Nonprofits urge faster payments, clearer indirect-rate rules in H.233 testimony

Jesse Bridges, CEO of United Way of Northwest Vermont, told a legislative committee reviewing H.233 that delays in contracting and payments for state-funded grants are forcing nonprofit organizations to carry substantial cash-flow risk.

Bridges said H.233 — described in the hearing as a bill addressing requirements for state-funded grants — offers an opportunity to change “how we fund” nonprofit work, not only “how much we fund,” by reducing reimbursement delays, clarifying indirect-cost rules and creating pathways for advanced or bridge funding.

Bridges framed the issue as a practical one for service delivery: United Way of Northwest Vermont subgrants more than 70% of a prevention grant tied to retail cannabis revenue and in the first year advanced payments to local partners. He said the organization waited months to be reimbursed on an invoice that exceeded $500,000, forcing use of reserves and creating fiscal strain. “It can be the difference between making payroll,” Bridges said.

Bridges described three recurring problems: contract execution delays that leave organizations working before an agreement is finalized; lengthy reimbursement timelines that stretch a 30-day statutory window into several months when invoices are quarterly; and repeated invoice “kickbacks” for clerical or numeric corrections that restart the statutory payment clock. He said some nonprofit partners have the capacity to absorb delays but many do not.

On indirect costs, Bridges urged clearer rules in state guidance and accountability for compliance. He said the federal de minimis 10% or the 15% figure referenced in administrative materials does not always reflect true indirect costs that support staff, human resources and benefits. “Indirect often is the cost to support the people doing the work,” Bridges said.

Committee members asked about common industry practices for invoice turnaround and whether organizations routinely begin work before contracts are finalized. Bridges replied that “very, very common” practice is to begin work when grant years and program needs compel it, and that nonprofit decisions to proceed often rest on trust that contracts and funds will follow.

Bridges also flagged workforce and cost pressures: nonprofit employees account for large shares of the workforce in Vermont and turnover is driven by housing and health-care costs; he said United Way recently lost three employees who left the state. He suggested the bill or an associated working group address funding levels and expectations so contracts can better cover employee pay and benefits.

No formal motion or vote was recorded during the testimony excerpt. Committee members indicated the material would be refined and that additional testimony was expected on related items.

The testimony cited state processes and a 30-day statutory payment window as central constraints but did not identify a specific statute name or citation in the record. The witnesses and committee members discussed administrative “bulletins” and a proposed multi‑sector working group to clarify contract terms, advance-payment options and indirect-cost methodology.

Bridges said the changes would make state dollars “go a lot farther” by reducing administrative burden and financial risk for local providers. The committee closed the session saying more testimony was expected on the measure.