Colorado’s nonprofit organizations deliver essential public services – from housing and mental health care to food access, education, workforce development, and emergency response. Yet many are forced to front the cost of state-funded work and wait weeks or months for reimbursement.

From Patchwork to Policy: Standardizing Advance Payments From the State of Colorado to Nonprofits is a new white paper from Communities Lead Communities Thrive that examines how Colorado’s reimbursement-based grantmaking system creates unnecessary financial strain for nonprofits – and outlines clear policy solutions to fix it.

Read our white paper below:

The Problem

Colorado’s current funding model shifts financial risk from the state to nonprofit partners. Reimbursement delays can lead to:

– Cash-flow crises and depleted reserves
– Difficulty retaining staff or launching programs
– Organizations are declining or not pursuing state grants altogether

These challenges hit small, community-rooted, and BIPOC-led nonprofits hardest, often those closest to communities with the greatest needs.

A Patchwork System

Advance payments are technically allowed in Colorado, but only in limited and inconsistent ways. One state agency has clear statutory authority, while others must rely on vague fiscal rules or discretionary waivers.

The result is confusion, inequity, and unnecessary administrative burden for agencies and nonprofits alike. The Patchwork to Policy White Paper explores:

– How reimbursement-based funding undermines nonprofit stability
– What nonprofit leaders across Colorado are experiencing firsthand
– How other states are modernizing grant payments
Two policy options to standardize advance payments statewide

The Colorado Solution

The white paper proposes a straightforward solution: expand the permissive advance payment authority currently available to the Colorado Department of Public Health and Environment to all state agencies. This approach would allow – but not require – agencies to provide nonprofit grantees with up to 25 percent of grant funding in advance, while keeping all existing accountability, reporting, and audit requirements in place.

By standardizing permissive authority across state government and allowing agencies to use existing systems and processes, the proposal reduces confusion, improves equity in access to state funds, and strengthens the State’s partnership with nonprofit organizations – without creating new mandates or fiscal impact.

Why It Matters

Nonprofits are essential partners in meeting Colorado’s public goals. When funding systems work against them, communities suffer. Standardizing advance payments is both sound public policy and a matter of equity.