California Nonprofit Equity Initiative

Improving how state government contracts with nonprofits is a question of equity – for our most vulnerable communities and for the nonprofits that serve them. That's why CalNonprofits has worked in collaboration with a coalition of nonprofits to develop seven state bills that comprise the California Nonprofit Equity Initiative. Passing this package of bills will strengthen nonprofits’ essential partnership with the State of California and our mutual efforts to deliver the highest quality service to the people of California..

Update Sept. 7, 2023:  We crossed another milestone last week as the Appropriations committees from both houses voted on six of the seven bills. The results: three bills – all related to how nonprofits are paid – were voted through committee and now await final floor votes. Status on the bills, as follows:

• Advance payments for all AB 590 (Hart): Ensures nonprofits can secure up to 25% of contracted funds up front, with a priority on nonprofits serving vulnerable communities or those with modest reserves. (Awaiting floor vote.)
• Flexibility during emergencies AB 619 (Fong, V): Avoids disruption of community services during declared states of emergency by easing the contract modification process. (Did not pass.)
• Modernizes processes AB 696 (Lowenthal): Moves more administrative processes online, reducing time and costs for both nonprofits and the state. (Did not pass.)
• Streamlines small grant programs AB 860 (Valencia): Reduces application and reporting requirements for small grants. (Did not pass.)
• Fairness in contracting AB 885 (Rivas, L): Requires the state to pay nonprofit partners the full costs of delivering programs and services ­– including administrative costs, fair wages and benefits; also encourages multi-year contracts and expedited contract renewals. (Now a two-year bill.)
• Standardizes indirect cost coverage SB 336 (Umberg): Requires the state to pay nonprofits the same rate the organization has negotiated with the federal government, and requires the state to set a standard indirect rate for nonprofit partners of no less than 10%. (Awaiting floor vote.)
• Equity in prompt payments SB 557 (Limon): Extends the state’s Prompt Payment Act to all state contracts with nonprofits, sets a minimum discrepancy amount, removes the existing eligibility cap on nonprofit contracts, and includes any penalties paid to nonprofits in the required annual report. (Awaiting floor vote.)