(a) By November 1, 2024, the Controller shall adopt Citywide standards that departments must comply with when contracting with nonprofit organizations. The standards shall include requirements that contracts with nonprofit organizations include performance measures; guidance for how departments should engage contractors in the development and monitoring of such measures; regular financial and performance reporting requirements applicable to nonprofits; standard reporting timeframes and expected elements for ongoing departmental monitoring of nonprofits; a process departments must follow when entering into and managing their contracts with nonprofits and reporting monitoring results to the Controller; and recommendations for departments with the goal of making it easier for nonprofits to do business with the City. The Controller shall have discretion to revise these standards as the Controller deems necessary to achieve the goals of standardizing and ensuring adequate Citywide programmatic and performance monitoring of nonprofit organizations and clarifying departments’ obligation to appropriately monitor their contracts with nonprofits.
(b) The Controller shall be responsible for administering a Citywide nonprofit contractor corrective action policy to ensure compliance with City funding requirements, accountability, and reliable service delivery. By November 1, 2024, the Controller shall engage with City departments and nonprofit contractors in a review of current standards for corrective action and issue a Citywide policy that establishes clear procedures for identifying areas of concern or poor performance by nonprofit contractors. The policy may include, among other things, specific procedures for identifying nonprofit contractors in need of technical assistance, multi-departmental coordination, and/or escalation protocols including but not limited to audits of nonprofit performance or financial practices.
(c) By November 1, 2024, the Controller shall complete a review of the publicly available information the City has about its nonprofit contracted services, including spending, performance, and types of services provided. At the conclusion of the review, the Controller shall issue a report to the Mayor and the Board of Supervisors recommending any policy changes that the Controller concludes would improve public access to this information in the future. Concurrent with the November 1, 2024 report, the Controller shall publish a directory webpage documenting where and how to access existing public information about nonprofit contracted services. The Controller shall maintain and update this directory webpage as additional public information is made transparent through the recommendations in the report, including information gathered by the Controller through the annual review required in subsection (d) below.
(d) Each fiscal year, beginning with Fiscal Year 2025-2026, the Controller shall conduct a review of department compliance with the Controller’s established contract monitoring standards and shall submit a report summarizing the review to the Mayor and the Board of Supervisors. The Controller may limit the annual review to specific departments, service areas, or contracts as the Controller deems appropriate to achieve the goal of ensuring adequate Citywide programmatic and performance monitoring of nonprofit organizations.
(e) Starting with Fiscal Year 2024-2025, nonprofit organizations that received a total of at least $750,000 in funding from the City in a fiscal year must submit to the City an audited balance sheet and the related statement of income and cash flows for that fiscal year within six months after the end of the fiscal year, certified by an independent accounting firm as accurately presenting the financial position of the organization. The Controller shall establish procedures and deadlines for submission of such audit materials to the City and distribution of such audit materials to City departments, provided that March 31, 2026 shall be the deadline for the submission of the audit materials for Fiscal Year 2024-2025. This subsection (e) does not limit the authority of the City, through the Controller or any other part of City government, as otherwise authorized by law, to conduct a fiscal review or require alternate documents demonstrating sound financial controls in the absence of an audit, including for nonprofit organizations receiving less than a total of $750,000 from the City within a fiscal year.
(f) The Controller shall publicly issue on its website a draft version of any proposed policy, standard, or guidance required in subsections (a), (b), and (e) of this Section 10.6-1, and shall provide an opportunity for members of the public to review and provide written comments about the draft for at least 15 days prior to final adoption. In the public review process, the Controller shall make good-faith efforts to ensure community involvement and racial equity in its outreach efforts. Outreach and engagement for public review shall include engaging organizations, regardless of size, with a focus on fostering the growth of new, smaller institutions reflecting the experiences of historically underserved communities, including but not limited to African American communities, Asian American communities, disabled communities, Latinx communities, LGBTQIA+ communities, Native American communities, Pacific Islander communities, and women.
(Added by Ord. 55-24, File No. 230973, App. 3/22/2024, Eff. 4/22/2024)
(Former Sec. 10.6-1 added by Ord. 175-71, App. 7/8/71; repealed by Ord. 313-00, File No. 001908, App. 12/28/2000)