Toward fairness, efficiency, and stability
Improving how state government contracts with nonprofits is a question of equity – for our most vulnerable communities and for the nonprofits that serve them. Which is why CalNonprofits has been working with legislators and nonprofit leaders across the state to develop and sponsor bills that strengthen nonprofits’ essential partnership with the State of California and our mutual efforts to deliver the highest quality service to the people of California.
The state relies on hundreds of nonprofit organizations across California to deliver a wide range of programs and services, from sheltering unhoused individuals and feeding homebound seniors, to addressing the impacts of climate change and providing mental health services. But contracting practices have long been an issue for the state’s nonprofit partners.
In response, the California Nonprofit Equity Initiative, a package of seven bills, was introduced in 2023. A group of 22 nonprofits, organized under the banner of the California Contracting Coalition, worked with CalNonprofits on the initiative, and more than 550 nonprofits and foundations across the state signed on to support the effort.
2025 legislative efforts:
The California Nonprofit Equity Initiative continues into the second half of the 2024-2025 session with three active bills:
- Advance pay implementation AB 1039 (Hart) This legislation builds on the state’s existing advance payment practices for state grants and contracts with nonprofits by requiring all new grants and contracts administered by state agencies, beginning January 1, 2026, to provide advance payment to nonprofits. The bill also requires state agencies to include whether advance pay is available and at what rate in any notices about grants and contracts, including on the state’s grants portal. Our Position: SPONSOR
- Indirect cost coverage and prompt payments AB 880 (Bennett/Limón/Umberg) This legislation combines two bills from the last legislative session (SB 336 and SB 1246, both vetoed by Gov. Newsom) to continue our push for two key objectives: 1) remove a long-standing exemption in the state’s Prompt Payment Act and require timely payments for services rendered by nonprofits; 2) improve coverage of nonprofits’ indirect costs, consistent with the federal government’s approach. Our Position: SPONSOR
- Contract flexibility in emergencies AB 944 (Macedo) This bill provides nonprofits the flexibility to adjust how they deliver services during a state of emergency, as long as they still fulfill the purpose of their contract. Read the fact sheet here. Our Position: SUPPORT
Advance payments for the win!
- Advance payments for all passes in 2023: AB 590 (Hart) authorizes state agencies to provide nonprofits up to 25% of contracted funds up front, with a priority on nonprofits serving vulnerable communities or those with modest reserves. The next step (a focus for 2024) is to work with the administration and the leadership of various state agencies to implement the law.
Providing advance payments are a win for nonprofits and the state. Nonprofits won’t have to incur significant expenses until reimbursed or to take on high interest loans to get new programs going. With the clarity that advance payments up to 25% are permissible, AB 590 has the potential to enable more nonprofits – particularly those in rural, poor, and people-of-color communities – to partner with state government. This was an historic victory and one that advocates from around the country are watching to see the impact and whether to advocate for it in their state.
