Little Hoover Commission adopts report urging faster, fairer payments to nonprofits

The Little Hoover Commission voted to adopt a draft report on state contracting with nonprofits after staff presented findings that current payment and administrative systems frequently burden smaller nonprofit partners.

Crystal Beckham, a project manager on the commission staff, summarized the draft findings: state grants commonly use reimbursement payment methods that force nonprofits to front operational costs; only about one-third of opportunities offered advance payments and delayed reimbursements are common. The draft recommends requiring 25% advance payments for state grants and 100% advance payments for nonprofits in good standing for three years, tying indirect-cost reimbursement to the federal de minimis rate (with negotiated exceptions), creating a quick-contract amendment process for declared emergencies, and establishing a nonprofit liaison office in the governor’s office.

Commission discussion: Commissioners Aronnier and Garcetti, members of the subcommittee that reviewed the issue, praised staff work and emphasized the report’s potential to reduce administrative burden, speed payments, and improve equity for smaller community-based organizations. Garcetti moved to adopt the draft report; Aronnier seconded. The commission briefly suspended a final roll call for quorum and completed the vote after Commissioner Hernandez returned; the report was adopted.

Vote and implementation: The motion passed on roll call with recorded 'ayes' from the chair and multiple commissioners and commission staff said they will format and release the final adopted report. Staff proposed (and the commission accepted) that formatting and public release be completed as a near-term task, and further legislative outreach and follow-up may follow.