New York City has reduced its nonprofit contract backlog by 52% this year

The New York City Mayor’s Office of Nonprofit Services hosted a meeting recently with City Hall leadership, department commissioners and chief nonprofit officers to discuss the results of the office’s efforts to get nonprofit organizations contracting with the government paid on time. For a long time, the city was very behind in “registering,” or paying, contracted nonprofits, creating a backlog of unpaid contracts worth more than $11 billion. These nonprofits run programs on the government’s behalf, such as offering social services to families in need. Since April, the office has been using a new tool, ContractStat, to help track its performance on compensating nonprofits, and it has been conducting a survey among these organizations to gauge their experiences working with the city. The results shared with city officials showed that these and other efforts from the office have contributed to a reduction in the unpaid backlog of contracts from over $11 billion in 2022 to under $3 billion now. Mayor’s Office of Nonprofit Services Executive Director Michael Sedillo spoke with City & State about this improvement. This interview has been edited for length and clarity.

How has the city’s nonprofit contract payment backlog changed since 2022?

We’ve tried to boil down to five key indicators that tell us how we’re doing as a city in terms of paying our nonprofit providers on time. We’ve done that in partnership with the great chief nonprofit officers that are every city agency, and we boiled it down to a few that focus on contract backlog, invoice cycle time, budget (modification) cycle time and our provider sentiment survey. As it relates to the contract backlog, just to explain that a little bit, when a contract is backlogged, that means that it has not been registered, but the services were supposed to start already. When a contract isn’t registered, it’s not able to be paid out, we can’t have a provider invoice on that. It has historically been one of the main contributors to delays in payments to our nonprofit providers. At the start of this administration, we had well over $11 billion in retroactive and unregistered contracts. I’m really happy to say that, thanks to tireless work of city agency staff across the administration in that time, that number has been reduced by 81%. If you look just at this calendar year since we started tracking this regularly from the Mayor’s Office of Nonprofit Services, that number has been reduced by 52%.

How does ContractStat help the office monitor contract registration performance, and what is the benefit?

It is a performance management tool. It is about focusing agency leadership and chief nonprofit officers who are responsible and accountable for their agencies’ outcomes as it relates to paying nonprofit providers on time, focusing them on the key indicators that tell us how we’re doing as it relates to paying our providers. Since February, we’ve been reporting this on a monthly basis to our noncity agency partners. But at a higher level, what it really offers us is a chance to get alignment across our bureaucracy. We have hundreds of thousands of employees, and this allows the administration and leadership to send a signal of prioritization to city agency staff and lets them know what they’re accountable for. One of the things that having chief nonprofit officers allows us to do is work toward that alignment.

So far, what has the Quarterly Provider Sentiment Survey shown the office? How has this information been used?

The provider sentiment survey is something we also started this year, right after I started this role in January. It allows us to get the voice of the customer. We think the quantitative data that we’re tracking is important, but the qualitative data is really important as well. We need to be responsive to our customers – our nonprofit providers – and make sure that we’re providing them with an excellent experience across the board. The provider sentiment survey allows providers to anonymously answer a few questions about city agency staff that they contract with and, importantly, it only goes to those who are contracted providers. (The) questions are like: Is the contracting agency responsive to their inquiries? Are they creative in finding solutions to issues, etc.? That generates a provider sentiment score because each of those questions are based on a Likert scale, and then we track how that changes over time based on the different interventions and the different initiatives coming from that city agency. I’m happy to say that that score has continued to increase since we first launched it, and the next version of our survey will be our fourth one, being released on Dec. 2. (We’re) really excited to see the new scores that are coming, and expect to see that continue to increase as our chief nonprofit officers have been busy closing out 200-plus constituent inquiries, saving folks sometimes from payroll delays and making sure the bureaucracy is responsive to them as quickly as can be.

Aside from the promising statistics, what new ideas or goals came out of your recent meeting with city leadership?

We’ve been doing this since February, reporting on this data, but I think the real magic was bringing all the leaders, deputy mayors, agency heads, chief nonprofit officers together to look at these indicators citywide to see what the trend lines are for these key indicators. And then giving them a chance to huddle as an agency with the agency head and their chief nonprofit officer to focus on their agency-specific data, look at how their data compares to citywide averages and their sister agencies. At that point, we had 43 days left in this calendar year and we said, “Hey, we want you to focus on a goal for each of these indicators that you want to realize by the end of this calendar year, and let the deputy mayor teams and City Hall teams know how they can support you in achieving these goals.” Even just the act of looking at their data, being very clear about their performance, how they are performing these indicators and then establishing and vocalizing that goal was something that we’re really proud to do. We look forward to seeing how the trends change quarter over quarter, as we’re going to continue to convene.

What more do you think can or should be done to make the system of compensating nonprofits even more efficient – if anything?

The first place I’ll start is with discretionary contracts. If you look at our current backlog, over two-thirds of those contracts are discretionary contracts, and these contracts are retroactive and delayed by design because we don’t find out who we’re contracting with until the same day that those services are actually supposed to start. We had a lot of great partnerships with folks at the City Council and the comptroller’s office to reimagine how these contracts could be done. Really proud to have launched – in partnership with many folks – the discretionary grant process, which removes 13 steps in the process, removes the registration process and gets folks paid way quicker. That is just a pilot only for those under $25,000. I would love for this pilot to be successful and for us to continue expanding that, because that’s great for our providers – particularly our small providers who are not used to the crazy, arcane contracting process – and then also for our city agency staff, who are often saddled with these contracts that are delayed by design. We’d love to continue seeing bold, innovative solutions and keep pushing the envelope for those discretionary contracts. Second is just continuing to work on that alignment of key actors. Our office is really good at bringing together folks who are aligned on the same outcome of wanting to get our nonprofit providers paid so they can actually focus on service delivery, not the headache of payment delays.