New York’s nonprofits will be stronger if they work together.
It is really this simple: New York could not function without the nonprofit sector.
First, nonprofits in New York are exceptionally diverse in size and complexity, forming an essential pillar for service delivery. They are inextricably linked to the functioning of many City agencies, providing services such as health care, childcare, education, after-school programs and workforce development — services that were originally the responsibility of government agencies.
Second, the nonprofit sector is a significant employer in New York City. According to a report from former Comptroller Scott Stringer’s office, 1 in 6 employees in New York works for a nonprofit, totaling approximately 662,025 workers. This workforce is predominantly women (64%) and people of color (56%).
Third, the nonprofit sector itself is an important feedback arm for public policy. Alexis de Tocqueville in 1835 stated that voluntary organizations represented the “science of democracy.” By engaging with local communities, nonprofits amplify the voices of those they serve, influencing larger political discussions around resource distribution and other important issues.
Despite the vital role nonprofits play in New York and other cities, the sector faces significant barriers. Nonprofits must be better organized and coordinated if they hope to address a host of challenging issues in the near future, including changing service delivery models and employment standards and a host of technological advances.
Historically, nonprofits have often driven solutions to critical societal challenges. From advancing HIV/AIDS advocacy in the late 20th century to leading discussions on the digital divide in the 2000s to providing essential services during the COVID-19 pandemic, nonprofits have consistently mobilized resources to emerging problems. Each of these examples follows a similar pattern: nonprofit sector pressure followed by a public sector response, thus reinforcing the interdependence of both sectors.
However, just because this model of mutual dependence has worked in the past does not guarantee it will in the days to come. Several persistent challenges hinder the nonprofit sector’s ability to plan for the future. First, access to capital. For many nonprofits in New York, municipal government is the primary source of revenue. While the City invests in nonprofits at levels unparalleled by other municipalities, government contracts often create difficulties. Misaligned cycles of service delivery and payment disbursement force many nonprofits to seek additional funding streams to cover delayed payments and to rely on high-interest lines of credit, further straining already tight budgets. Moreover, the blurred lines between civil servants and nonprofit providers constrain the earning potential of frontline workers, making it challenging for them to sustain a livelihood in the city they serve. This is largely due to standardized wage structures that fail to account for the high cost of living and unique demands of nonprofit roles. As highlighted in the United Way’s “True Cost of Living” report, greater investment in pensions, internships and standardized benefits is essential to sustain the sector’s workforce and impact.
While New York City invests in nonprofits at levels unparalleled by other municipalities, government contracts often create difficulties.
At the Fund for the City of New York, we witness all of these challenges firsthand. Our partnership with the City to provide a zero-interest loan fund has been a lifeline for the nonprofit sector. Over the past 20 years, the Fund has disbursed 9,253 loans to local nonprofits, totaling $1.5 billion. We are also noting demand beyond the mainland United States. Recently we made our first loan to a nonprofit organization in Puerto Rico that was able to leverage millions in federal dollars for programming by providing access to affordable capital. At the Fund, we look at collateral in a much more expansive way than traditional private lenders do.
The challenges of accessing capital are not limited to established nonprofits. Social entrepreneurs face barriers such as burdensome tax filings and compliance costs, increasing the demand for back-office support. In response, the Fund for the City of New York’s partnership program has more than doubled over the past five years. Through this program, we offer comprehensive back-office services to fledgling enterprises, including tax filings, insurance, banking, HR services and staff benefits. This support has been instrumental in launching innovative research initiatives, expanding museums and growing workforce programming, particularly for nonprofits with budgets under $4 million that lack the resources for full-time back-office staff.
The difficulties of accessing capital or establishing adequate infrastructure often make it difficult for nonprofits to think long-term or engage in the kind of collective action that could help improve the sector — and experience tells us that nonprofits are often stronger when they act together. For example, in recent days, the sector achieved a great collective win: The Human Services Council, representing 170 New York City nonprofits, successfully pushed for a cost-of-living adjustment (COLA) increase on government contracts — the first such increase in four years.
Efforts to organize around wage increases and workforce sustainability are also gaining momentum. For example, Just Futures highlighted the need to engage retiring nonprofit talent in its 2022 study. Addressing the “retirement cliff” through standardized benefits for part-time and full-time staff would demonstrate a strong commitment to the workforce sustaining New York’s vital nonprofits.
To truly reimagine the nonprofit sector’s future, we must think boldly. What would a Marshall Plan for nonprofits look like? It starts with recognizing our sector’s dual responsibility — to those served and those providing services. While the recent COLA increase is a significant achievement, it does not solve all the problems the nonprofit workforce faces. Going forward, a comprehensive agenda for the sector could integrate a number of interconnected goals, such as improving wages, benefits and working conditions as well as service delivery.
The difficulties of accessing capital or establishing adequate infrastructure often make it difficult for nonprofits to think long-term or engage in the kind of collective action that could help improve the sector.
But this just scratches the surface. How can we, as a sector, work toward subsidizing or supporting retirement plans tailored to the size and capacity of nonprofits? What would it mean if we came together as a sector and collectively established thousands of paid internships, creating a robust future pipeline of talent? Imagine if these internships not only provided critical work experience to young people but also rotated across nonprofits, fostering greater collaboration and exposure in ways we’ve never considered before. What if we went even further? What if working for a nonprofit came with benefits like better housing rates or access to affordable loans? These are the types of innovative approaches we need to consider as we rethink the sector’s ability to attract and retain talent.
A Marshall Plan for nonprofits is also going to require us to think through new technology. We cannot be left behind when it comes to artificial intelligence. At the Fund, we have already seen how AI can be a game changer, particularly in human resource management and finance. AI has proved to be an effective tool, but we must harness its potential thoughtfully, leveraging it to enhance operations especially in hybrid work environments.
A nonprofit Marshall Plan should also think deeply about leadership training and development. Collectively, we need to do a better job identifying potential leaders and ensuring clear pathways for their growth. At the end of the day, nonprofits are only as good as the people who lead them. We need to build a stronger pipeline that allows talented nonprofit staffers, regardless of their backgrounds, to grow into leadership positions.
Those of us who work in nonprofits tend to use the expression “nonprofit sector” loosely, and our connections often reflect this looseness. But it is only by thinking collectively that the sector will be able to move beyond the immediate demands of service delivery to tackle the root causes of systemic issues. Nonprofits are uniquely positioned to drive long-term change in communities, but this requires strengthening their connections and creating a unified platform to achieve common goals. Collaborating to address challenges like funding, training and workforce stability can transform the sector into one that is not only resilient but visionary.