September 10, 2026

For many nonprofits, receiving a state grant can mean spending money first and waiting for reimbursement later. That can require organizations to cover payroll, vendors, supplies, and other immediate, grant-related expenses with their own funds – creating a particular cash-flow challenge for smaller and community-rooted nonprofits with limited reserves.

Following the passage of House Bill 26-1274: State Agency Payments to Grant Recipients, as of August 12, 2026, Colorado agencies have a new pathway for eligible nonprofits to receive state grant funds in advance. The Colorado Office of the State Controller (OSC) adopted a new advance payment policy effective August 12, 2026, followed by additional implementation guidance effective September 1.

WHAT NONPROFITS NEED TO KNOW

Advance payments are not automatic. State agencies must establish an approved process for providing them, and nonprofits must meet eligibility requirements that demonstrate their need for advance funds. The new OSC guidance generally applies to state-funded nonprofit grants above $15,000; advances up to $15,000 follow the individual agency’s approval process.

Your organization must be assessed as “Low Risk.” Agencies will use the State Controller’s Nonprofit Risk Assessment Tool (click here to download) to determine whether a Grantee is high, medium, or low risk, and allow advance payment only to a Grantee that is determined to be low risk. If your organization receives a risk rating other than low, the agency must notify you and provide the assessment showing your rating.

Look for advance payment information when applying for grants. State agencies are expected to include information about advance payments, eligibility, and the request process in their grant funding announcements. CLCT will also add information about advance payment opportunities to our Colorado State Grant Database for Nonprofits as agencies make it available.

Plan ahead. Nonprofits seeking an advance should be prepared to submit an Advance Payment Request Form (to be published) and supporting documentation with their grant application. This includes an itemized budget, spending timeline, workplan, and information demonstrating strong internal controls and accountability. The amount requested must reflect the minimum immediate funding needed to begin the grant work.

Requests are subject to review. The administering state agency reviews the request, and some requests also require final approval from the State Controller. If a request is denied, the nonprofit must receive a written explanation.

WHAT SHOULD NONPROFITS DO NOW?

If your organization pursues state funding, start preparing before your next application. Review your financial policies and internal controls and make sure you can clearly document your budget, immediate funding needs, spending timeline, and workplan.

You can use CLCT’s Colorado State Grant Database for Nonprofits to find funding opportunities across state agencies. As you review grants, look for information about advance payments and contact the administering agency with questions about its specific process.

WE’LL KEEP YOU UPDATED

CLCT is committed to helping nonprofits understand Colorado’s new advance payment policy and what it means for organizations seeking state funding. As state agencies develop and implement their individual advance payment processes, we’ll continue updating you with new information and practical guidance, including a forthcoming comprehensive guide on our website.

HB26-1274 and the State Controller’s guidance represent an important step toward making state funding more accessible to nonprofits that may not have the resources to front the costs of delivering state-funded programs. How well that promise is realized will depend on how the new process works in practice.