Payments to nonprofits worst in nation, study finds

Illinois ranks worst in the nation in delaying payments to human services providers, according to a study released by the Urban Institute.

Seventy-two percent of Illinois’ nonprofit organizations face delays in state payments for services, compared with 41 percent nationally, the study found. As a result, 54 percent have reduced their staff, and 65 percent have cut or frozen employee salaries.

“Illinois is failing its residents just at the time when they need high-quality services the most,” Laurel O’Sullivan, a vice president for the Donors Forum, said in a written statement. The Chicago-based organization represents philanthropic interests and nonprofits statewide.

“Illinois residents and communities are hurting. … This is just further evidence that Illinois’ system for human services is broken and needs to be fixed,” O’Sullivan said. She pointed to Donors Forum recommendations that include incentives for nonprofits to perform more efficiently and a published system for late and delayed payments to nonprofits.

The Urban Institute also reported that Illinois was the third worst in the nation in changing the terms of existing contracts with nonprofit providers, and third worst in issuing payments that don’t cover the full cost of services. Other problems for human service providers include complex and time-consuming application and reporting requirements, the report noted.

For its study, the institute surveyed 9,000 human services organizations nationwide that have more than $100,000 in expenses.