By Charles H. Hamilton
Senior Fellow, Philanthropy New York
On April 6th, Mayor Michael Bloomberg and his Administration showed real leadership for the nonprofit and philanthropic sector, just as they did in 2006, when they established the Center for Economic Opportunity. The Mayor made a speech at New York University, in which he announced three initiatives to help nonprofits: (1) reduce fixed costs through bulk purchasing; (2) strengthen nonprofit management through technical assistance and referrals, including a new program called Greater NY, by which business executives will volunteer their time and company resources to nonprofit executives; and (3) seek substantial reforms of the City’s contracting procedures, together with bridge loans. (Read the full press release.)
What are we to make of all of this? The Mayor’s announcement gives us an opportunity to start a candid conversation about what foundations, nonprofits, and the City (and business too) are doing during this recession and more generally.
The Mayor’s leadership shines a harsh light on the lack of leadership among foundations and nonprofits. Many foundations and nonprofits have responded well to the challenges of this recession, but the endless meetings called to “act in a more concerted way” have produced…nearly nothing. Yet, everyone still feels the need to show up for the next meeting. We need to do business in new ways if the sector is to be strengthened and its work improved. That requires leadership: real cooperation leading to concrete actions.
While the Mayor’s proposals represent progress, they struck me and others as no more than first steps, given the importance of the sector (in his speech, the Mayor noted nonprofits make up 15% of the City’s non-government workforce). For example, to what extent were the initiatives for reducing costs and strengthening nonprofit management really informed by, and coordinated with, what currently exists? And how will they be going forward? Group purchasing efforts have often proven to be inefficient. Management assistance is indeed very important, but nonprofit executives report a surfeit of offerings of varying quality, which are often “forced” upon them by foundations. Perhaps we need less “more” and more focus on coordinated, deeper, and better TA? What is the added value being proposed here and how will we know if it is successful?
The City’s inefficiencies are well-known and not particular to any Administration. The recent Nonprofit Executive Outlook Survey from Baruch College shows a significant, recent uptick in disapproval of current Administration policies and programs. The plans to reform City contracting procedures could make a significant difference and are welcome news. For instance, the Returnable Grant Fund administered by The Fund for the City of New York is slated to increase 150% from $8 million to $20 million over two years. There are also promises of further help through other lenders. These admirable steps only get to the symptom, and will prove to be pitifully small given the huge delays in public contract payments that have been a sad fixture for so many years.
Plans to expedite compliance review, standardize human services contracts, and increase openness for City contract information get closer to the nub of the issue. We have heard all of this before, of course. This Administration could make it different this time. Reforms rarely live up to the fanfare with which they are announced, but the Administration should commit to a regular “report card” to the public with specific benchmarks and a clear time-line for achieving these reforms. The real test of the Mayor’s initiatives will be how well the Administration puts its own house in order, measures it and reports its outcomes. Philanthropy should ask how we can help too.
The Mayor’s speech raises two larger issues. First, it simply isn’t clear from the proposals, and the process leading up to them, how much cooperation with nonprofits and foundations is desired. The Mayor’s comments suggest that there is a commitment to strengthening the infrastructure, efficiency, and effectiveness of New York City’s nonprofits, including the important web of community-based organizations. Questions remain about how well the Administration actually understands—and acts towards—the sector. Are nonprofits merely instrumental vendors and foundations simply occasional funding sources? New York City’s troubles and the challenges facing the poor and disadvantaged can be solved only with genuine understanding, partnerships, and actions. But we should all run screaming from the idea of yet another meeting. How, then, can we develop broader leadership that produces real concerted action?
Second, we must put these initiatives and all of these meetings in proper perspective. Action now is important (albeit slow and probably only modestly effective), but those actions are sometimes presented as if they are unique and important only now for the recession. When we look at leadership from a longer-term perspective, however, what is important now is what has always been important. We all have our lists of what that might entail: my list for foundations includes general operating support; building organizational and sector infrastructure, professional development, and board capacity; improving capitalization and cash flow; and well-defined results. Do the actions being taken now suggest a failure of leadership over the last 5, 10, 15 years? Going forward, then, let us concentrate not just on the immediate and easy, but always on what makes for good grantmaking, good government, and good management.
