Expanding Legislative Permissive Authority to Advance Up to 25% of Grant Amount to Nonprofit Grantees

Sponsors: Reps. Mandy Lindsay and Lorena Garcia; Sens. Katie Wallace and Mike Weissman


Reforming the state’s reimbursement-based grantmaking system is a key priority within the Communities Lead Communities Thrive (CLCT) Funding the Frontlines Policy Agenda. Developed after conversations with dozens of nonprofit leaders across the state, the Agenda is focused on removing structural barriers that make it harder for community-rooted nonprofits to access and manage state grant funding.

Earlier this year, CLCT released From Patchwork to Policy: Standardizing Advance Payments from the State to Colorado Nonprofits, a white paper exploring how inconsistent reimbursement practices create barriers for nonprofit partners across the state. Now, that research is translating into action.

Colorado’s nonprofit organizations are essential partners in delivering public services – from housing and behavioral health to food access, workforce development, environmental protection, and immigrant support. Yet the way the state pays nonprofits for this work often creates unnecessary financial strain.

House Bill 26-1274 offers a practical, bipartisan solution to strengthen the state–nonprofit partnership – without creating new mandates or new costs.


The Problem: A Reimbursement System That Creates Barriers

Most state grants operate on a reimbursement basis. That means nonprofit organizations must pay for program expenses up front – including payroll, supplies, rent, and contracts – and then wait weeks or even months to be reimbursed.

As detailed in From Patchwork to Policy, this structure disproportionately impacts small and community-rooted nonprofits that lack large reserves or access to credit. The current system often forces organizations to:

  • Delay services
  • Take out short-term loans
  • Tap limited reserves meant for emergencies
  • Assume personal financial liability
  • Decide not to apply for state grants at all

In effect, access to state funding depends more on cash flow than program effectiveness.

What HB 26-1274 Does

House Bill 26-1274 strengthens Colorado’s partnership with nonprofits by expanding existing authority for advance payments.

Expands Permissive Authority Statewide

In 2021, the legislature passed House Bill 21-1247, granting the Colorado Department of Public Health and Environment (CDPHE) the authority to advance up to 25% of a grant award to nonprofit recipients. HB 26-1274 builds on that successful model by allowing all state departments and agencies to provide up to 25% of grant funding in advance to nonprofit grantees.

Importantly, this authority is permissive – not mandatory. Agencies retain full discretion.

Standardizes Inconsistent Practices

Current State Fiscal Rules generally prohibit advance payments, though limited waivers and exceptions exist. These are applied inconsistently across departments and programs – the “patchwork” described in the white paper.

HB 26-1274 creates clarity and consistency across state government while allowing agencies to match payment structures to program needs – using existing systems and infrastructure.


Why This Matters

Permissive advance payments:

  • Improve service delivery – Programs can launch on time
  • Expand access – Small nonprofits compete on impact, not balance sheets
  • Reduce administrative strain – Fewer delays and workarounds
  • Protect public dollars – Prevent service disruptions and staff turnover
  • Advance equity – Reduce structural barriers for community-rooted organizations

When nonprofits are financially stable, communities benefit.

How You Can Get Involved

House Bill 26-1274 will only move forward with strong, visible support from nonprofit leaders, service providers, and community partners across Colorado. If your organization has experienced delays or challenges under the current reimbursement system, your voice matters.

Here’s how you can help:

Sign On In Support: Add your organization’s name through our endorsement form to help demonstrate broad statewide backing for this common-sense reform. You can view a list of endorsing organizations below.

Share Your Story: Legislators need to hear real examples of how reimbursement delays affect service delivery. Even a short paragraph describing your experience can make a difference. Fill out the endorsement form or reach out to share your organization’s challenges with a reimbursement-based state grant system, and we can help you get the word out!

Contact Your Legislators: Reach out to your Representative and Senator to express support for HB 26-1274. Personal outreach from trusted community organizations carries significant weight. You can find your state legislators by clicking here.

Spread the Word: Use our toolkit to share information about the bill with your board, staff, and peer organizations. The more nonprofits understand the opportunity this bill presents, the stronger our collective advocacy will be.

Moving from Patchwork to Policy

For years, nonprofits have navigated inconsistent policies and unpredictable reimbursement timelines. From Patchwork to Policy laid out the case for standardizing advance payment authority statewide. House Bill 26-1274 turns that recommendation into action.

By expanding proven authority across state government – without mandates, new costs, or weakened oversight – this bill modernizes Colorado’s grantmaking system and ensures public dollars reach communities when they are needed most.

Organizations that have completed our endorsement form and support HB26-1274 include:

Benefits in Action
Caring for Colorado Foundation
Collaborative Healing Within Communities
Colorado Alliance of Boys & Girls Clubs
Colorado Nonprofit Association
Colorado Nonprofit Development Center (CNDC)
Colorado Pathways to Inclusive Higher Education
Community Resource Center
Convivir Colorado
Drive Clean Colorado
Foster the Source dba Be the Source
Four Corners Rainbow Youth Center
Fully Liberated Youth
Generation Schools Network
Healthy Child Care Colorado
Juntos Community
Latin American Educational Foundation
Latino Community Foundation of Colorado
Latinx Therapist Project
Mi Casa Resource Center
Mi Familia Vota Colorado
Mountain Roots Food Project
Promotores De Epseranza
Rocky Mountain Equality
Rose Community Foundation
San Luis Valley Local Foods Coalition
Servicios de la Raza and Servicios Sigue
Soul 2 Soul Sisters
The Denver Foundation
The Refuge
Village Exchange Center
Vuela for Health
Women’s Wilderness
YouthRoots

Are advance payments a new concept? No. CDPHE has had this authority since 2021. Other programs, including Colorado Parks and Wildlife’s Outdoor Equity Grant Program and the Office of Economic Development and International Trade’s Colorado Creates Grant Program, have also utilized advance payment waivers.

Does this weaken accountability? No. All existing grant requirements remain in place, including application review, reporting, monitoring, audits, and repayment requirements for unspent or improperly used funds.

Who would be eligible? Only nonprofit organizations that have been awarded state grants. Agencies would continue to assess eligibility, organizational capacity, and risk.

Is this mandatory for agencies? No. The bill is entirely permissive. Agencies may choose whether to offer advance payments based on program needs and other operational considerations.