I'm owed money from a non-profit for services rendered, but they are unresponsive

Question

I work sometimes in an arts-related field as an independent contractor for a certain 501(c)3. Over the last twenty years, I have helped them with an annual project, for which I have been paid and hourly rate. If it matters, the amount is usually between $600 and $1000 per year.

This year, I submitted my invoice using the method I did every other year. While I'm usually paid within a week or two, I have not been paid yet. It's been 1 month. I've written to confirm receipt of my invoice and asked to be informed when the check will arrive but received no response. It's a reputable organization, run by people whom I have met (i.e. not a scam).

Other contractors are having a similar experience. I'm concerned that the organization has gone under and may not be able to pay its workers. What are some steps I should take to get what I am owed?

EDIT - I finally got a response; the director of the organization simply fell behind in paperwork and is late to processing invoices. So it appears the organization is still solvent and the other contractors and I are likely to be paid shortly. I'll of course leave this question up (answer accepted) in case it goes this way for anyone else in the future). And it goes without saying that it's now on me to decide if I want to work with a group like this again...

Answer 1

If the organization is going under, as an independent contractor, you're in the back of the line with all the other unsecured creditors. As opposed to employees who are at the front of the line. In most bankruptcies, that means that you will get pennies on the dollar of what you are owed if you get anything at all. And be aware that if the organization files for bankruptcy shortly after paying you, the bankruptcy trustee can (and will) claw back any funds the organization sent you. This can be a rather nasty surprise for contractors that have to pay back several months of invoices when the company goes under if they don't have that cash sitting around.

If the organization is solvent but simply choosing not to honor their debts, you could certainly sue them in small claims court. It seems unlikely that a reputable organization would suddenly decide to start stiffing a contractor that had been working for them for 2 decades on a relatively small invoice, though, so it seems unlikely that this would be a terribly fruitful path.

I'd continue reaching out to any contacts you have at the organization (presumably you have several after 20 years) to see if they can shed some light on the situation. You can send past due notices to the organization and, if your contract allows it, start assessing late fees.

It is possible that you'll just need to write off the invoice as an uncollectable debt. If the organization depends on government grants, for example, and those grants are held up at the moment, the organization may be insolvent at present. If there is no money to send out, you can't force money into their pockets so that they can pay you. Unfortunately, that's one of the realities of life as an independent contractor.

Answer 2

For this amount of money, if they don't respond to a past due notice and a phone call or visit, consider small claims court.

Of course, if there is no money winning might not help you. And right now funding may be problematic. Your best bet in that case might be telling them to send you a letter documenting it as a donation,and taking the tax deduction to recover part of it.

Alternatively you could offer to carry it as an open account, in the hope that they will be able to repay you with interest later. But would be easier if that has been written into the engagement from the beginning preferably as an explicit contract.