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February 24, 2016

N.Y. Charities Find Government Contracts Don't Cover Costs

With the collapse last year of the large and mostly taxpayer-funded New York City charity FEGS, other area nonprofits are growing wary of the financial squeeze that can come with relying primarily on government human-services contracts, The Wall Street Journal reports.

A study to be released Wednesday by nonprofit membership trade group the Human Services Council says such contracts often do not provide sufficient funds to cover the costs of the programs for which they are earmarked. The council calls for changes to government reimbursement models and warns charities to avoid city and state contracts that do not fully pay program costs, writes Politico New York. The financial calculus has led groups that were asked to take on former FEGS programs to closely consider how much of the work they can absorb, the Journal writes.