HomeMy WebLinkAboutStaff Report 2512-5788CITY OF PALO ALTO
Policy & Services Committee
Special Meeting
Wednesday, January 14, 2026
6:00 PM
Agenda Item
2.Discuss and Approve Nonprofit Partnership Workplan Phase I Process Improvements Late
Packet Report Added, Presentation
Policy & Services Committee
Staff Report
Report Type: ACTION ITEMS
Lead Department: City Manager
Meeting Date: January 14, 2026
Report #:2512-5788
TITLE
Discuss and Approve Nonprofit Partnership Workplan Phase I Process Improvements
This will be a late packet report published on January 8, 2026.
Policy & Services Committee
Staff Report
From: City Manager
Report Type: ACTION ITEMS
Lead Department: City Manager
Meeting Date: January 14, 2026
Report #:2511-5585
TITLE
Discuss and Approve Nonprofit Partnership Workplan Phase I Process Improvements
RECOMMENDATION
Staff recommends that the Policy and Services Committee discuss and recommend City Council
approval of the proposed process improvements to the FY2027 Nonprofit Partnership
Workplan Phase I.
EXECUTIVE SUMMARY
In follow-up to a 2022 City Auditor’s report, the City developed a Nonprofit Partnership
Workplan. Phase I of the workplan aimed to provide a fair and transparent method for
evaluating nonprofit funding requests that fall outside existing grant programs. In FY 2026, the
City used the Phase I process to award $506,646 to 17 nonprofit organizations, supporting four
new partnerships and 13 existing partners. On December 15, 2025, the City Council approved
continuing the Nonprofit Partnership Workplan Phase I funding process for the FY 2027 Budget
Cycle, with the Policy & Services Committee to recommend process refinements.
This report summarizes feedback from nonprofit applicants, staff, Councilmembers, and the
Policy & Services Committee and suggests potential improvements to clarify eligibility, funding
priorities, and application design. Staff requests Committee feedback and direction on the
proposed improvements.
BACKGROUND
On December 15, 2025 the City Council approved continuing the Nonprofit Partnership
Workplan Phase I funding process in the FY 2027 Budget Cycle and referred refinements of the
process to the Policy & Services Committee with a return to Council in early 2026.1 The Phase I
1 December 15, 2025 City Council Meeting:
https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=10222&meetingTemplateType=2&com
piledMeetingDocumentId=18036
process is part of a broader effort to improve the City’s best practices for nonprofit
partnerships and contract management, consistent with recommendations from the 2022 City
Auditor’s report.2 The pilot focused on improving how nonprofit funding requests that fall
outside existing funding mechanisms are evaluated during the annual City budget process.
In FY 2026, the Phase I process allocated $506,646 in grant funds to 17 nonprofit organizations
that deliver services to the Palo Alto community. The effort resulted in four new partnerships
and support to 13 existing nonprofit partners.
ANALYSIS
This report reflects feedback gathered from nonprofit partners, staff, the City Council and the
Policy & Services Committee throughout the development and implementation of the process
and suggests potential areas for improvement.
APPLICATION QUALIFICATIONS
One of the primary sources of confusion during last year’s implementation was determining
which nonprofit partnerships should/could apply for funding through the Phase I process. The
intent of the Phase I process was to provide the City Council with a fair and equitable way to
evaluate nonprofit funding requests during the Budget Adoption process, not to create a new
grant program. Historically, Council has considered requests from both new nonprofits and
those with existing contracts experiencing hardship or seeking to expand services; accordingly,
Phase I was designed to remain open to all nonprofits. However, this was particularly confusing
for nonprofits with multi-year agreements renewed through Council budget approval.
Another challenge was the high number of applications submitted by existing grant program
recipients. While they were not discouraged from applying, this reduced opportunities for other
nonprofits that did not have an established program through which to seek funding.
Some Councilmembers suggested that nonprofits with longstanding relationships with the City
should not have to compete for funding and should continue to be awarded funding annually to
create predictability and therefore support programming.
Attachment A defines one-time and multi-year contracts as well as grant programs and
suggests a definition for Enduring Partnerships.
