5 Ways to Fix Dysfunctional Government Contracting

Government at all levels outsources many of its functions through contracts with community-based nonprofits. But it’s tough, sometimes fatal, doing business with public agencies.

In an op-ed in Crain’s New York Business, NPQ contributor John MacIntosh, whose work on risk management frequently references problems in government contracting, called upon Mayor Bill de Blasio to provide some common-sense solutions to the problem in New York City—a problem experienced by nonprofit government contractors across America.

Many nonprofits are already on the edge. More than 10% are insolvent (18% in human services) and almost half have virtually no cash and limited access to credit. Reductions in federal discretionary spending will hit them very hard.

Nonprofits will never be able to fundraise their way out of inadequate government payments. Most services are provided by organizations that are overwhelmingly funded by the government and the overall pool of private donations is largely fixed, no matter how hard individual nonprofits try to raise money.

These are efficient, professionally run organizations that despite their nonprofit status must compete in the market for resources like employees, real estate and technology. They cannot recover from cuts in government funding by becoming more efficient, having bake sales or leaning on volunteers.

[The mayor] also knows that while nonprofits are often taken for granted and seldom make the news unless there’s a scandal, they employ hundreds of thousands of people, serve millions, and provide much of what makes our city great in the arts, education, recreation, health care and human services.

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