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Another Voice: Reform is needed now for state’s nonprofit sector

By William T. Gettman Jr.

In late 2014, the New York City social services mega-agency FEGS (Federation Employment and Guidance Service) suddenly closed, to the dismay of funders, service recipients, staff and investors. How could the failure of a $250-million social service agency occur overnight?

A distinguished panel of experts has released a thoughtful, balanced and practical report on how the not-for-profit sector and its government partners need to change, innovate and improve governance.

“New York Nonprofits in the Aftermath of FEGS: A Call to Action,” identifies chronic problems and offers solutions for strengthening the nonprofit human services sector.

Bluntly stated is the fact that over the past 40 years, government has transferred an increasing number of support functions to the more efficient and nimble nonprofit sector in order to save on costs. The work includes functions like providing out-of-home care and safety for vulnerable children, operating early childhood education and after-school programs, running food pantries, providing mental health counseling, sheltering people experiencing homelessness and caring for the elderly.

While transferring the important direct care and safety net support for hundreds of thousands of recipients, the operating environment makes fiscal, program and community viability extraordinarily difficult for the state’s nonprofit providers. The states and local governments do not pay full costs, and their payment schedules and rules are erratic, which can cause a number of problems having to do with lack of liquidity, unreasonable fundraising burdens and underpaid staff. All of these issues result in low performance and diminished quality of service.

The report identifies three major problems and makes a series of recommendations designed to work together to strengthen the nonprofit human services sector.

First, many programs are designed without soliciting valuable feedback and expertise from the nonprofits that are responsible for implementing them, resulting in ineffective and unworkable programs. Second, government should collaborate with the sector in program design, to ensure that the sector is prepared to make the shift to Medicaid Managed Care – a major shift in how services are designed and delivered. Third, we need to reduce unnecessary regulations that impede the partnership between nonprofits and government. At the same time, we need to recognize legitimate cost structure and needs and promote efficient operations.

Nonprofit human services organizations play a critical and long-standing role in building and supporting the wellbeing of New Yorkers. The time for state, local and private action is now.

William T. Gettman Jr. is executive director of St. Catherine’s Center for Children in Albany.