A few months ago, in my class about the scope and sector of the nonprofit landscape, we began learning about how grant applications work. Coming from Florida, hearing about the large scale of city and state grants from the Northeast was amazing, until I learned that many of these grants take years to pay, require nonprofits to take out loans, and have generated millions of dollars in annual interest costs for organizations. There’s a better way.
Background
While nonprofits have been dealing with this issue for a while, the news picked up on it in mid-2025, when a report titled Nonprofit, Nonpayment: An Analysis of Payment Delays for the City’s Human Service Contractors was released. The article, overseen by the city comptroller, found over 7,000 unpaid invoices worth more than $1 billion.¹ The statistics do not stop there. Around $680 million in unpaid invoices were for 2024, the average first payments to human services providers took over six months to begin, and since 2023, this rate has actually gotten slower.² Diving more into the second item on the list, we are talking about essential human services. Medical care, disability support, food assistance, and many other major life necessities fall into these categories and are completely going by the wayside.
Unfortunately, this problem is not unique to the city of New York, but to the entire state as well. In a May report entitled Nonprofits in Peril, it was discovered that the state owes nonprofits around $650 million.³ A more important question, in my opinion, is: why in the world is it taking so long to pay nonprofits? According to the city, the delays are due to contract modifications, bureaucratic steps that require checks at each level, and paperwork requirements that have been newly instated to prevent fraud.⁴ To me, this response sounds like corporate excuses. The work is important. Life-saving. In fact, the city has been giving grants to nonprofits since 1909 with the establishment of the New York Foundation.⁵ If this idea of city grantmaking were a new concept, then it would make sense to have these kinks. However, it has been over 100 years, and there are better ways.
Problems and Failed Solutions
Unlike a for-profit business, there is no bankruptcy to fall back on. Furthermore, the work is too vital to stop to wait for funding. So, nonprofits are often forced to take out loans and deprioritize payroll so that services can continue. Since these organizations are tax-exempt and are receiving verifiable money from the city, the loans should be interest-free, right? Absolutely not. Banks have made a multimillion-dollar business collecting nonprofit loan interest, directly taking away programmatic funding. Nonprofits are forced to pay hundreds of thousands of dollars in interest expenses, shut down, or default on their loans because the city has still not responded.⁶
Since the bombshell report dropped in April, there have been a few proposals to fix the issue, with former Mayor Adams announcing an increase of $2.2 billion for advanced funding for nonprofits in 2026.⁷ Other main options include awarding a percentage of the contract immediately, establishing a Department of Contract Services, and creating a better process to deal with modifications done on an annual basis.⁸ Also, in the fall of last year, Adams announced a “speeding-up” program, with 100 nonprofits that receive grants of $25,000 or less getting their money in half the time.¹¹ Once again, this is not a bad development, but it is not enough. Overall, these solutions, in my opinion, are band-aids. They will still result in interest payments on charitable money, a lack of full impact, and banks profiting due to city inefficiencies.
What Should Be Done
Right now, JPMorgan has $1.5 trillion in outstanding loans.⁹ Considering JPMorgan is not the only major bank, there are trillions and trillions of dollars currently being loaned out. I am not stating these facts to diminish the importance of nonprofit-sector loans, but to show that banks should be able to afford to provide non-interest loans guaranteed by the city to make up for delayed nonprofit funding. The happiest day of a nonprofit finance team’s year is not being awarded a grant or contract, but when they actually receive the money. Immediately, this is an issue.
Essentially, we are using tax money to pay nonprofits, but because the payments are late, that tax money becomes interest going to the bank. The city should immediately work with major banks and negotiate a tax break in exchange for non-interest loans for nonprofits waiting for city contracts. While this may reduce tax revenue from banks, it will ultimately bring more money into the independent sector and create more gains than losses. Money spent now on people who need it is more effective than money locked in a trust account for a bank executive.
If we are truly looking to reform the system of public-private partnerships, changes must be made. Large, granting foundations are significantly faster at giving out money to nonprofits; meaning it is possible. We need our government officials to work with loan-making institutions to guarantee that if the city is unable to pay the grant or contract immediately, nonprofits will still have access to the money through other avenues (interest-free loans guaranteed by the city). It will not be an easy transition, but fortunately, over 1,800 people¹⁰ work for the city’s Department of Finance, meaning we certainly have the resources and manpower for this change. If we do not work quickly, many nonprofits will continue to fold.
References
1. Business Quant. (2025). JPMorgan Chase: Loans, net. https://businessquant.com/metrics/jpm-pc/loans-net
2. New York City Comptroller. (2025). Nonprofit, nonpayment: An analysis of payment delays for the city’s human service contractors. https://comptroller.nyc.gov/reports/nonprofit-nonpayment/
3. New York City Comptroller. (2025). Nonprofit, nonpayment: An analysis of payment delays for the city’s human service contractors. https://comptroller.nyc.gov/reports/nonprofit-nonpayment/
4. Human Services Council of New York. (2025). Nonprofits in peril. https://coffeywritesimpact.com/wp-content/uploads/2026/01/fb167-nonprofitsinperilreport.pdf
5. Newman, A. (2025, May 5). New York City owes nonprofits billions, and the bills are piling up. The New York Times. https://www.nytimes.com/2025/05/05/nyregion/new-york-city-nonprofits.html
6. New York Foundation. (1909). Records of the New York Foundation. New York Public Library Archives. https://archives.nypl.org/mss/18363
7. Newman, A. (2025, May 5). New York City owes nonprofits billions, and the bills are piling up. The New York Times. https://www.nytimes.com/2025/05/05/nyregion/new-york-city-nonprofits.html
8. Nonprofit Quarterly. (2025). New York and other states move to fix nonprofit contracting delays. https://nonprofitquarterly.org/new-york-and-other-states-move-to-fix-nonprofit-contracting-delays/
9. New York City Council. (2025, April 30). Council advances legislation to address nonprofit contracting delays. https://council.nyc.gov/press/2025/04/30/2856/
10. New York City Department of Finance. (n.d.). New York City Department of Finance. LinkedIn. https://www.linkedin.com/company/nyc-department-of-finance/
11. New York City Mayor’s Office. (2025, August 21). Mayor Adams, Speaker Adams announce bold contract reform to help nonprofits get paid faster. NYC.gov. https://www.nyc.gov/mayors-office/news/2025/08/mayor-adams–speaker-adams-announce-bold-contract-reform-to-help
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