Potential Improvements:
• Exclude nonprofits that receive funding through existing grant programs or have a multi-
year service agreement from the Phase I funding application process. This would
2 2022 City Auditor Report on Nonprofit Agreement Risk Management Review:
https://cityofpaloalto.primegov.com/Public/CompiledDocument?meetingTemplateId=9028&compileOutputType=
1
potentially create the need for a separate approach to the periodic evaluation and
extension of such agreements.
• Policy & Services Committee to discuss the proposed Enduring Partnership category,
recommend refinements for Council consideration.
FUNDING PRIORITIES
Phase I applications included a requirement to describe alignment with City Council Priorities.
While community grant programs are traditionally evaluated based on anticipated service
delivery and overall public benefit, the concept of public benefit can be subjective and difficult
to quantify. To provide greater clarity and consistency, the Phase I application emphasized
alignment with Council Priorities as a key evaluation factor.
In practice, however, reliance on City Council Priorities as a primary evaluation metric proved
challenging. Council Priorities are updated biannually, are not intended to be comprehensive,
and are designed to reflect areas of emphasis for a given year. This approach created particular
difficulty when evaluating applications in areas such as human services and arts and culture. If
the intent of the Council is to fund programs beyond the Council Priorities through this process,
a modified approach would be needed.
The City currently relies on several established data sources to identify community needs and
priorities, including the Community Survey, which reflects public opinion on community
characteristics and City services, and the Human Services Needs Assessment, which focuses on
areas such as food insecurity, housing, mental health, seniors, children and youth, individuals
experiencing homelessness, and low-income residents. Together these tools provide a more
complete insight and needs-based understanding of community priorities than the annually
adopted Council Priorities alone.
The City administers established grant programs to evaluate and fund human service needs,
including the Human Services Resource Allocation Program (HSRAP), Community Development
Block Grant (CDBG) program, and the Emerging Needs Fund. The Emerging Needs Fund is
specifically intended to support nonprofit organizations serving Palo Alto residents with short-
term or urgent funding to address emergency, critical, or emerging human service needs that
arise outside of regular funding cycles. Service areas not addressed through these human
services grant programs include arts and culture, environmental stewardship, and workforce
development.
Potential Improvements:
• Give higher priority to requests from service categories not currently covered by a
qualifying existing City grant program.
• Refer eligible funding requests to HSRAP and other programs, and review program
funding levels relative to needs, or engage Human Relations Commission to review and
recommend Phase I application awards to the Policy & Services Committee
• Replace alignment with Council Priorities in the Phase I application with other selection
criteria
• A general best practice to reduce risk caused by reliance on a single funding source for
program stability is to diversify funding streams. Communicate and structure grant
funding to complement, rather than significantly fund nonprofit program costs.
• For improved transparency of total City support to nonprofits, include funding requests
and City facility use.
NONPROFIT SERVICE CATEGORIES
Phase I applications did not identify service categories. The Policy & Services Committee
suggested that requiring that information as part of the application would help the City reduce
funding redundancy.
Suggested Improvement:
To improve the program evaluation process, the Phase I applicants could self-select in the
application from categories such as:
• Special Needs
• Youth Services
• Arts & Culture
• Climate Action & Natural Resources
• Homelessness Services
• Senior Services
• Workforce Development
• Other Community Health (write-in)
APPLICATION DESIGN AND NONPROFIT ENGAGEMENT
Throughout the development of the Phase I program, the City conducted multiple listening and
informational sessions to gather feedback from nonprofit partners on the proposed process. A
consistent theme in this feedback was the need for clearer application guidelines and
expectations communicated earlier and well in advance of the application period.
While nonprofit feedback during the development phase was generally favorable,
implementation revealed concerns from both nonprofit applicants and City Councilmembers
that the application was more lengthy and involved than anticipated.
Potential Improvements:
• Revise the application (as proposed in Attachment B) to remove redundant or low-value
questions identified during the evaluation process and shorten the overall form.
• Edit small grant reporting requirement threshold from $5,000 to $10,000, thereby
lessening administrative burden on nonprofits and staff.
• Post application materials on the City’s website well in advance of the application period
and conduct informational sessions to explain the process and expectations.
