Comptroller Lander Spotlights Nonprofit Payment Delays in Follow-Up Report & Launches Audits of 3 Agencies with Worst Delays

New York, NY — In a follow-up to the Comptroller’s Annual Contracts report, New York City Comptroller Brad Lander released Nonprofit, Nonpayment, a deep dive into payment delays in the City’s human services contracts. The report examines contract and payment delays from the point an agency awards a contract to when nonprofit providers receive payment from the City and looks at nine agencies with over $100 million in active nonprofit contracts as of Fiscal Year 2025. In light of the report’s findings, Comptroller Lander launched three audits into the three agencies with the worst payments—Human Resources Administration (HRA), Department of Homeless Services (DHS), and Department of Health and Mental Hygiene (DOHMH).

“When nonprofits cannot make payroll, are behind on their rents, and take out loans because the City is consistently late to pay, we are ultimately letting down New Yorkers who rely on these organizations to prevent gun violence through our Crisis Management System, run our childcare centers, and represent tenants in court,” said Comptroller Brad Lander. “With federal funding slashed by Elon Musk’s DOGE, the very least the City can do is pay contractors on time and in full for services already rendered. Despite my office’s commitment to registering contracts well within our mandated timeframe and our taskforce with Mayor Adams’ Administration to get nonprofits paid on time, City Hall has not held up its end of the bargain. That’s why we are launching three audits of the agencies with the worst payment delays because once we know what’s holding up these payments, we can get hundreds of nonprofits paid and get New Yorkers services without interruption.”

New York City’s human services, which are overwhelmingly provided by non-profit contractors, represent $8 billion of the City’s spending in Fiscal Year 2024. The Comptroller’s Annual Contracts report found that the percentage of late registered human services contracts rose from 88.5% in FY23 to 90.7% in FY24. In recent years, human service providers increasingly experience invoice and payment delays from City agencies, reportedly forcing nonprofit providers to take on debt, consider layoffs, and scale back services. A review of available data indicates that active non-profit contracts with short and medium-term durations could be eligible for up to $4.9 billion more than the City already paid them as of April 15, 2025.

Key findings:

• In April, the Procurement and Sourcing Solutions Portal (PASSPort) revealed over 7,000 pending unpaid invoices worth over $1 billion. At least $675 million in unpaid invoices were for service dated in FY 2024 or prior.

• 2,508 contracts valued at $4.6 billion await registration (either to be sent to the Comptroller’s Office or self-registered by agencies) even as their start dates passed.
• Modifying a contract budget, even for modest changes to line items like rent or payroll, contributes significantly to payment delays, and often completely stops the flow of money to vendors. 85% of contracts with an approved FY 2025 budget have been modified at least once.
• At 7-of-8 agencies, the City issued first payments to human services providers over 200 days (or 6.5 months) on average after the contract’s official start. The Department for the Aging (DFTA), the Department of Health & Mental Hygiene (DOHMH), the Department of Housing Preservation (HPD), Department of Small Business Services (SBS), and the Department of Youth & Community Development (DYCD) issued first payments over a year after their contracts stated.
  • HPD exhibits the worst overall delays from the point when contract work begins to the first contract payment, with human service contractors waiting 765 days on average to process the first payments.
  • Over the last year, DOHMH and the Department of Homeless Services (DHS) took over 41 days on average to process an invoice to payment; both agencies had hundreds of invoices that sat pending for 100 or more days.

• Between FY 2023 and FY 2024, payment delays at about half of the agencies reviewed worsened.
• The majority of agencies reviewed did not meaningfully improve their on-time payment performance over the past five years. Across the agencies, time to first contractual payment was 16% longer in 2024 compared to 2019.

On the heels of the Adams Administration’s announcement to increase contract advances, Comptroller Lander recommends the following to provide both immediate relief to contractors facing potential insolvency and systemic reforms to fix the City’s broken procurement, budget and invoicing systems:

1. Launch and expand ContractStat, a public dashboard and management tool to develop, track, and improve Key Performance Indicators, such as invoice processing, budget and subcontractor approvals, and payments.
2. Make partial invoice payments a standard practice across agencies.
3. Launch a reboot of & expand Clear the Backlog, a 2016 de Blasio Administration initiative, which increased the sector’s minimum wage, increased the indirect reimbursement rate, authorized advances once a contract was registered, and standardized processing for human services contracts through the HHS Accelerator—clearing 90% of contracts for registration. The reboot of Clear the Backlog should prioritize paying contractors with demonstrable financial distress that risks service disruptions, with criteria such as being threatened with arbitrary loss of federal contracts by the Trump Administration, deriving 75% of operating income from City sources, demonstrable delays in contract registration of a year or more, and an established history of exemplary service provision and clean financial audits.
4. Dramatically expand the funds for the City of New York’s Grants and Bridge Loans program, which provides grants and bridge loans to organizations that require funds to make payroll and rent payments.
5. Increase contract processing staffing in City government.
6. Fix pain points in PASSPort, such as allowing vendors to submit invoices and supporting documentation in parallel while agencies review budget modifications, addressing fundamental problems with document uploads, and improving user functionality in managing workflows.
7. Set deadlines for the steps that lead up to contract registration on the portions of the procurement pipeline that the Administration oversees.

Comptroller Lander continued, “Increasing advance payments is a helpful band-aid to help solve the immediate crisis, but what City Hall needs are clear deadlines, better management over agencies, transparency, and fulfilling the promise of a public ContractStat to get vendors paid on time for their work. Together with our partners in government, we must effectuate meaningful and impactful change that will unclog this bureaucratic slog.”

Under the New York City Charter, the Comptroller’s office is responsible for reviewing and approving most City contracts and agreements entered into by City agencies before they are legally effective and payments can be made. Once a contract arrives at the Comptroller’s office for registration, the office has up to 30 days to ensure that appropriate funds exist for the City to pay the vendors, confirm that the City agency followed the procurement rules, and to verify that there was no corruption in the decision-making process. The Comptroller’s office is currently the only City entity with a time limit proscribed by law for its part in the City’s procurement process.

In addition to this report, the Comptroller’s office provides an array of information about City contracts in its Annual Contracts Report as well as in an updated primer on City contracting, which provides an overview of the process and vendor selection methods. Back in September 2024, the Office also published Preventing Corruption in Procurement, a four-step plan to root out fraud, minimize risks, and strengthen oversight of the procurement process.

Read the full report: https://comptroller.nyc.gov/reports/nonprofit-nonpayment

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