600 applications with requests totaling $280 million dollars. In a state with around 97,700 nonprofit organizations [3], it isn’t surprising to discover that so many nonprofits have unmet infrastructure needs. Faced with almost $1 billion dollars in funding cuts since the Great Recession [4], nonprofits have been struggling just to deliver services, and many have been unable to invest in things like updating their computer systems or replacing outdated heating and cooling systems.. For this reason, we are advocating making the NICIP an annually recurring investment of $100 million dollars.

Research shows that “[o]rganizations that build robust infrastructure—which includes sturdy information technology systems, financial systems, skills training, fundraising processes, and other essential overhead—are more likely to succeed than those that do not.”[5] Investing in infrastructure is an important way to make our communities and our State stronger, and when we have organizations that can operate at their full potential, the results are well worth the cost. This idea drove our advocacy for the creation of the NICIP and continues to drive our efforts.

To build momentum for the coming legislative session, HSC launched the first ever Nonprofit Infrastructure Week campaign as a way to celebrate the creation of the NICIP and to advocate for its expansion. This statewide campaign engaged nonprofits in online and offline advocacy.

  • We devoted the first day to thanking our State leaders, including Governor Cuomo, for creating the NICIP. Their generous support not only directly helps organizations, but raises awareness of our needs on a statewide level.
  • “Tech Tuesday” was next, highlighting the crucial technology updates that nonprofits need to be effective in today’s connected world and to comply with ever-increasing mandates.
  • Wednesday was focused on the perennially important needs around heating, cooling, plumbing, and all the other things we take for granted but without which we simply could not operate.
  • Thursday was devoted to accessibility, which is especially important since many nonprofit organizations’ sole purpose is to serve seniors and people with disabilities.
  • Friday culminated in a look at investing in things that keep clients and employees safe and secure.

The social media component of the campaign garnered significant engagement, and our hashtag, #buildingwellbeing, even reached trending status.


We are grateful to the many providers and supporters who liked and shared our posts and came up with their own content. We are especially thankful to Catholic Charities of New York’s for writing their own guide to help their members get involved! [6]

As we move into the busy winter months, HSC, UJA, UNH, and Catholic Charities will ramp up our advocacy for this important part of our mission. We hope that you will join us in our campaign to make the NICIP a recurring program of $100 million dollars a year.

Although Nonprofit Infrastructure Week has passed, it’s not too late to make a personal visit to the district office of your Senator or Assembly Member, so they can get to know you and your organization before the crazed lobbying season begins after the first of the year.


The NICIP and the campaign for its expansion have energized and inspired us, and we hope that you join us in fighting to get organizations the resources they need to do their incredibly important work.

Meara Levezow, HSC Policy Intern 

[1] https://nonprofitquarterly.org/2008/01/25/why-every-foundation-should-fund-infrastructure/

[2] The first solicitation was issued on October 28, 2015. That solicitation was cancelled, and a new one was issued on August 5, 2016.

[3] http://www.nycon.org/files/7814/2653/2398/Palm_Card_Template_2015.pdf


[5] Ann Goggins Gregory and Don Howard, “The Nonprofit Starvation Cycle”, Stanford Social Innovation Review, Fall 2009. http://www.ssireview.org/articles/entry/the_nonprofit_starvation_cycle/

[6] http://catholiccharitiesny.org/blog/tips-tweets-and-infrastructure-awareness-too?utm_content=bufferbf223&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer


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Moving Beyond the Election

This election cycle was rough, to say the least. And for good reason, many of us are feeling anxious about what lies ahead. To move forward, I think we need to reflect on some of the deeply held beliefs this process unearthed and the implications they have for our work.

Some extremely concerning privilege based values surfaced in this election process. How we choose to move forward and heal as a country has real repercussions for the communities we work in and our ability to effectively meet our missions.

During this election cycle, it seemed to me that personal responsibility as the key driver of success or failure was pitted against oppressive dynamics as if it’s wholly one or the other that determine one’s fate. The framing of the work we do and beliefs about what causes communities and people we serve to struggle matters because they drive public policy choices and resources.

As a mission driven sector focused on maximizing human potential, we know the answer is more complex. We are intimately aware of the intersecting systemic biases at play driving opportunities and success. Much of our work seeks to harness individual determination and resilience, to help people succeed despite the odds; yet the oppressive dynamics facing those we serve are undeniable. We need solutions that appreciate both of these truths and right now it does not seem like we are likely to achieve the policy changes or investments needed to realize the progress we are desperate for any time soon. This is, at best, frustrating.

