SACRAMENTO, Calif. — A new California bill introduced Tuesday by State Sen. Jerry McNerney seeks to protect the state’s nonprofit sector from federal budget cuts enacted by the Trump administration, amid growing concerns about funding freezes and program reductions affecting social services statewide.
State Sen. Jerry McNerney, D-Pleasanton, chair of the State Revenue and Taxation Committee, introduced legislation, SB 1240, aimed at shielding California’s nonprofit sector from looming federal budget cuts enacted by the Trump administration.
The bill, supported by CalNonprofits, based in San Francisco, through education and research, works with lawmakers, advocates and nonprofit leaders to advance the health, stability and effectiveness of California’s nonprofits. Moreover, the organization seeks to create a formal bridge “between government and the nonprofit sector.”
Geoff Green, CEO of CalNonprofits, advocates that “just as businesses can turn to the Office of the Small Business Advocate or GO-Biz, a dedicated office like this will strengthen nonprofit-government relations as well as the communities we both serve.”
If SB 1240 is passed, the governor’s office would welcome the Office of Nonprofit Empowerment, further improving nonprofits’ access to vital resources and helping them navigate the state government and its many factions.
“California nonprofits play a vital role in our economy, providing essential services and programs in education, health care, social services, the arts, the environment, public safety, and more” […] “But with significant cuts coming from the federal government, nonprofits are fighting for their survival,” McNerney said.
Currently, about 109,000 nonprofits are operating throughout California, employing 1.7 million workers and producing 15% of the state’s gross domestic product.
Because of the Trump administration’s federal budget cuts, California nonprofits struggle to navigate the state’s bureaucracy. In President Donald Trump’s second term, a large range of diverse social service programs froze, were cut, or were threatened to be cut, including assistance in food and services for refugee settlement.
Data collected by the Urban Institute showed that in 2021, $267 billion was provided to nonprofit organizations from a range of government sectors. However, the data only accounts for tax-exempt organizations, like food pantries. It did not collect the total funding that nonprofits receive from the government.
The Urban Institute noted that “there are two national trends in charitable giving: total/aggregate giving is increasing, while the share of households making donations to nonprofits is declining.”
The Little Hoover Commission is an independent state oversight agency that strives to investigate state government operations and policy through reports and legislative proposals. It details that nonprofits face a wall in accessing grants, have to complete reporting requirements, and wait a lengthy time to receive reimbursements.
However, SB 1240 adopts one recommendation in the Little Hoover Commission report: “The State of California should establish a nonprofit liaison office within the Office of the Governor.”
The Office of Nonprofit Empowerment would operate similarly to programs assisting businesses throughout California, including the Office of the Small Business Advocate or GO-Biz, providing interagency coordination, collaboration and facilitating future state partnerships with nonprofits.
On or before March 2027, the Office of Nonprofit Empowerment is mandated to report to the governor and the Legislature detailing how to improve the ways that nonprofits and the state partner together, while “maintaining accountability to Californians and public resources,” McNerney wrote.
SB 1240’s legislation encourages advance payments, compensation to nonprofits based on contracts and grant programs, reforms to ensure equitable payment, opportunities for greater consistency in the grantmaking process, application and reporting statewide, overall honing a large focus on small grant programs and nonprofits serving historically marginalized communities.
SB 1240 is pushed vocally and anticipated to be heard by a Senate committee in the next few weeks.
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