New York City government, the same as many other big cities, loves and hates them but can’t live without non-profits.

The city relies on non-profits, spending billions on them each year, yet it often battles them over when payments are made and how they operate.

Brooklyn-based CORE Services Group. is in the middle of a court battle with the city. It has provided services to the New York City homeless for some 15 years and was previously praised by city officials.

The controversy started late last year. In the waning days of the administration of Mayor Bill de Blasio, the city filed a lawsuit against CORE and ordered it to repay $2.3 million for “excessive executive salaries.”

The city also withheld payments, contending CORE overcharged for homeless services and overpaid executives. City officials didn’t answer questions I recently poised about the lawsuit.

CORE officials call the De Blasio administration’s charges dishonest.

They say the group is owed some $35 million by the city; that de Blasio “knowingly” used its services during the Pandemic and then turned deadbeat.

“The sequence of events says it all–de Blasio used CORE to deflect from his own failures addressing homelessness in NYC. The failure to pay nonprofits that continued to operate during the worst of the pandemic is indefensible,” said Wendy Weingart, CORE Vice President/General Counsel.

“Put simply, the de Blasio administration took advantage of CORE through administrative delays and non-payment for programs it operated at the behest of the city,” she added.

Spokesmen for the new city Comptroller, Brad Lander, and the new mayor, Eric Adams, didn’t respond to repeated questions from InsideSources about CORE Services Group or queries about city non-profits.

A mayoral spokesman referred questions to the city Law department. It declined an interview request.

But a city government spokesman, quoted in the New York Times last year, said “We and the mayor were crystal clear that if CORE did not reform in response to our corrective actions, the city would have no choice but to end our relationship with them.”

Still, CORE, which had worked with the city for about a decade, was once commended by the city.

“As one of the Department of Homeless Services’ (DHS) valued non-profit partners,” DHS wrote in a release about a decade ago, “CORE’s programs strive to fully engage individuals/families. They can take full advantage of extensive onsite evidence-based programming, that’s grounded in comprehensive assessment, ongoing case management, and evidence-based practices.”
[core (nyc.gov)]

CORE officials, in an interview, noted clients have included homeless adults, as well as families with children and runaway youth.

“In 2021, CORE’s Crown Heights shelter program for senior men was rated “excellent” by DHS and, in 2019, CORE was designated as provider of the year. It’s simply unconscionable that di Blasio would move to shut down these well-run shelters, which housed over 470 people at a time when people are sleeping in subways and on street corners.,” a CORE spokesman said.

The lawsuit, in New York State Supreme Court, is due to continue on Friday with various motions.

CORE isn’t the only non-profit battling the city. Relationships between non-profits and the city are “in crisis,” a recent city report and task force on non-profits said.
[NYC Government Publication | A Better Contract for New York A Joint Task Force to Get Nonprofits Paid On Time | ID: 3197xp73c | Government Publications Portal]

The report, authored by Adams and Lander, details late city payments. The delays have caused financial problems and even bankruptcy for some non-profits, according to the report. These organizations provide everything from housing, sexual assault treatment, early childhood education and park services.

In “A Better Contract for New York” report, it notes “delays in payments from the city to its human services partners have caused financial problems and even bankruptcy to critical nonprofits.”

CORE said the city withholding funds risked destroying hundreds of jobs.

“Due to the “hold,” CORE was at risk of missing payroll or health insurance premiums for more than 450 employees—many of whom live paycheck to paycheck—which also endangered their families and the 825 people experiencing homelessness who they serve,” CORE officials wrote in a filing at its web site. A CORE spokesman also said since the dispute jobs have been lost.

The non-profit report is one point in which CORE and the current administration have some agreement: “CORE is hopeful that Mayor Adams and Comptroller Lander take the necessary steps to address this problem quickly. We applaud them for identifying the problem and looking for a solution,” a CORE spokesman said.

Here are some criticisms of how the city works with nonprofits from the city report:

*There are no time frames to guide the City’s procurement process. Without having any parameters or expected timeframes, it is difficult for nonprofit providers to hold city agencies accountable for delays.”

*Nonprofit organizations incur considerable costs when contracting with the City.

*Delays in registration and payment often lead nonprofits to take out private loans to fund operating costs and meet payroll while they work at risk. The interest from these loans is not reimbursable, creating financial burdens for nonprofits that are already operating with limited resources.

Non-profits are vital for the city, yet “not financially strong,” says a 2020 study by Baruch College and Non Profit New York.
[Who is New York City’s Nonprofit Sector? – New York City, Long Island, Westchester | Nonprofit New York]

The study said “there are 46,595 total nonprofits in New York City. Manhattan has the most registered organizations at over 20,000, followed by Brooklyn, Queens, the Bronx, and Staten Island.”

These non-government groups employ thousands. However, the problem of paying them on time and how they operate has been going on at least since the previous de Blasio administration and continues today.

The city is tied to these non-government agencies in many ways.

In the 1970s and 1980s, Bryant Park in midtown Manhattan was a dangerous drug den. Few ventured into the park.

However, since the creation of the non-profit Bryant Park Restoration Corporation, the park, with its private police and private cleanup crews, the small park now attracts thousands. Its restaurants generate millions of tax dollars each year.
[Private Oasis in Manhattan | Mises Institute]

“The nonprofit sector is a critical element of the New York economy,” according to a 2017 city Comptroller report. “It generated nearly $78 billion in economic activity last year. Citywide procurement reached $30.4 billion, with roughly $12 billion in the human services sector alone.”
[NYC_Nonprofit_Organizations.pdf ]

Ensuring these organizations function effectively is important because thousands of New Yorkers make a living through them, the report said.

“Nonprofits,” the report continued, “employ more than 500,000 people in the five boroughs.” In the Bronx, non-profits provide about a third of the private sector employment.”

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Gregory Bresiger
Gregory Bresiger

Gregory Bresiger is an independent financial journalist from Queens, New York. His articles have appeared in publications such as Financial Planner Magazine and The New York Post.