• Host a nonprofit training or workshop focused on developing program goals and
proposed budgets to improve application quality and reduce confusion.
• Incorporate an interview meeting with nonprofit applicants, as requested by the Policy
& Services Committee, to support more informed evaluation.
• Implement Phase I in FY 2027 according to the schedule proposed in Attachment C,
which reflects these process improvements.
• Post a template service agreement on the City’s website to increase transparency
regarding contractual expectations.
At its May 28, 2025 meeting, the Policy & Services Committee suggested including the following
application questions to better assess program proposals. However, adding them would
lengthen the application. Staff seeks the Committee’s feedback on whether they should be
added.
• Why should the City fund the program for which you are requesting support?
• Compared to similar nonprofit programs, what distinguishes or makes your program
unique?
ROLE CLARITY BETWEEN FINANCE COMMITTEE AND POLICY & SERVICES COMMITTEE
Role clarity between the Finance Committee and the Policy & Services Committee is another
potential area for improvement.
Potential Improvements:
• Finance Committee’s role is to set a budget goal for the process in order to balance
budget demands.
• Policy & Services Committee’s role is to review applications and recommend awards for
Council approval.
Staff requests feedback and direction on the suggested improvements.
FISCAL/RESOURCE IMPACT
No resource impact is expected at this time. The FY 2027 target budget for Phase I process will
be addressed during budget review process in May.
STAKEHOLDER ENGAGEMENT
Throughout the development and implementation of the FY 2026 Nonprofit Partnership
Workplan Phase I process development, staff collected feedback through an extensive
engagement process from key stakeholders such as nonprofits, Policy & Services Committee,
Finance Committee and Council. Additionally, nonprofits were invited to send additional
feedback prior to the January 14, 2026 Policy & Services meeting and invited to attend.
ENVIRONMENTAL REVIEW
Committee action on this item is not a project as defined by the California Environmental
Quality Act (CEQA) because making improvements to the Nonprofit Partnership Workplan
Phase I funding process is a continuing administrative or maintenance activity. CEQA Guidelines
section 15378(b)(2).
ATTACHMENTS
Attachment A: Service Agreement and Grant Definitions
Attachment B: Proposed Edits to the Nonprofit Partnership Workplan Phase I Application
Attachment C: Draft FY 2027 Phase I Timeline
APPROVED BY:
Ed Shikada, City Manager
ATTACHMENT A
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Service Agreement and Grant Definitions
Grant Programs- A specified amount awarded to support an identified focus area or community goal.
Existing programs include the Human Services Resource Allocation Program, Community Development
Block Grant, and Emerging Needs Program. Below are a few nonprofit recipient examples:
Ada’s Café
Pathwise (formerly DreamCatchers)
Penninsula Healthcare Connections
Service Agreements (one-time)- A contractual arrangement in which a nonprofit delivers a City-
specified service to address a community need. These agreements could be approved by the City
Council as part of the budget adoption process for a single fiscal year. Some nonprofits may return to
request funding in a subsequent year; however, some of these requests are distinct in that there is no
established application process, such as an RFP, existing grant program, or formal solicitation.
UNAFF
Magical Bridge Foundation
Service Agreements (multi-year)- contract for services, initiated by the City to address a need that
would otherwise be provided by the City itself. Usually initiated through a Request for Proposals (RFP) or
single source contract due to the uniqueness of the service.
Neighbors Abroad
Project Safety Net
Palo Alto Chamber of Commerce
Canopy
LifeMoves
Pets in Need
Palo alto Community Child Care
Enduring partnerships- a new term suggested by Council member Burt and Reckdahl to describe
longstanding partnerships with nonprofit organizations that are consistently funded over the years, that
may be outside of currently established process.
Youth Community Service
Environmental Volunteers
ATTACHMENT B 1
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FY 2027 Budget Nonprofit Funding Request- Application
ORGANIZATION INFORMATION
Are you a 501 (c)(3) nonprofit organization? ☐Yes
☐No
Organization Name
Year Founded
EIN (Tax ID#)
Contact Person, First and Last Name
Title
Email Address
Phone Number
Mailing Address
Website
ABOUT YOUR ORGANIZATION
What is the mission of your organization?