But I am trying to harness my feelings of anxiety, frustration, fear, and disappointment by thinking about how we as a sector can find our voice and proactively counter the “personal responsibility” narrative which fails to appreciate systemic biases and perpetuates inequity. We engage with people and communities every day; we are well positioned to contribute to a counter narrative that better appreciates the systemic reasons people are struggling and highlights how nonprofits work to counteract the systematic failures that bring so many people to our doors.

At HSC, we will continue to do our part and work to develop the voice of the sector in these areas and create space for collective reflection and thinking on workable solutions. It is critical that together, we also engage in the very difficult work of self-examination to better appreciate how our own actions or inactions contribute to the oppressive systems at play and contribute to the “personal responsibility” narrative. Our failure to take on these challenges will only serve to undermine our collective success.

We look forward to taking an active role in the nation’s healing process and contributing constructively to the dialogue about how to move forward.
Allison Sesso
Executive Director
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NYN Media Cause Award: #15andFunding

HSC is pleased to announce that we, along with our partners Fiscal Policy Institute (FPI) and FPWA, have been awarded a New York Nonprofit Media 2016 Cause Award! The award recognizes our joint commitment and success in the field of Employment; specifically, our efforts with the #15andFunding Campaign.

The statewide #15andFunding Coalition was formed to voice the impact of low wages on the human services workforce. The Coalition included over 90 organizations from across New York State including New York City (throughout all five boroughs), Long Island, Westchester, Hudson Valley, Capital Region, and Western New York.

We co-led this campaign to call on Governor Cuomo and the Legislature to invest in New York’s human potential and include human services providers and Medicaid-funded care workers in the minimum wage increase to $15 per hour, as well as funding by the State for the increased wage for nonprofits with State contracts. This work grew out of a successful initiative to institute a funded $15 wage floor for social services agencies with New York City contracts.

Although human services workers were included in the increased wage mandate, additional funding was not included in the State FY 2016 budget. As such, FPI, FPWA, and HSC will continue to advocate for the State funding of the increased minimum wage through our new campaign, Restore Opportunity Now (RON), and address the chronic underfunding of our sector.

The Restore Opportunity Now campaign asks the State to recommit to the human services sector so that we can continue to build well-being within communities by supplying critical interventions and support. We ask the State to provide:

  • Fully funded contracts that are reflective of the real cost of service provision,
  • Salaries and benefits which allow nonprofits to recruit and retain high quality staff, and
  • Program funding which meets the growing needs of New Yorkers.

It is crucial that the State recognizes the need of the sector’s work in building well-being which affects all New Yorkers and its communities. You can support the Restore Opportunity Now campaign by signing on here.

We would like to thank our funders, The Clark Foundation, the United Way of NYC, and New York Community Trust for continuing to support this vital work.

We would also like to recognize our members who also won NYN Media 2016 Cause Awards:

Congratulations to JCCA on your Cause Award for your work in Education.

Congratulations to The THRIVE Network on your Cause Award for your work with Disability Access.

Congratulations to The Children’s Aid Society on your Cause Award for your work in Education.

Thank you for your dedication to human services. The sector would not be the same without you!

Contributed by Janice DeRito of the Human Services Council.

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Cost Escalation and Nonprofit Sustainability

Those following the news in the human services realm over the last few years know that the financial situation of many nonprofits has become increasingly concerning. In our recent report on the precarious fiscal condition of New York’s nonprofit sector, we at HSC outlined how chronic underfunding of contracts, development of programs and metrics without meaningful input from service providers, late payments by government agencies, and failure to pay interest when it is due can lead to financial strain or collapse for even our largest and most robust organizations. You also know that the cost of living and the cost of doing business—particularly in New York City—have skyrocketed over the past decade, while funding of human services contracts has stagnated. For this reason, HSC has continuously called for the addition of cost escalation clauses to human services contracts.

A cost escalation clause, or escalator clause, guarantees that the funder will adjust payment to reflect any cost increases that are out of either party’s control, usually expenses that haven’t been adjusted for inflation.[1] Nonprofits report that expenses for rent, insurance, repairs to infrastructure, supplies, and improvements in technology have all increased at a rapid pace over the last decade[2]. In the absence of cost escalation clauses, agencies must scramble to cover rising costs by pulling money from other budget areas. For many organizations, this has meant laying off or furloughing staff, reducing salaries or benefits, freezing hiring, or even shuttering certain programs. Ultimately, these actions have the effect of reducing the quality of and access to critical services that uplift communities.