What do you think and why? How would you take the measure of leadership for foundations, or nonprofits, or the City? What real partnering with real actions would strengthen the effectiveness of this funny three-legged stool of nonprofits, philanthropy, and government? All of us in the Philanthropy New York community hope to hear from you.
The measures being proposed, while undeniably positive, do not begin to get at the crux of the issue, which is that the government, supposedly serving as a voice for the people, has broken its contract.
When the government developed many of its large social service programs, such as day care, it looked around and realized that it didn’t have to recreate the wheel by building its own day care centers. In many instances organizations already existed that were providing similar programming, or had staff and infrastructure in place to do so. The government believed that these agencies had value and that they could provide these services efficiently with proper funding.
But what has happened over the decades is a sea change in that relationship so that the direct service providers are no longer partners, or even conduits, but pawns. The game now is to see how often the government can cut funding and at the same time increase standards, expectations and reporting, before the providers yell “uncle.” A famous Monty Python skit comes to mind.
And at the same time that the government continues to make its contracts more arduous and more costly, it continues to add layers and layers to its own bureaucracy. Perhaps this keeps the lawyers away, but it assures that virtually no service is provided efficiently any longer and that scores of government bureaucrats have repetitive, vestigial positions.
Also at the same time, the direct service providers – the ones with the vision, passion and dedication to their communities or constituents – now spend an incredible amount of time and money trying to raise private funds to keep these same services going. And of course this is also time not spent providing service or developing new programs and means of efficiency.
A favorite trick of government agencies is to reduce the amount of a funded contract and at the same time force the provider to maintain (or increase) its contracted units. They figure that if they can cut off both legs and both arms and the providers will still participate in the dance, then there must be other body parts still to be removed.
Frankly, I don’t think this was ever the will of the people. And if government held up providers as shining examples rather than always pointing to the providers’ deficiencies to cover its own, society would be more than willing to fund these programs rather than cut off another limb.
Brian Saber
Former Executive Director
Hudson Guild
I write to respond to Chuck Hamilton’s blog entry as someone who has advocated valiantly, and with enormous frustration, for more than 20 years to resolve the issues of the unnecessary time and effort spent in contracting with the City, processing the contracts, and getting paid for the work that has been done sometimes eight months prior to the receipt of the first payment. I recall being a member of several task forces in the Koch administration, continuing in the Dinkins administration and again, but with little support, in the Giuliani administration. Among the many problems we addressed were issues of prompt contracting, multiple vendex requirements, varying understandings of what constitutes a performance-based contract, cash flow issues, and the requirement of some city agencies to have a senior management person deliver vouchers by hand to a city office distant from the nonprofit agency.
I remember convening a meeting in 1991 of the IT directors of eight City human services agencies to discuss an initiative, funded by the Ford Foundation, to integrate services. None of these directors had ever met previously, nor did they have any clue as to what hardware or software each was using or proposing to use, since they oftentimes paid different consultants to design different reporting systems. Consequently, nonprofits have all been required to purchase and use individual computers and varying systems for the various agencies with which they contract. The standing joke was that if you had eight contracts, your fiscal officer could have eight computers on his or her desk as required by each contract. Sometimes a nonprofit employee was not allowed to use the computer paid for by one city agency for work involving another city agency! Many of us had high expectations that Mayor Bloomberg, with his private sector success in using technology, would immediately see its potential to alleviate some of the above-listed problems and a long list of other ones. This is still on our wish list.
Most of these issues, however, are still current and unresolved. Has there been some progress? Yes, but not enough and with little central support from the Mayor’s office until now. There has to be a way, other than increasing the loan funds available, to solve the cash flow problems facing nonprofits that contract with city agencies. I sincerely hope that as a result of the financial crisis, the City will make a serious effort, in concert with nonprofit and foundation leaders, to establish a system that will reduce the unnecessary stress and pressure on nonprofit agencies arising from arcane systems and requirements and allow them to concentrate on the delivery of human services that are needed more than ever.