Number of Employees ☐Full-Time Staff
☐Part-Time Staff
☐Volunteers
In the last two years, have you been awarded a grant or other direct funding by the City? If so, explain.
Are you qualified to apply for the Human Services Resource Allocation Program (HSRAP), Community Development
Block Grant (CDBG), or Emerging Needs grant programs? If so, did you apply? Explain why or why not.
PROGRAM & COMMUNITY IMPACT
Name of Program: Grant Request Amount: $
Please provide a narrative describing your proposed program (no more than 200 words):
Total Number of people estimated to be served by this
program:
Total number of Palo Alto residents estimated to be
served by this program:
Total number of Palo Alto residents estimated to be served by
your agency:
Total number of unduplicated Palo Alto residents
estimated to be served by the requested funding
amount:
EQUITY IMPACT
Does Will your organization proposed program serve historically underrepresented or underserved populations? If yes,
please describe. (ex. Number or percent of demographic populations)
What measures does your organization take to promote services to underserved populations?
☒Social Media ☐Website
☐Location of program/services ☐Direct mail
☐Other: (Please describe)
What fees will be charged for proposed services, if any?
Will subsidized or fee waivers be offered to clients?
ALIGNMENT WITH CITY COUNCIL PRIORITIES
Briefly describe how your request supports one or more of the City Council Priorities (2-3 sentences). If not relevant
indicate with “N/A.”
Climate Action and Adaptation & Natural Environment Protection:
ATTACHMENT B 2
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Economic Development and Retail Vibrancy:
Implementing Housing Strategies for Social & Economic Balance:
Public Safety, Wellness & Belonging:
PROGRAM GOALS
Attachment 1: Please use the template below to list up to 3 goals related to the program(s) you are proposing with
requested funding. In a separate Attachment 1, for each goal identify 1-3 strategies your organization will implement
to achieve this goal. For each strategy, provide an objective and an outcome.
Example:
Goal: A general statement about the desired long-term impact.
Example: "Enhance STEM education access for underrepresented middle school girls in underserved areas.”
Strategy: The overall approach or method used to achieve the goal.
Example: "Partner with local schools to develop and deliver hands-on STEM workshops led by female science
professionals.”
Objective: Specific, measurable actions that need to be completed to reach the goal. Example: "Train 20 female
STEM professionals to facilitate workshops reaching 100 middle school girls per year.”
Outcome: The positive change or result that occurs as a direct consequence of the project activities. How will
you know that the strategy is successful?
Example: "An increase in the number of girls expressing interest in pursuing STEM careers post-workshop
participation.”
Describe your organization’s plan for evaluating the program’s effectiveness? Include any specific measurement tools
to be used such as surveys or other tools. (no more than 200 words)
PROGRAM SUSTAINABILITY BUDGET
What amount $ and percent % of your organization’s budget is currently funded by the following:
If the full funding request is not awarded, would the program remain viable with partial funding? (Y/N)
☐Government Grants$_____, ___%
☐Private Donations$_____, ___%
☐Fundraising$_____, ___%
☐Membership Fees$_____, ___%
☐Fees for service$_____, ___%
☐Other $_____, ___%
What percentage of your organization’s annual budget does the grant request represent?
Annual Budget: $____
Grant Request Amount: $____
Percent of Budget: (Grant request/Annual Budget) x100 = ___%
If awarded, will the contribution be used to leverage other funding opportunities? Explain (1-2 sentences).
Attachment 2- Proposed Budget. Describe specifically how the requested funding will be used.
REQUIRED ATTACHMENTS
Attachment 1: Program Goals Attachment 3: IRS Determination Letter (501 (c)(3)
Attachment 2: Proposed Budget Attachment 4: IRS Form 990*
REPORTING REQUIREMENTS
*Requests of up to $510,000- brief annual report (1-2 pages) summarizing key activities and community impact
highlights. -Financia reporting will consist of a self-certification of compliance with grant terms.
Requests $510,000-$25,000- Requests $25,000-$100,000- Requests $100,000+
ATTACHMENT B 3
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-Annual report on service outcomes
and performance metrics.