Government agencies often blame nonprofits for failing to properly oversee their financial affairs, and recommend that they should run their agencies more like for-profit businesses. Cost escalation clauses are a perfect example of how nonprofits can better plan for the future, and they come right out of the for-profit sector’s playbook. Any good contract lawyer would advise a construction company to include a cost escalation clause to account for future increases in the cost of materials and labor. Those who provide necessary and life-saving care for our fellow New Yorkers deserve the same protection.

While ideally every business that contracts with government would have a cost escalation clause in its contracts, human services organizations are particularly susceptible to inflation because so much of their business is tied to the astronomical rent increases that are happening across the City. Not only do these increases affect the spaces that the organizations operate from, but the lack of affordable housing[3] has also led to a drastic increase in homelessness, food insecurity, and overall financial pressure on New Yorkers, thereby increasing the number of individuals who are in need of human services.  This is to say nothing of the staff at these organizations, whose rent is also going up while their wages are not.[4] This keeps nonprofits in the position of being unable to attract and retain the most talented candidates for jobs and leads to high levels of turnover. This also doesn’t help sustain a well-run agency that can keep track of its financials and deliver the high-quality services that communities need.

Cost escalation clauses are only one thing out of many that we can fight for to make our organizations stronger and better equipped to serve. No organization whose mission it is to help everyone in our City live a fulfilling and healthy life should have to close its doors because of rigid contracts that fail to keep pace with rising costs. HSC will continue to advocate for contracts that are reasonable, fair, and equitable, and we look forward to working directly with the newly created New York City Nonprofit Resiliency Committee and New York State Not-for-Profit Contracting Advisory Committee to achieve this goal.

Meara Levezow, HSC Policy Intern 

[1] http://www.referenceforbusiness.com/encyclopedia/Ent-Fac/Escalator-Clauses.html

[2] http://nynmedia.com/news/nonprofits-call-for-contract-increases-to-cover-administrative-costs

[3] http://www.nytimes.com/2015/02/25/nyregion/new-york-rents-outpaced-inflation-over-3-years-census-data-say.html

[4] http://www.bizjournals.com/albany/blog/health-care/2016/01/15-minimum-wage-for-health-care-human-services.html

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HSC’s Annual Membership Meeting 2016

On Wednesday, September 14, the Human Services Council hosted our 2016 Annual Membership Meeting. The morning of #WorkingForChange included a panel discussion on the challenges faced by the human services workforce, a briefing on HSC’s FY17 work, an update on our governance change and vote on a slate of our new Board of Directors, and a presentation from Bridgespan on real costs of providing services.

Working for Change: Challenges of the Human Services Workforce Panel

Human service providers – and a diverse workforce – form the foundations of wellbeing by delivering services for physical, emotional, and economic health in communities served. There are many constraints that our sector faces as we work to support and implement progressive labor policies. It is critical that we overcome these constraints in order to strengthen the human services workforce and expand opportunity within it.img_0581

In a dynamic discussion facilitated by Jonathan Bowles from the Center for an Urban Future, panelists addressed said issues from an economic lens; they explored factors that drive wages and which policies can sustain and strengthen our sector’s workforce. The panel comprised the following individuals:

  • Heidi Shierholz, Chief Economist to U.S. Secretary of Labor Thomas E. Perez
  • New York State Senator David Carlucci, Chair of Senate Committee on Social Services
  • New York City Council Member Julissa Ferreras-Copeland, Chair of Committee on Finance
  • Melanie Hartzog, Deputy Director at NYC Office of Management and Budget (OMB)
  • Christine C. Quinn, CEO of Win

The discussion highlighted the way inequity manifests in the frontlines of the sector and emphasized the crucial role of direct service staff. Dr. Shierholz noted that, “Human services workers will take lower pay for meaningful work, but still need a living wage.” In conveying the harsh reality that many direct service staff in human services agencies need the same services they might be providing, Ms. Quinn alluded to a point made by Dr. Shierholz: the workforce of the social services sector is disproportionately women of color and individuals of low socioeconomic status.

Panelists discussed the difficulty of retaining staff to maintain the quality services that serve communities without funding for organizations for wages and indirect costs. However, Councilmember Ferreras-Copeland challenged the sector to communicate our full costs to the City Council because “Nonprofits should not assume that elected officials know the real cost of running programs.” As such, our sector also needs to speak with a collective voice and what is needed to fully serve New York’s communities.

