Authors: Charisse Bremond Weaver, Saundra Bryant, and Efrain Escobedo
In Los Angeles, nonprofit service providers lead the response to the homelessness crisis, economic inclusion, education justice, and community safety. These on-the-ground workers serve as trusted partners and infrastructure for Black, brown, immigrant, and indigenous communities that are often marginalized and criminalized. The City of Los Angeles relied on nonprofits to save lives during the pandemic and continues to rely on nonprofits for assistance with some of our community’s most critical issues.
One challenge facing Los Angeles nonprofits is delayed or reduced payments from the City. While the City heavily relies on nonprofits for essential services, bureaucratic hurdles and budget constraints impede full and prompt payments. This financial hardship forces nonprofits to cut back on services or reduce staff, which adversely affects us all. The nonprofit sector is an important segment of our economy, accounting for 23% of all city jobs.
The impact of delayed or reduced payments from the City extends far beyond the nonprofits themselves and directly affects the lives of Angelenos. Because nonprofits are key partners in addressing social and economic issues, any reduction in services or staff can increase homelessness, hunger, and other growing social problems.
To keep up with community needs, nonprofits incurred additional debt and tapped their reserves to continue providing these essential services. These are unnecessary challenges that contract reform by the City would easily mitigate.
The current City contract practices serve as a significant barrier to nonprofits’ effective work. For example, a Los Angeles family seeking assistance from a nonprofit in order to buy food may face difficulties due to the nonprofit’s limited funds caused by delayed payments from the City. The uncertainty regarding when those vital funds will be available prevents nonprofits from scaling up their support for families in need. To put it plainly, payment delays from the City are directly hurting residents.
In fact, City payments are consistently late, with some delays lasting up to nine months. A recent report by the Committee for Greater LA revealed that nearly a quarter of surveyed nonprofits have less than two months of cash on hand. Most banks are unwilling to extend lines of credit to nonprofits, and many contracts with nonprofits prohibit them from saving or building surpluses.
Additionally, nonprofits face significant time wastage during the application, contracting, and reporting phases. A local nonprofit organization that provides youth, homeless, and workforce services estimated that its staff spends half of their time on complex manual reporting requirements, which detracts from time spent meeting community needs.
The bureaucratic challenges faced by nonprofits make it especially difficult for BIPOC-led organizations to access funding. BIPOC-led nonprofits often have smaller budgets compared to white-led organizations, creating a barrier to current City contracting opportunities. BIPOC-led organizations are uniquely positioned to reach diverse communities, yet they are shut out of funding opportunities or burdened with payment delays, deepening existing inequities in our area.
The City of Los Angeles must prioritize funding for nonprofits and ensure that payments are made in a timely manner. This necessitates streamlining bureaucratic processes and allocating sufficient funds to support the important work being done by these organizations. Immediate actions can be taken to alleviate the strain on nonprofit partners. We ask the City to:
- Pay nonprofits on time. Establish a payment process whereby all City departments and offices are required to pay provider nonprofits within 30 days. This would provide much-needed financial stability and enable nonprofits to continue to provide essential services uninterrupted.
- Curtail the bureaucracy. Contracting processes should be streamlined by expediting and fully funding the reform efforts of the City’s Chief Procurement Officer. The development of the new Regional Alliance Marketplace for Procurement (RAMP) system should be accelerated to create centralized and user-friendly technology that integrates data across City departments. This would facilitate comprehensive centralized contracting, compliance, and auditing processes, eliminating the need for nonprofits to submit the same information to multiple agencies or adapt their materials to meet customized requirements from different departments.
- Develop a public statement. The Chief Procurement Officer should develop a public statement outlining the values that nonprofits can expect when partnering with the City. We can model procurement reforms like those adopted by New York City’s Citywide Procurement Reform efforts including their Values for a Provider Bill of Rights to ensure the equitable treatment of nonprofits.
The City has an opportunity to act now as it moves to adopt a new budget for the upcoming fiscal year.
Nonprofits are a vital part of Los Angeles, and their work is essential to building a more just and equitable city. It is time for the City of Los Angeles to take action to provide the financial support and reform that these vital partners need so that they can continue to improve the lives of Angelenos.
ABOUT THE AUTHORS:
Charisse Bremond Weaver is President & CEO of the 55-year-old nonprofit Brotherhood Crusade and is a champion of equality and equity by helping individuals overcome the barriers that deter their pursuit of success in life and facilitate opportunities for a better quality of life by effectuating improved health and wellness, facilitating academic success, promoting personal, social and economic growth, and building community agencies and institutions.
Saundra Bryant is Executive Director of All Peoples Community Center, one of sixteen City-funded FamilySource Centers, which incrementally move families out of poverty by providing a continuum of services.
Efrain Escobedo is President & CEO of the Center for Nonprofit Management, which partners with philanthropies, the public sector, and businesses to amplify the reach of nonprofits.
