Listen to this articleIn January 2025, New York State Comptroller Thomas DiNapoli released a report, “The Critical Role of Nonprofits in New York.” While many of the statistics and figures in the report are not surprising to nonprofit professionals, there are some important takeaways that every New Yorker should know.
The role Nonprofits play in employing our citizens:
New York’s nonprofit sector plays a vital but increasingly challenged role in the State’s economy and social services landscape. As of 2022, New York ranked second in the U.S. with 33,536 nonprofit establishments, employing 1.3 million people and representing a significant portion of the State’s workforce— approximately one in every six private-sector jobs.
Where people work in the industry:
The nonprofit sector in New York is concentrated primarily in three key areas:
- Healthcare and social assistance (41.3% of establishments, 61.4% of employment)
- Educational services (9.6% of establishments, 21.1% of employment)
- Other services, including religious and civic organizations (28% of establishments, 6.7% of employment)
Geographically, nearly half of all nonprofit jobs are located in New York City, with about two-thirds of total nonprofit employment concentrated in the downstate regions, including the Hudson Valley and Long Island.
Economic Impact
Nonprofits are crucial to New York’s economy:
- They generated $96.8 billion in total wages (2022)
- In some regions, they account for up to one in four private-sector jobs
- They provide essential services in healthcare, education, and social assistance
- Wage growth in the sector (29.3% from 2017-2022) outpaced other private-sector establishments
Significant challenges for the industry:
Several concerning trends have emerged:
Employment recovery has been particularly weak post-COVID. New York had the lowest job recovery rate following the pandemic, regaining only 7.4% of lost positions. Nonprofits in the state are facing significant challenges as the rising minimum wage makes other job sectors more attractive. Many nonprofits struggle to compete with these higher wages, leaving them scrambling to fill positions that require handling more demanding duties compared to lower-wage alternatives in other industries.
Average nonprofit wages in New York ($72k annually) lag behind both private-sector (24% lower) and public-sector (14% lower) wages, unlike the national pattern where nonprofit wages are more competitive. Rising costs are now hitting the wallets of nonprofit employees more than ever in a State where costs are already high.
A significant operational challenge facing nonprofits is delayed state contracts. In 2023, over 56% of contracts with state agencies were processed late, creating cash flow problems and potentially affecting service delivery. On many occasions, nonprofits start the contract (i.e., spending) months before reimbursements are received. This issue has persisted for decades, but it has not improved. Agencies must make tough decisions on staffing and borrow money (and incur interest they do not get reimbursed for) to keep the organization running and operational.
The findings suggest that while New York’s nonprofit sector remains a vital economic and social force, it faces significant challenges that require policy attention, particularly regarding timely contract processing and competitive wages to ensure continued effective service delivery.
Strategic Actions Nonprofits Can Take to Overcome Challenges and Foster Sustainability
In the absence of productive progress, timely contract processing or significant shifts in employment, nonprofits can take some actions to overcome the challenges noted above.
Sharpen your creative tools
- Organizations are best served to diversify their revenue streams, especially if revenue is concentrated in government-funded, reimbursement-based contracts. Revenues from program fees, foundations, membership dues, etc., help mitigate liquidity risks and foster sustainability. For example, strategically placing programming and fundraising efforts throughout the year when delays in reimbursements are known can help fill liquidity gaps and keep an organization focused on mission delivery.
- Regarding personnel challenges, organizations need to find reasons to retain and recruit staff beyond the paycheck. An organization with supportive leadership and colleagues, a company based on high ethical values, strong communication and regular constructive feedback, will always retain more staff than a company that lacks those traits. Providing a total compensation and benefits package that caters to the staff’s needs requires creativity and a willingness to change the status quo.
Join Forces
- Is there a similar organization in the geographical area or mission statement? There may be strength in numbers. Organizations forming a strategic partnership or going through a merger can pool resources, talent and human capital, bringing a stronger advocacy voice.
- Investing in infrastructure is no longer a taboo. Mission delivery suffers when the deliverers do not have adequate support in development, finance, legal, human resources and facilities management.
- Volunteers can be more valuable than you might think. Volunteers value an organization for their outreach and positive outcomes. Asking them to fill gaps with their skills can ease the burden on paid staff.
Don’t Watch the Clock
- There are few things more damaging to any organization than inactivity. Organizations need to continue to self-reflect and improve to thrive. Assessments of operational teams, finance and administrative policies, and overall risk management enterprises are all tactics strong leaders make to discover cracks in the armor.
- Unfortunately, discovering the cracks is usually the easy part! Teaming up with leaders in similar industries and consultants with nonprofit expertise will provide the knowledge and experience to take a collection of findings and turn them into operational improvements.
