CalNonprofits Articles

Equity Initiative - Newsom signs AB590

Responding to unanimous support from the Legislature and from nonprofit, philanthropic, and business leaders from all over California, Governor Newsom signed AB 590 into law – paving the way to advance payments for nonprofits with state grants and contracts.

As you most likely know, the California Nonprofit Contracting Coalition brought a package of seven bills this year to the Legislature as the California Nonprofit Equity Initiative. More than 550 nonprofit, philanthropic, and community leaders signed on to support the bills, which sought various improvements to how state government contracts with nonprofits.

AB 590, authored by Assemblymember Gregg Hart (D-Santa Barbara), was a priority because it strongly impacts the access and ability of nonprofits to partner with the state or successfully pursue grant funding. What on its face may look like a minor technical change, authorizing advance payments to nonprofits signing government contracts is a major equity advancement! With upfront funds, nonprofits won’t be forced to float significant expenses until reimbursed or to take on high interest loans to get new programs going. With that barrier lifted, AB 590 will enable more nonprofits – particularly those in rural, poor, and people-of-color communities – to partner with state government.

We applaud Assemblymember Hart who authored this bill and fought for it every step of the way, CalNonprofits’ fellow bill co-sponsors United Ways of California and California Council of Community Behavioral Health Agencies for their tireless advocacy and leadership, and we thank Governor Newsom for signing it.

Prompt Payments vetoed

Unfortunately, the Governor vetoed SB 557 – Senator Monique Limón’s bill to address inequities in the state’s Prompt Payments Act. The Governor’s veto is terribly disappointing. Nonprofits often wait months for payments due from the state, and payments can get held up for weeks based on discrepancies of less than five cents. It is so obviously fair that nonprofits should get paid on time. Our thanks and admiration to Senator Limón for authoring the bill and getting it to the Governor’s desk.

Throughout this legislative session, hundreds of nonprofit and community leaders have called and emailed their legislators in support of the bills, and dozens of nonprofit folks testified at hearings, both in-person and remote. We greatly appreciate their commitment and support.

We are far from done pursuing equity in state contracting! Nonprofits partnering with the state still need:

  • Fair and reasonable indirect cost rates
  • Direct deposit of payments and digital signatures
  • Simpler processes for small grants of less than $20,000
  • Flexibility in times of emergency and disasters
  • Full costs and standardized rates

Out of our original seven-bill package, two made it to the Governor, two are two-year bills (and can be acted upon again in January), and three were held on suspense in the Senate Appropriations committee (and so would need to be reintroduced as new bills in early 2024).

The Coalition will be meeting again soon to debrief this campaign and to talk about next steps. We remain committed to advancing the Nonprofit Equity Initiative.

Net net? We got an important win and our nonprofits and our communities will benefit for years to come. This campaign has been a huge step in building nonprofit power. Let's figure out how to be even stronger going forward.

- Jan

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