Advance payments for State funded grants

This legislation builds on the state’s existing advance payment practices for state grants and contracts by requiring all new state agency grants and contracts to provide advance payment to nonprofits beginning Jan. 1, 2026. The bill also requires state agencies to inform whether advance pay is available and at what rate in any notices about grants and contracts. CalNonprofits sponsors AB 1039 because “nonprofits need contracting terms that set us up to partner effectively” and because better advance pay provisions “enable nonprofits to better collaborate with the state.”

Text:

AB 1039, as introduced, Hart. State-funded assistance grants and contracts: advance payments.

Existing law authorizes a state agency administering a grant program or contract to advance a payment to a recipient entity, subject to specified requirements. Existing law defines “recipient entity” for these purposes to mean a private, nonprofit organization qualified under federal law, or a federally recognized Indian tribe whose territorial boundaries lie wholly or partially within the State of California, as specified. Existing law requires the administering state agency, among other things, to prioritize recipient entities and projects serving disadvantaged, low-income, and under-resourced communities, and to ensure an advance payment to the recipient entity does not exceed 25% of the total grant or contract amount, except as specified.

This bill would limit the requirement to prioritize recipient entities and projects to grants and contracts advertised before January 1, 2026. The bill would require, rather than authorize, an administering state agency to advance a payment to a recipient entity in accordance with the above requirements for all grants and contracts advertised on or after January 1, 2026. The bill would require the solicitation for the grant or contract to state the percentage of the grant or contract funds that may be distributed as an advance payment.

Existing law requires each state agency to register every grant the state agency administers with the California State Library prior to commencing a solicitation or award process for distribution of the grant, and to provide specified information that assists the California State Library with cataloging the distribution of grants and provides potential applicants with understandable and consistent information about available funding opportunities.

This bill would require a state agency to include within the information submitted to the California State Library, the percentage of the grant funds that may be distributed as an advance payment.