A New York City institution serving low-income communities outlived the Great Depression, the city’s near bankruptcy and the Great Recession. But the 200-year-old Sheltering Arms Children and Family Services, a stalwart social services organization, could not survive the COVID-19 pandemic and the current fiscal climate.
Last month, the nonprofit organization that serves more than 17,000 children and families a year throughout the city’s five boroughs, announced it will be shutting its doors later this month, news that exacerbated ongoing concerns in the social services industry.
“After 200 years of dedicated service, financial challenges resulting from the pandemic — combined with chronic underfunding and late government payments — are forcing Sheltering Arms to transfer many of our programs and staff to other high-quality organizations,” read a statement released in February by a Sheltering Arms spokesperson.
Beginning March 2023, the organization’s numerous programs that span foster care, juvenile justice, youth homelessness, early childhood education and mental health care will be transferred to six different agencies. Among them is Rising Ground, another long-time local social service agency.
Alan Mucatel, Rising Ground’s chief executive officer, said the closure of the Manhattan-based Sheltering Arms is problematic for the city, and for the future of the state’s human service industry. But he noted that plans to transition the programs and some employees have been in the works for months. A final divvying up of the group’s government contracts will not be completed until March 31, the end of the fiscal year.
“It really is a reflection of how fragile this network of services that we have,” Mucatel said. “And there are a lot of good questions to be asked about what is inherent in the financial relationship with the government that keeps organizations so much on the precipice of collapse.”
Two centuries of change
Sheltering Arms, formerly Episcopal Social Services of New York, was founded in 1823 to assist immigrant families. At the start of the 20th century, it had an office on Ellis Island, greeting Europeans coming in great numbers to the city.
The organization came a long way over its two centuries.
The most recent publicly available tax filings show the organization’s total revenue jumped from roughly $39 million for the fiscal year ending in June 2011 to roughly $100 million by 2020.
But an independent audit, completed in January 2022, found that total operating revenue plummeted to $82 million a year later. That amount reflected a combined $13 million drop in government funding for “residential group homes,” and “health, preventive, youth and educative programs.”
The agency hasn’t elaborated on the specifics of its overall financial struggles, but confirmed the drop in funding for those programs was due to their low census during the pandemic.
“I can see more organizations making decisions to close, merge, or stop providing certain types of services.”— Michelle Jackson, executive director of the Human Services Council of New York
The organization had 1,000 employees prior to the closing of its the early childhood program in December, according to Jennifer Barden, Sheltering Arms spokesperson.
In recent years, the organization has assisted nearly 500 foster children and young adults through age 21, helping select foster parents, adoptive families and group homes.
Sheltering Arms also helped New York City implement its signature 2012 Close To Home juvenile justice reform. The state law ensures that city youth who are being adjudicated for crimes remain in their local communities, rather than being placed in far-flung upstate detention facilities. The initiative is widely viewed as successful, increasing young people’s academic success and resulting in high percentages of youth leaving facilities for home-based settings.
Sheltering Arms has run a handful of “limited-secure” group residential settings in the city, facilities that have decreased reliance on upstate detention centers and contributed to their eventual closure.
The organization also served homeless youth through drop-in centers, shelters and assistance with transitional housing, and providing counselors to help young people secure employment, open bank accounts and apply for housing.
In a 2019-2020 annual report, the group vowed to “deepen offerings in our current community footprints.”
But the organization faced increasing hurdles that would ultimately threaten its survival. Like similar organizations in the city, Sheltering Arms struggled with pandemic-related delays in government contract payments and high staff turnover, with many employees leaving for similar jobs in the public sector that offered better pay and benefits.
There have been recent efforts to stabilize New York’s human services workforce, although they appear to have come too late for Sheltering Arms. Last year, nonprofit leaders called on Mayor Eric Adams and Gov. Kathy Hochul (D) to include annual cost-of-living adjustments for all human services contracts, and to establish a minimum wage of $21 an hour for all city and state employees.
In the governor’s budget for the coming year that has yet to be finalized, Hochul has proposed a 2.5% cost-of-living adjustment, far less than what leaders in the human services industry say is needed.
“The pandemic only exacerbated these issues”
Leaders of other nonprofit agencies in New York City said they weren’t surprised that Sheltering Arms was forced to close due to chronic underfunding, noting other agencies facing similar circumstances have merged to stay afloat.
Michelle Jackson, executive director of the Human Services Council of New York, said delayed government payments and a lack of funding to increase wages have been problems for decades, but the situation became acute when COVID-19 ravaged the city. Private dollars, she added, cannot always fill in the funding gaps.
“The pandemic only exacerbated these issues, which have resulted in extreme financial instability for much of the sector,” Jackson said in an email. “Unfortunately, more organizations should be considering if their model is viable, if they aren’t already. I can see more organizations making decisions to close, merge, or stop providing certain types of services.”
Marisa Kaufman, spokesperson for Administration for Children’s Services, said the city’s top priority during the transition of clients from Sheltering Arms to other agencies is stability for the children and families.
“We have been working very closely with Sheltering Arms and the non-profit providers to which their programs will be transitioned,” Kaufman said in an email. “We will continue to take the steps necessary to minimize any impact to the children and families we serve.”
Yet some local nonprofit leaders remain skeptical, given the many programs Sheltering Arms has long run.
Bill Weisberg is executive director of the social service organization Forestdale, which works with foster youth and vulnerable families in Queens and Brooklyn and is not taking on Sheltering Arms’ clients. But Weisberg said even if the transition goes as smoothly as possible, vulnerable families will feel the impact of moving to another service group they may be unfamiliar with. Those long served by Sheltering Arms have experienced trauma, family separation and loss, and seeing new service providers could only add to that burden, he said.
“We’re going to have a lot of families whose services are disrupted, where they’ve really grown to trust an office of Sheltering Arms in Jamaica, Queens, that is familiar and they know it. And suddenly, it’s something else,” Weisberg said. “So it disrupts the stability for clients, and it disrupts stability for communities.”
Michael Fitzgerald contributed to this report.
UPDATE 3/10/23: After the publication of this article, a Sheltering Arms spokesperson provided additional information clarifying the size of the agency’s current workforce, and describing the recent decline in government funding as stemming from a lowered census during the pandemic.