Since taking office just a few months ago, Mayor Cherelle Parker has said the City needs partnerships to make Philadelphia a safer, cleaner and greener place to live. Unfortunately, many of those partners have learned over time that partnering with the City is a one-way ticket to financial hardship.
The Parker administration has shown a commitment to changing the way the City does business — but more can and must be done. Without a dramatic shift in how — and how quickly — the City finalizes contracts and reimburses partners for their work, Philadelphia could soon find itself without the crucial partners with the boots on the ground necessary to have an impact.
I serve as president and CEO of Public Health Management Corporation (PHMC), the leading nonprofit provider of public health resources in Greater Philadelphia, and the largest and most comprehensive public health organization in the nation. The City regularly partners with nonprofits such as ours — and ones much smaller than ours — to deliver social services to individuals, families and communities.
Delayed payments are stressing community-based organizations almost to the point of breaking.
The strength of those partnerships is built on a simple setup: Nonprofits like PHMC deliver services on behalf of the City, and the City pays for those services. Failure on either side of that setup — service delivery or payment — results in people not getting the services they need.
What’s more, delayed payments are stressing community-based organizations almost to the point of breaking.
Many nonprofit providers play a crucial role in supporting the well-being of Philadelphians through behavioral and public health, including small nonprofits and minority-led entities that provide essential services but are the most disadvantaged by delayed payments. Right now, when the need for behavioral and public health demands have increased, we need to resolve these issues before they adversely affect nonprofit service providers and the services they deliver.
It’s small providers who are most affected by delayed payments. If organizations as big as PHMC are feeling the strain, it’s hard to imagine how smaller organizations manage.
Chicago addressed similar problems in 2021 by forming a multi-departmental “Prompt Payment Working Group” to analyze payment processes and develop recommendations to streamline and accelerate payments to city contractors.
Small nonprofits often operate on limited budgets, relying on a delicate balance of funding sources to sustain their operations and deliver services. When there are payment delays to these nonprofits, it creates a significant hardship. As a result, small nonprofits may be forced to reallocate funds from other essential areas or seek additional short-term financing, which can ultimately hinder their ability to fulfill their service commitments.
With delayed payments, small nonprofits may have to stop providing services or greatly limit their work, negatively impacting the well-being of Philadelphians who rely on these essential programs and resources. Ultimately, their long-term stability can be jeopardized.
The Parker administration has already taken helpful steps to drive toward efficiency. On Tax Day, the mayor signed her PHL Open for Business Executive Order, which removes regulatory burdens, accelerates approval timelines and further streamlines city permit and licensing processes.
But there’s more work needed if we are to avoid a coming crisis. Chicago addressed similar problems in 2021 by forming a multi-departmental “Prompt Payment Working Group” to analyze payment processes and develop recommendations to streamline and accelerate payments to city contractors. Their work can be a helpful roadmap.
By making payment processes clear, consistent and transparent, the City can help businesses and nonprofits plan and better manage their finances, while alternative forms of support, such as providing technical assistance or capacity-building resources, can help empower small nonprofits and strengthen their operational resilience.
If Philadelphia can recognize and support the unique needs of minority-led and small nonprofits, we can build a more equitable and inclusive environment for all nonprofits, to the ultimate benefit of all the communities we serve.
Michael Pearson is president and CEO of Public Health Management Corporation.
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