Volunteer Lawyers Project of Central New York Executive Director Sal Curran, pictured at the podium in the New York State Capitol building. Curran is pictured at an advocacy action at the Capitol this spring. Credit: Courtesy of Katy Lasell, a campaign organizer at the Right to Counsel Coalition

Nonprofit operators in New York say they desperately need more consistency in how the state disburses and reimburses funds vital to their operation. 

That lack of regularity and timeliness in the delivery of state reimbursement payments, they say, has left them taking on credit lines to continue providing key services like housing and legal aid to state residents. 

A recent survey conducted among nonprofits in the state revealed that 33% of the organizations with contracts with the state were owed funds for services already delivered, totaling at least $58 million in tardy disbursements.

Legislation voted through the New York State Legislature last year could help improve that by tweaking existing contracting laws, streamlining how all state agencies approach contract renewals to improve timeliness, clarifying when organizations can expect payment, guaranteeing the state can deliver interest payments for late disbursements and locking in automatic contract renewals. 

“New York nonprofits are absolutely in a state of crisis,” said Sal Curran, the executive director of the Volunteer Lawyers Project of Central New York. Curran helped write the bill and lobby state leaders to pass the legislation throughout the past year.

That bill now awaits the signature of Gov. Kathy Hochul, and Curran and other nonprofit operators say the legislation is even more vital in the face of cuts by the White House and Congress to federal programs administered by nonprofits. 

“Governor Hochul will review the legislation,” said Kassie White, a spokesperson for Hochul, in response to questions about when the bill would be signed and what might be holding up the governor’s approval of the legislation. 

Curran said they hope the bill will be signed soon. Their organization signed onto a letter that also included 562 other nonprofits requesting the governor approve the legislation. In the letter, organizations detailed the grim realities they face while they await funding. 

About 65% of nonprofits surveyed by the coalition of nonprofits that sent the letter relayed concern about funding basic operations in 2025. The group projects that this year New York may owe nonprofits more than $650 million statewide.

“A contract might be six months late in being executed, and so what that means is: you’re having to pay your staff, you’re having to pay your rent, you’re having to pay all the expenses of operating a nonprofit, but you have no money coming in,” Curran said.

Central Current reported last summer that VLP took on a low-interest loan facilitated by the Central New York Community Foundation to be able to continue its pro bono work, which includes advocating for tenants facing eviction, aiding residents with their medical and educational debt, and protecting LGBTQ+ rights.

At that time the state owed VLP about $1.1 million out of its $5 million total budget. The lower interest loan the organization took to continue operating at full capacity required the organization to pay interest of $2,500 a month, which Curran said is relatively manageable.

“But it’s not like the CNY Community Foundation can do this for every nonprofit,” Curran said. “It isn’t fair. We need a systemic fix to this.”

The bill updates parts of state contracting law, asking state agencies to provide an advance of 25% of the contract, and require the payment of interest by the state when reimbursements are late. 

This already occurs at some state agencies, but not all, Curran said. An advance, Curran noted, would allow organizations to bridge gaps while they wait for state reimbursements.

“That would be critical because some of these contracts are six months late” Curran added.

Another issue that the bill would address is how state agencies delay payments due to clerical errors from nonprofits. Curran said typically the state is supposed to pay an invoice from an organization related to their state contract within 30 days. 

If an invoice shows some kind of error, including minor ones like typos or rounding mistakes, the state can freeze that 30-day timeline until the nonprofit submits a corrected invoice. 

“That just delays, and delays and delays things,” Curran said. 

The bill amends contract law to indicate that a freeze of the 30-day reimbursement timeline can only occur if the nonprofit invoices show material errors. 

The legislation also establishes a 15% administrative cost rate across the board for all state contracts. These costs typically entail the overhead necessary to provide the services outlined in the contract. Included in that are utility and office space costs.

“The costs have gone up a lot in the last five years,” Curran said. “ This is a crisis people are having to close their doors. They’re having to lay off staff because of cash.”

State Assemblymember Amy Paulin, a Democrat from Westchester County who sponsored the bill in the Assembly, said the bill’s improvements to contracting law are even more important now that cuts to programs administered by nonprofits included in next year’s federal budget are set to disappear. 

“We know these nonprofits are going to be losing a lot of their revenue so they will not be able to afford to continue. They’re going to go out of business,” Paulin said. “ We’re going to drive nonprofits out of business if we don’t do something.”

Read more of Central Current’s coverage

Eddie Velazquez is a Syracuse journalist covering economic justice in the region. He is focused on stories about organized labor, and New York's housing and childhood lead poisoning crises. You can follow...