Updates on HSC and HSC FY17 Priorities

Following the discussion, Allison Sesso, Executive Director of HSC, presented HSC’s vision and plan for the upcoming year. She honed in on points discussed during the panel: “if we are to effect tangible change, we can no longer afford to allow the current approach in which providers are paid less than true cost, have no funding to invest in our institutions, and continue to employ a low-wage workforce.”


Allison Sesso, Executive Director of HSC

HSC’s “Call to Action” Commission Report, released earlier this year, largely sets out the vision for the change we need and positioned HSC as a leading voice on nonprofit issues. HSC’s report has been referenced in stories found in mainstream media and national nonprofit publications and HSC has been asked to present around the country. As promised, the “Call to Action” is an active report and will continue to drive our work in the coming year.

Highlights of HSC’s work in the coming year include:

  • Risk assessment including the development of an RFP Rater; a Government Agency Performance Scorecard; and participation in Ahead of the Curve, a collaborative brainstorming amongst capacity building groups serving NYC nonprofits around risk
  • Program Collaboration through a new working group being launched by the City and partnership with State leaders like Fran Barrett, the Interagency Coordinator for Non-profit Organizations
  • Capitalizing the sector by understanding the real costs of running various programs and advocating for greater investments by the City and State for our organizations and the human services workforce
  • Disaster Preparedness by partnering with the DOHMH to develop a sector-wide plan for disaster response
  • Equity Agenda through encouraging our sector to appreciate our own biases at play and actively developing and moving strategies forward for these conversations

Additionally, she introduced the launching of HSC’s newest campaigns, Restore Opportunity Now and Fund the 15, with our partners FPWA and FPI to help highlight the role of human services and make a case for further investment by the state.

After detailing HSC’s development of statewide partnerships, legislative goals, and grassroots functionality with the Advocacy Institute, Allison spoke to the internal restructuring of HSC, and introduced changes to our Governance approach and membership engagement strategy.


Sesso with Joel Copperman and Dr. Jeremy Kohomban

HSC’s New Board of Directors

Nancy Wackstein, the head of HSC’s Transition Committee, described the process HSC went through this year to change our Governance structure and introduced the new Board slate. Joel Copperman, HSC’s Board Chair, presided over the vote for our new Board of Directors, which can be found here. The vote decreased the size of our Board of Directors to thirteen members with an additional three “lay” individuals to be identified, recruited and vetted at a later date.

After a unanimous vote, we were honored to welcome Dr. Jeremy Kohomban as our new Board Chair and the rest of our new Board of Directors. Their leadership will be instrumental in building an even stronger and more impactful HSC.

We would also like to extend our deepest gratitude to Joel Copperman for serving as the Board Chair from 2010-2016. His leadership and partnership has been instrumental to HSC’s growth and positioning. We appreciate the amount of time, effort, and dedication Mr. Copperman has poured into HSC to make sure we continue to work towards our mission and vision. We are also very thankful that Mr. Copperman will be staying on for one more year in the ex-officio role to ensure a smooth transition.

Bridgespan Presentation – Paying What it Takes to Achieve Results

To conclude HSC’s Annual Membership Meeting, Alex Neuhoff and Leslie MacKrell from Bridgespan gave a presentation on the study found in their article, “Pay What It Takes Philanthropy,” on nonprofit indirect costs. In their presentation, they discussed the fact that indirect costs for organizations differ greatly across segments and sectors and that indirect costs at organizations are often greater than what is typically provided by funders.img_0584

Bridgespan led a conversation around their study’s methodology and previewed their upcoming research project on looking at the indirect costs of greater numbers of nonprofit organizations. To find a copy of their presentation, click here.

Understanding the real or true costs of doing business and building funding approaches that take these into account is critical to the future of nonprofit human service organizations.  HSC is focused on this topic as it is a key component to the financial health of our membership and we are thrilled to be engaging Bridgespan in conversations on this topic.


HSC is looking forward to working on behalf of the sector in this coming year. We would like to thank our members and all of our funders for their support of our work:

  • Altman Foundation
  • The Clark Foundation
  • Department of Health and Mental Hygiene
  • The Leona M. and Harry B. Helmsley Charitable Trust
  • The Kresge Foundation
  • New York City Council
  • The New York Community Trust
  • United Way of New York City
  • UJA-Federation of New York

We have an ambitious agenda and look forward to working with all of our members, funders, and supporters this coming year!


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