Alliance Alert: A recent report by the New York State Comptroller’s Office underscores the vital role nonprofit organizations play in providing essential services to communities across the state. Nonprofits not only deliver critical support in areas such as housing, education, and healthcare, but they also form the backbone of the mental health and substance use service systems. These organizations are lifelines for individuals and families in crisis, offering high-quality care and support that is indispensable to New York’s overall well-being.
While the Governor and State Legislature have made investments in recent budgets, much more must be done to reverse the effects of decades of underfunding, which have left agencies struggling to provide services and offer competitive wages for staff. Although non-profit jobs represent nearly 20% of private sector employment throughout the state, our workers earn about 24% less than other private sector employees and 14% less than those in the public sector, making it increasingly difficult to recruit and retain staff.
As demand for mental health and substance use services continues to rise, it is imperative that the state invests in the nonprofit agencies that deliver these services. Statewide behavioral health advocates are calling for a 7.8% increase in rates and contracts for nonprofit mental health and substance use agencies. This increase is necessary to ensure that these agencies can continue providing high-quality, life-saving services to New Yorkers in need.
Nonprofit agencies are struggling to meet the increasing demand for services while grappling with severe workforce shortages and underfunded programs. To address these challenges, the state must support increased contracts and rates for agencies so they can meet rising costs of providing services and improve pay for nonprofit service workers. By investing in our agencies as well as better wages and benefits, New York can improve workforce recruitment and retention, ensuring that these agencies remain equipped to serve communities effectively.
The Comptroller’s report highlights the critical contributions of nonprofits, but these contributions can only continue if the state prioritizes funding to meet rising needs. We urge New York’s leaders to commit to this necessary investment in nonprofit mental health and substance use agencies to build a stronger, healthier future for all New Yorkers. Click here to read the full report and see below for more information.
New York’s Nonprofit Sector Faces Challenges Despite Economic Contributions, Report Finds
Staff Report | FingerLakes 1 | January 8, 2025
Nonprofit organizations remain a cornerstone of New York’s economy, contributing over 1.3 million jobs and $96.8 billion in total wages, according to a recent report from State Comptroller Thomas P. DiNapoli. However, despite their economic significance, the state’s nonprofit sector has been shrinking since 2017, with declines in both the number of establishments and jobs, while the rest of the nation’s nonprofit sector has experienced growth.
The report highlights that nonprofits account for 5% of New York’s private sector establishments but provide more than 20% of private-sector jobs in several regions, with concentrations as high as one in four private-sector jobs in areas like the Southern Tier. Yet, employment in the sector has not rebounded since the pandemic, recovering only 7.4% of jobs lost between 2020 and 2022, compared to a fuller recovery in other states.
“Nonprofits provide essential services, from healthcare and education to social assistance and cultural programming,” said Comptroller DiNapoli. “However, persistent challenges, including delayed state contracts and lower wages compared to other sectors, are hampering their ability to fully recover and thrive.”
The report also reveals a wage disparity. While nonprofit wages in New York grew faster than those in other sectors between 2017 and 2022, they still lag behind private and public sector earnings. On average, nonprofit employees earned nearly 24% less than private-sector workers and 14% less than public-sector employees.
Health care and social assistance remain the largest nonprofit employment sector, representing 61.4% of nonprofit jobs in the state. Educational services follow closely behind, with private colleges and universities playing a significant role in employment and wage contributions.
Another critical issue highlighted is the persistent delay in processing state contracts with nonprofit organizations. In 2023, more than half of state contracts with nonprofits were executed late, causing delays in essential funding. These delays force nonprofits to rely on loans or cut back on services and staffing while waiting for state payments.
“Late contracts create financial instability and undermine the ability of nonprofits to deliver critical services to vulnerable populations,” the report states.
While New York’s nonprofit sector continues to play a vital role in supporting communities and driving economic growth, the report concludes that without improved funding mechanisms and greater wage parity, the sector may struggle to meet increasing demand for services in the years ahead.
DiNAPOLI RELEASES REPORT ON NONPROFIT INDUSTRY
Yonkers Times | January 8, 2025
State Comptroller Thomas P. DiNapoli released a report that showed nonprofit organizations in 2022 provided 1.3 million jobs to New Yorkers, just over 1 in 6 private sector jobs in the state. While the number of nonprofits increased nationally between 2017-2022, they declined in New York and the number of jobs also fell by 4.1%.
