City Government

City Considers Prompt Payment to Nonprofits

Published

12 years ago

October 24, 2014

The City Council is considering an amendment to its Prompt Payment Ordinance that would ensure nonprofit organizations that do business with the City of Oakland receive payments for the work they do in a timely manner.

The ordinance is scheduled for discussion and a vote at the city’s Finance and Management Committee meeting, Tuesday, Oct. 28, 9:30 a.m., at City Hall.

Many agencies, especially smaller nonprofits, have frequently complained that they in effect have to float a loan to the city, as they wait for months or even over a year for the city to pay invoices of tens of thousands of dollars or more for work that has already been completed.

A few nonprofits even have had to curtail programs or even shut down as result of failure to receive payments from the city.

Sponsored by Councilmember Desley Brooks in 2008, a Prompt Payment Ordinance was passed requiring timely payments to city contactors – normally within one month.

However, the City Attorney ruled that the ordinance applied only to private businesses that do work for the city, not to grant-funded programs

“Nonprofits frequently would carry the burden of the city,” said Brooks. “We’re talking not just small sums of money. Sometimes, it would be in the six figures. Sometimes, they wait for over year to be paid.”

“They couldn’tan’t function when faced with that kind of uncertainty.”

The amendment, introduced by Councilmembers Brooks and Rebecca Kaplan, is intended to clarify and extend the ordinance to nonprofits that are grant recipients.

“We’re supporting this amendment that would go back to ordinance’s original intent, that everybody should be paid in a timely fashion,” said Brooks.

Oakland Private Industry Council CEO Gay Plair Cobb welcomed this clarification, stating, “The question is why would the city not want prompt payment requirements to apply to non-profits, which do such important work for Oakland citizens?”

Cobb has disputed previous rulings that the current ordinance excluded contractor that receive grant funds. “This made no logical sense whatsoever,” she added.