Bills to promote prompt payments advance

Bills to promote prompt payments advance
For nonprofits that receive funds from government agencies, payment delays have been a major management problem for years. Nonprofits in Maryland continually face delays in payments on grants or contracts that may extend many months. Additionally, they may need to wait several months for an initial payment on a program with considerable start-up costs. Payment delays make participation in government programs even more difficult for service providers, particularly disadvantaging smaller and younger nonprofits often led by people of color, that are less likely to have any substantial reserves.

The General Assembly has passed Senate Bill 112, sponsored by Senator Cheryl Kagan of Montgomery County and House Bill 328, sponsored by Delegate Anne Kaiser also of Montgomery County. As amended, the two bills are identical. They only need Governor Moore’s signature to become law.

Both bills will provide in essence that nonprofits delivering state services have the same security for prompt payment that is already in law and regulation for procurement contracts. Our ‘prompt pay’ laws, and the regulations that set standards for the review of invoices, do not currently apply to the reimbursable grant agreements that are used with most state grants for the provision of health, education, or social services by nonprofits.

The passage into law of these “payment parity” measures will be a big win for the nonprofit community – representing many years of advocacy directed at the legislature and the executive branch.

These bills address one aspect of payment problems. But nonprofit advocates will need to be vigilant and continue to work to ensure prompt payment becomes a reality.

  • Work with state agencies to ensure that the time frames of SB 112/HB 328 are in fact followed. We need nonprofits with government grants and contracts to share with Maryland Nonprofits issues that arise.
  • Support full funding of the Nonprofit Interest-free Micro-bridge Loan program (NIMBL) in the state Commerce Department. NIMBL provides $25,000 loans to nonprofits that have obtained a government grant of contract but have not received payment or need ‘start-up’ funds. Senate Bill 53 and House Bill 84 would require this funding. Maryland Nonprofits is also working with the departments of Commerce and Budget and Management to provide more NIMBL loans with existing funds.
  • Support the Maryland Efficient Grant Application Council (MEGA) and the Governor’s grants Office to coordinate and improve grant management in state government on an ongoing basis.





Neil Bergsman is the Senior Policy Analyst at Maryland Nonprofits. His work focuses on fiscal affairs, nonprofit research, and economic policy.