Contracted Services customer service

State Government Can Improve Customer Service in Contracted Services

The N.C. Center for Nonprofits has received input from a wide range of nonprofits about the severe difficulties they face in providing essential services to North Carolinians through grants and contracts with the state. These longstanding problems hurt taxpayers and the state’s economy by making nonprofits less efficient and less effective at delivering needed services. This is particularly troublesome since 83% of North Carolina nonprofits experienced an increase in demand for their services in 2013, and 71% lacked the resources to meet this demand.

What problems do nonprofits experience with state grants and contracts?

1. Excessive red tape.

  • Three-fourths of North Carolina nonprofits experience problems with application processes and reporting requirements on state grants and contracts.
  • This red tape adds greatly to nonprofits’ administrative burdens, taking time and money away from providing direct services.

2. Late payments from state government.

  • Half of all North Carolina nonprofits with state grants and contracts are paid late by state agencies, the 11th-worst rate in the nation.
  • Nonprofits often hold about three months of financial reserves in case of dire need, but some payments from the state have come as much as six months late.
  • Organizations are forced to take out large loans, cut (already reduced) salaries, and lay off staff to cover the cost of services in the interim.

3. Mid-stream contract changes

  • Nearly half of N.C. nonprofits have seen the government unilaterally change contract terms.
  • These changes include altered reporting standards, increases in the amount of services that must be delivered, and adjustments to the schedule and amount of payments.

4. Underpayment

  • More than half of N.C. nonprofits report that their payments from state government don’t cover the full cost of providing contracted services

What are some easy steps policymakers can take to improve customer service?

  1. In addition to streamlining regulations, applications, and reporting and auditing requirements for nonprofit service providers, the state could use a centralized electronic “document vault” to store grant and audit documentation, accessible to all relevant agencies. This would increase efficiency by removing the need to send identical information to multiple agencies.
  2. Legislators could ensure that nonprofits aren’t harmed by late payments by requiring state agencies to pay interest when they are late in their payments to service providers. More immediately, the state could improve transparency in the contracting process by creating a searchable, publiclyaccessible database of timeliness of contracts and payments by state agencies.
  3. Policymakers should seek continuous input from nonprofit service providers about ways that the state can improve the effectiveness of service delivery. One solution may be the creation of a nonprofit-government task force that includes key stakeholders from the nonprofit sector and from the executive and legislative branches of state government.

For more information and other ideas for solutions, please contact David Heinen, Vice President for Public Policy and Advocacy, N.C. Center for Nonprofits, 919-790-1555, ext. 111 or