“Nonprofits play an important role in our state and local economies and are an essential part of the fabric of the communities they serve, but their numbers are shrinking,” DiNapoli said. “Many nonprofits rely on government funding to support their services, and contract delays and slow payments have contributed to some of the challenges they face. Policymakers need to ensure state agencies process contracts and payments for nonprofits on time, so they can carry out the work on which so many New Yorkers rely.”
Nonprofits Role in State Economy
In 2022, there were over 344,000 nonprofit organizations in the U.S., 3.1% of all private sector establishments. With 33,536, nearly 1 in 10 of these nonprofits were located in New York, comprising 5% of the private sector statewide.
Nonprofits provided 12.8 million jobs nationwide in 2022, with the greatest number (10.6%) in New York. In some regions of the state, they supported more than 1 in 5 private sector jobs. Nonprofits in New York paid $96.8 billion in wages in 2022 (11.1% of the nationwide total). Average annual wages paid by nonprofits in the state were lower than in the public and private sectors, in contrast to nonprofits in the rest of the country, where average wages were more in line with public and private sectors.
Statewide, three industry sectors accounted for 78.9% of nonprofits and 89.3% of nonprofit jobs in 2022. The health care and social assistance sector had the largest share of nonprofit establishments (41.3%) and jobs (61.4%). Other sectors with significant employment in New York include educational services, other services, professional and business services, and leisure and hospitality.
Decline in Nonprofits Since 2017
Although New York ranks among the highest for nonprofit establishments and employment, both numbers declined between 2017 and 2022. The state experienced a loss of 626 nonprofits between 2017-2019, and recovered 453 over the following three years, a net loss of 173 establishments through 2022.
Prior to 2020, employment in nonprofits was growing in nearly every state and New York had the fourth highest increase with 32,348 additional jobs. During the pandemic, the number of jobs at nonprofits plummeted nationwide, with a loss of 580,426. Approximately 1 in every 5 nonprofit jobs lost was in New York. By 2022, employment at other private sector establishments nationally had fully recovered, but nonprofits were still struggling. New York had the lowest nonprofit job recovery, regaining just 7.4% of the jobs lost and fewer jobs than in 2017.
In addition to lagging other states, job growth for nonprofits in New York was also lower than that for other private sector establishments and the public sector from 2017 to 2022. During the five-year period, nonprofit employment declined by 4.1% in comparison to a 1.5% decrease for the public sector and a 1% increase all other private sector establishments.
Regional Impact
DiNapoli’s report found that in 2022, almost 60% of the state’s nonprofits and two-thirds of their employment were in the downstate regions, with nearly half of all nonprofit jobs located in New York City. However, nonprofits jobs are a higher share of private sector employment in upstate regions. For example, in the Southern Tier, 1 in 4 private sector jobs are at a nonprofit.
In 2022, nonprofit employment in all regions remained below 2017 levels, with the largest declines in the Mohawk Valley (-12.3%), Western New York (-10.3%), and the Capital Region (-9.5%).
State Contract and Payment Delays
Nonprofits provide a number of services on behalf of the state, including mental health and public assistance, recovery aid from storms and other weather events, public safety, food, and arts and cultural programs. Under state law, contracts are to be executed within 150 to 180 days after the funding for the program became law. As noted in DiNapoli’s 2023 annual report on the implementation of the prompt contracting requirements, over 5,000 contracts, or 56%, with state agencies in 2023 were processed late.
A high share of late contracts is not a recent phenomenon; late contracts have been a persistent problem faced by nonprofits. When contracts or payments are late, nonprofits may decrease the services provided, defer hiring or lay off workers, or rely on loans or lines of credit to get by.
State Comptroller DiNapoli reiterated his call for nonprofits’ contracts and payments to be processed by state agencies in a timely manner to ensure steady funding and avoid any disruption of services.
Report
The Critical Role of Nonprofits in New York
DiNAPOLI RELEASES REPORT ON NONPROFIT INDUSTRY | Yonkers Times