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Lawmakers and Little Hoover Commission push new Office of Nonprofit Empowerment, advance-payment rules
Summary
A Little Hoover Commission report and sponsor testimony urged creation of an Office of Nonprofit Empowerment (SB 1240) plus changes to state payment rules — including required advance payments and expanded Prompt Payment Act protections — to ease financial strain on nonprofits, witnesses said.
A legislative hearing on the nonprofit sector Tuesday focused on proposals to make California a more reliable contracting partner for nonprofits, including creation of a central Office of Nonprofit Empowerment.
Dionne Ehrener of the Little Hoover Commission summarized the commission's 12 recommendations, urging structural fixes to state grant administration. She told lawmakers the state should require advance payments "of at least 25% if the nonprofit has been in good standing for at least 3 years," expand the Prompt Payment Act to cover all nonprofit grants and "match the federal government's allowance for overhead expenses," currently a 15% minimum, so agencies negotiate higher indirect-cost rates when justified.
Crystal Beckham, who served as the study's primary researcher, highlighted bills tied to the recommendations: SB 1240, which would establish the proposed office, and SP 1366, which would direct the California Public Utilities Commission to report on steps to avoid contractor cash-flow delays. Beckham said the office could "serve as a logical vehicle to implement several of our other recommendations," including plain-language guidance, a uniform reporting portal and training for lower-capacity organizations.
Committee members pressed for details on oversight and timeline; no vote was taken. Public commenters representing child welfare providers and Cal Nonprofits urged lawmakers to support SB 1240 during the hearing's public-comment period.
What happens next: SB 1240 was discussed and sponsors were identified during testimony; the bill remains under legislative consideration. No formal committee motion or recorded vote occurred in this hearing.
