Appropriations Committee considers pilot to advance grant funds to small nonprofits

Committee staff briefed a proposed substitute to House Bill 2587 that would establish a pilot at the Department of Commerce to provide initial distributions to nonprofit grant recipients who demonstrate need to deliver services under state contracts. Staff outlined eligibility criteria (nonprofit status, award received within six months, satisfactory prior performance, minimum three years in the relevant business, and grant purpose aligned with public health, safety or welfare). Commerce would prioritize organizations with average annual budgets under $5 million, require enforceable contracts protecting state interests before any advance, and limit initial distributions to a one‑time payment equal to the lesser of 25% of the award or $200,000.

Jessica Van Horn (staff) said the pilot would require Commerce to evaluate and report to the legislature and governor by September 1, 2028, and that the pilot would expire June 30, 2029. Fiscal impacts depend heavily on the number of programs included; Commerce estimated administrative costs and system updates ranging from the mid‑hundreds of thousands to low millions depending on scale. Representative Cortez, sponsor, described the proposal as targeted support for nonprofits that stabilize operations and expand capacity to perform state-funded work.

Nonprofit-sector witnesses (Neil Mizushima and Oscar Zambrano) urged support, saying reimbursement payment models present barriers for smaller nonprofits and that initial distributions would enable organizations to participate competitively in government contracting and provide uninterrupted services to communities.