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SB 784: A Bill Advancing State Contract Flexibility for Nonprofits During State Emergencies

Monday, May 24, 2021

BY Noann Villalobos-Sanchez

 

Intro:

Since the onset of the pandemic, nonprofit organizations have rapidly scaled their services to support communities disproportionately impacted by the crisis. In addition to meeting an increased demand for services, nonprofits have also needed to exercise caution to avoid jeopardizing the terms and resolutions of their government contractual constraints. SB 784 seeks to remedy the limitations put on nonprofit organizations by providing flexibility during a declared state of emergency, as currently exists for the state’s own departments and workforce.  
 

Background: 

Recent events have demonstrated that when a national disaster strikes, nonprofits play a pivotal role in our state’s response and recovery. For example, nonprofits provided rapid response and essential services to California’s residents on behalf of the state throughout the entire pandemic. Many of the services nonprofits provided were a direct result of the contracts they held with California. 
 
Unfortunately, state contracts’ inflexibility during national emergencies often creates additional challenges for nonprofits to overcome. Traditionally, nonprofits have to grapple with various obstacles during crises, including a heightened demand for services, lack of financial resources, limited capacity, and more. However, during the pandemic, nonprofits also had to navigate additional restrictions imposed by the state’s emergency orders that prevented them from fulfilling their contractual obligations during the pandemic. For example, due to shelter in place requirements, nonprofits providing foster care services were unable to perform home visits to confirm the safety of foster children. California’s emergency orders also affected some nonprofit’s ability to provide services due to forced closures or limits on the number of people who could receive assistance. And yet, as a result of not carrying out their work, the state deemed many nonprofits as not meeting the requirements stipulated in their contracts. 
 
According to CalNonprofits, 86 percent of nonprofits contracted through the state reported needing changes in their contract deliverable requirements. Several counties eventually saw the value of this prioritization and implemented policies to grant nonprofits flexibility. SB 784 would ensure that similar flexibility is embedded into all of California’s nonprofit contracts during a declared emergency. With this new flexibility, nonprofits could alter the terms of their contract as long as they still meet the contract's goals. Finally, the bill would help nonprofits stabilize more quickly during a crisis, avoid permanent closure, and leave services unaffected. 

 

Existing State Law: 

The California Emergency Services Act authorizes the Governor to declare a state of emergency, suspending any statutes and rules prescribing the procedure for the conduct of state business. Furthermore, existing law requires all state departments to render all possible assistance to the Governor and the Director of Emergency Services in carrying out the Act. As it stands, California only extends this flexibility to the state’s department and workforce, not to nonprofit organizations with state contracts. 
 

Proposed Solution: 

Senate Bill 784 would provide that in a declared state of emergency, nonprofit organizations with a state contract may adjust their service method and terms as long as they continue to serve the contract’s primary purpose and meet its stipulations. However, nonprofits would still need to notify all departments from which they receive funds of an impending closure or impacted service and provide proper documentation.  
 

Support: 

Southern California Grantmakers’ network of philanthropists and funders recognizes the tremendous work nonprofit carried out during the pandemic and supports their call for flexibility during emergencies to ensure they can continue delivering essential services to the state’s residents. 
 
The bill’s sponsor is Steven M. Glazer. Southern California Grantmakers supports this legislation along with our partners: 

  • CalNonprofits 
  • Catalyst of San Diego  
  • Northern California Grantmakers  

 
Opposition 

At the time of this memo, there are no known opponents to this effort. 

 

Action Taken/SCG Takes Action 

CalNonprofits has secured over 620 signatures from nonprofit organizations throughout California. Southern California Grantmakers was one of the signatories in support of SB 784. Review the letter
 
If you have any questions or comments, please contact Noann Villalobos-Sanchez at [email protected]


 

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