-IRS Form 990
-Semi-annual reports on service
outcomes and performance metrics.
- IRS Form 990
-Quarterly service outcomes and
performance metrics, and a year-end
community impact report.
- IRS Form 990
ATTACHMENT B 3
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ATTACHMENT B 4
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ATTACHMENT 2: Program Goals
Please use the template below to list up to 3 goals related to the program(s) you are proposing with
requested funding. In a separate Attachment 1, for each goal identify 1-3 strategies your organization
will implement to achieve this goal. For each strategy, provide an objective and an outcome.
Example:
Goal: A general statement about the desired long-term impact.
Example: "Enhance STEM education access for underrepresented middle school girls in underserved
areas.”
Strategy: The overall approach or method used to achieve the goal.
Example: "Partner with local schools to develop and deliver hands-on STEM workshops led by female
science professionals.”
Objective: Specific, measurable actions that need to be completed to reach the goal. Example: "Train 20
female STEM professionals to facilitate workshops reaching 100 middle school girls per year.”
Outcome: The positive change or result that occurs as a direct consequence of the project activities. How
will you know that the strategy is successful?
Example: "An increase in the number of girls expressing interest in pursuing STEM careers post-
workshop participation.”
Goal #1:
Strategy(s)-
Objective(s)-
Outcome(s)-
Goal #2:
Strategy(s)
Objective(s)
Outcome(s)
Goal #3:
Strategy(s)
Objective(s)
Outcome(s)
ATTACHMENT B 5
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ATTACHMENT 2: FY 2027 (July 1, 2026-June 30, 2027)
Proposed Budget
FY2027
Total Program Expense
Budget
Total Program Expense
Budget for
Requested Funding
Program Name:
Salaries
Insurance
Audit
Rent & Utilities
Maintenance/Repair
Phone
Consultants
Staff Development & Training
Travel & Meetings
Information Technology
Equipment
Office Supplies & Materials
Printing & Publishing
Direct Services
Direct Subsidy
Other-
Other-
Total
Add any additional program budget sheet(s) here, as needed.
Click or tap here to enter text.
ATTACHMENT B 5
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ATTACHMENT B 6
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ATTACHMENT 3: IRS Determination Letter 501(c)(3)
ATTACHMENT B 6
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ATTACHMENT B 7
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ATTACHMENT 4: IRS Form 990*
ATTACHMENT B 7
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ATTACHMENT B 8
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Signature(s)
The undersigned certifies the information contained in this proposal is true and accurate to the
best of their knowledge and belief. The undersigned warrants that they have authority on behalf
of the organization they represent to enter into this proposal, warrant its accuracy, and bind the
organization to the applicable terms and conditions.
Name of Authorized Signer: Click or tap here to enter text.
Title: Click or tap here to enter text.
Sign Here: Click or tap here to enter text.
Date: Click or tap here to enter text.
Name of Authorized Signer: Click or tap here to enter text.
Title: Click or tap here to enter text.
Sign Here: Click or tap here to enter text.
Date: Click or tap here to enter text.
ATTACHMENT C
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DRAFT FY 2027 Phase I Timeline
Date Activity Hearing Body
February 2 Council approval of P&S Phase I
improvements
City Council
February Phase I website updated: application
timeline and requirements posted
March 11 Nonprofit information session on
FY27 Phase I updates and
requirements
March 16-April 3 Application period open
March 25 Nonprofit workshop on application
goals and budget
April 3-30 Application review
May 12 Applicant Interviews Policy & Services
Committee
May 5-6 FY27 Phase I target budget set Finance Committee
June 8 FY27 Phase I award
recommendations
Policy & Services
Committee
June 15 FY27 Phase I awards approved City Council
January 14, 2026 www.paloalto.gov
NONPROFIT PARTNERSHIP WORKPLAN:
Recommend Nonprofit Partnership Workplan Phase I Process Improvements
2
Policy & Services Committee Referral
Refinement of the nonprofit guiding principles, as they relate to policy adjustments and new
process and procedures:
1.Impact-oriented Focus and Accountability: Partnerships will identify intended outcomes and prioritize unmet
needs, and incorporate appropriate measures and reporting, while reflecting the nature of the engagements
and avoiding unnecessary administrative processes.
