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Committee advances bill requiring prompt payment and indirect cost coverage for nonprofits
Summary
AB 880 would close a prompt‑payment loophole and require state agencies to cover reasonable indirect costs for nonprofits, supporters said, improving nonprofit financial stability and service delivery.
Assemblymember Bennett presented AB 880 to address long‑standing issues nonprofit service providers face when the state delays reimbursement and fails to fully cover indirect costs. Supporters, including Community Bridges, Rural Community Assistance Corporation and CalNonprofits, said delayed payments force nonprofits to take loans, cut services, or raise philanthropic funds to cover government contracts.
Witnesses said the bill would eliminate the exemption that allows delayed payments for contracts above certain thresholds, require prompt payment of undisputed portions of invoices, and require coverage of reasonable indirect costs for nonprofits. Supporters argued these are no‑cost fixes for the state that would improve service continuity and equity in contracting. The committee voted to pass AB 880 to the Assembly Committee on Appropriations.
