A new City of Austin audit found that many nonprofits contracted to provide social services failed to meet agreed-upon performance goals while still receiving full payment, prompting city leaders to call for stronger oversight and accountability.
The audit reviewed 26 nonprofit contracts worth about $30 million during the 2024-25 fiscal year. Auditors found fewer than one-quarter of the organizations met all of their contractual performance expectations. Of more than 150 output and outcome measures reviewed, more than 44% fell short of their targets, with many missing expectations by significant margins.
Despite those shortcomings, auditors found the city generally reimbursed nonprofits for their expenses regardless of whether they achieved the agreed-upon results. The report concluded the city lacks consistent corrective actions or penalties for organizations that repeatedly miss performance benchmarks.
According to the audit, nonprofits cited staffing shortages, funding limitations, and challenges engaging clients as reasons for falling short of their goals. Auditors also found weaknesses in the city’s contract management and oversight processes.
City leaders emphasized the findings should not be viewed as an indictment of all nonprofit organizations receiving city funding. Instead, they said the report highlights shortcomings in the city’s oversight system.
“This is first and foremost about the people we’re trying to serve, but it is really an indictment of our ability to manage that service,” Austin City Council Member Ryan Alter said following the audit’s release.
Mayor Kirk Watson said the city also bears responsibility if performance expectations were unrealistic or contracts were not managed effectively. However, he said repeatedly missing contractual goals without consistent review or consequences is not acceptable.
The audit comes as city leaders consider millions of dollars in proposed reductions to social services funding as part of the fiscal year 2027 budget process. City management has agreed with the audit’s recommendations and is working on reforms intended to strengthen contract monitoring and improve accountability.