2.Service Alignment: Programs and services should align with the Council's priorities and identified community
needs.
3.Fairness, Open Access, Equity, and Inclusion: The City will maintain visibility and consistency in its partnership
processes, to both the nonprofit community and public at large. Resource allocations will consider and prioritize
accessibility of the resulting services to all community members, with particular attention to underserved and
vulnerable populations.
4.Flexibility for Special Circumstances: The City Council will need the ability to act quickly when needed to
respond to special circumstances.
•Nonprofit Partnership Workplan Phase I Funding Requests
➢TONIGHT: Discuss and provide direction on potential improvements to clarify
eligibility, funding priorities, and application design.
•Nonprofit Lease Agreements
•Nonprofit Multi-Year Service Agreements
•Comprehensive review of all grant programs including Human Services Resource
Allocation Process (HSRAP) and Community Development Block Grants (CDBG)
3
Nonprofit Workplan Major Areas of Work
CHALLENGES IMPROVEMENTS
Application Qualifications
•Determination of eligibility
•High volume of applicants from existing
City grant programs
•Length of contract
agreement/relationship
•Eligibility excludes applicants that receive funding
through existing grant programs or have a multiyear
service agreement
•Define “level” of partnership, e.g. proposed Enduring
Partnership
Funding Priorities
•Reliance on City Council priorities as a
primary evaluation metric
•Existing grant programs support human
service needs; areas not address include
arts & culture, environmental
stewardship, and workforce development
•Prioritize services not covered by an existing grant
program (e.g. Human Services Resource Allocation
Process)
•Reduce reliance on Council priorities, add other
selection criteria
•Awards provide complement funding/facility space,
not predominantly fund a program.4
Nonprofit Workplan Phase I Process Improvements
CHALLENGES IMPROVEMENTS
Nonprofit Service Categories
•Lack of definition of categories •Applicants' self selection of categories (e.g. special needs,
youth, senior, climate, workforce development,
homelessness, etc.)
Applications, Design, & Engagement
•Need for clearer application
guidelines and expectations in
advance of the application period
•Length of application, too long
•Streamline application and reporting requirements based on
dollar thresholds. See attached redlines in staff report.
➢Committee sought to add questions, should these be
added?
•Host information session in advance of application period
•Post template service agreement template for transparent
contractual expectations
•Expand timeline to include interviews with applicants
5
Nonprofit Workplan Phase I Process Improvements
6
Draft Timeline
City Council
approval of P&S
Phase I
Improvements
February 2
March 11
Nonprofit
information
session on FY27
Phase I updates
and requirements
Application Period
Open
March 16 - April 3
March 25
Nonprofit
workshop on
application
goals and budget
Application review
April
May 5-6
Set Phase I FY
2027 target
Budget
(Finance
Committee)
Applicant Interviews
(Policy & Services)
May 12
June 8
Phase I FY 2027
award
recommendations
(Policy & Services)
Phase I FY 2027
awards approved
(City Council)
June 15
February
Phase I
website
application
timeline &
req’s posted
7
Recommendation
Recommend City Council approval of the proposed process improvements to the
FY2027 Nonprofit Partnership Workplan Phase I as outlined in the staff report and
amendments as discussed by the Committee.
Lupita Alamos, Assistant to the City Manager
January 14, 2026
4
Nonprofit Workplan Phase I Process Improvements
•Whether/how to include multi-year contracts in
Phase I
•Whether nonprofits eligible for other City grant
programs (i.e. Human Services Resource Allocation
Process) may apply for phase I funding
•Funding priorities (including relationship to Council
Priorities)
•Improve application evaluation process by
categorizing nonprofit services to clarify service
alignment and reduce redundancy in funding
•Role clarity between Finance and Policy & Services
Committees, for example Finance to propose total
amount of funding available each year in the
annual budget process, and Policy &
•Services to review applications and propose awards
•Early communication and engagement with
nonprofits on application expectations
•Structure grant funding to complement, rather
than fully cover nonprofit program costs
•Application timeframe adjustments to allow for
nonprofit interviews