Little Hoover Commission hears philanthropy leaders on contracting, advance pay and partnership infrastructure

The Little Hoover Commission on Oct. 17 heard testimony from academic, philanthropic and nonprofit leaders who said California can scale its public‑philanthropic partnerships by fixing contracting practices, investing in capacity and institutionalizing liaison roles.

Chair Pedro Nava opened the hearing by framing the commission’s two‑track review: one stream examining state partnerships with foundations and another on public charities that receive taxpayer dollars. He said the commission will examine “what factors have led to successful public philanthropic relationships, how to institutionalize the infrastructure that leads to success, and where there might be opportunities for improvement.”

University researcher Jim Farris told commissioners that partnerships can bring “nimbleness and a flexibility that government and philanthropy don’t always have” and that durable cooperation requires demystifying the two sectors and building trust. He recommended offices of strategic partnerships or directors of social innovation as institutional anchors to sustain collaboration beyond crisis moments.

Kathleen Kelly Janis, who served as Gov. Gavin Newsom’s senior adviser for social innovation, described California’s recent practice of naming agency liaisons and convening a statewide philanthropy summit. “I helped lead 50 public private partnerships totaling $4,300,000,000, impacting the lives of millions of Californians,” she said, and argued that relationship building, leadership buy‑in, clear resources and infrastructure are essential to sustaining partnerships.

Jeff Green, CEO of the California Association of Nonprofits, emphasized contracting frictions that limit participation by smaller community organizations: onerous applications and reporting, reimbursement‑only models that force nonprofits to take on debt, and insufficient overhead funding. He described the sector’s scale — the attorney general’s office lists roughly 107,000 nonprofits in California — and called for expanded advanced pay and prompt reimbursements to avoid “subsidizing government” with nonprofit capital.

Don Howard of the James Irvine Foundation and Chet P. Hewitt of Sierra Health Foundation described operational lessons from co‑funded and coordinated efforts during COVID, the 2020 census and opioid response programs. Howard set out four partnership types — direct funding to agencies, co‑funding, coordinated funding and technical assistance — and said senior adviser posts and sustained outreach help translate philanthropic capacity into durable state action. Hewitt recommended a higher state de minimis indirect‑cost rate (to match the federal 15%), state loan funds at favorable rates, and multi‑year funding commitments to reduce churn.

Commissioners pressed witnesses on oversight and political risks: how to prevent and detect fraud, how to preserve partnership offices across administrations, and what safeguards would make legislators comfortable granting flexibilities. Witnesses and public commenters proposed specific checks (random audits, whistleblower protections, clearer data collection) as tradeoffs for broader use of up‑front payments.

Public commenters representing direct service organizations echoed the call for advance and prompt payments and equitable indirect‑cost reimbursement, arguing that delayed payments and insufficient overhead cut capacity for on‑the‑ground nonprofits.

The hearing produced a set of concrete options for the commission’s report: collect statewide data on current agency practices, promote broader use of the new AB 590 authority for up to 25% advance payments, consider a state de minimis rate aligned with federal guidance, pilot state low‑interest loan facilities or grant bridges, and recommend durable liaison positions or offices of strategic partnership in state government. Commissioners said staff will follow up at future meetings and in the commission’s final report.

The commission adjourned with plans to consider the testimony and possible recommendations at a business meeting scheduled for Nov. 7.