This week's policy landscape presents a tale of two realities: federal funding uncertainty and sweeping cuts are creating turbulence for nonprofits across the country, while California and Bay Area governments are channeling billions into behavioral health, housing, and homelessness services. Here's what you need to know.

The Centers for Medicare & Medicaid Services published a final rule on April 6, 2026, overhauling policy for Medicare Advantage (Part C), Part D prescription drug benefits, and Programs of All-Inclusive Care for the Elderly (PACE). The rule takes effect June 1, 2026, with coverage changes beginning January 1, 2027.

Why it matters: If your organization operates health services, dual-eligible programs, or PACE centers, begin compliance planning now. The 8-month implementation window is shorter than it looks.

The Office of Management and Budget revised the Uniform Guidance, raising the de minimis indirect cost rate from 10% to 15% of modified total direct costs and increasing the single audit threshold from $750,000 to $1 million. However, a competing Executive Order directs agencies to prioritize awards with lower indirect cost rates.

Why it matters: The mixed signals are the story. While the higher de minimis rate benefits smaller nonprofits, the Executive Order's pressure to lower indirect costs could squeeze organizations that depend on overhead recovery. Review your current indirect cost rate agreement now.

Major 2026 tax changes are now in effect: non-itemizers can deduct up to $1,000 ($2,000 for joint filers) in charitable contributions to 501(c)(3) public charities — but not to donor-advised funds. Itemizers now face a new 0.5% AGI floor, and the deduction value is capped at 35 cents per dollar.

Why it matters: The non-itemizer deduction is a win for grassroots fundraising, but the AGI floor and DAF exclusion require immediate donor education. Update your year-end giving materials now.

Governor Newsom announced that Proposition 1 behavioral health bond investments are ahead of schedule, with over $4 billion allocated statewide. Bond Round 2 includes $1.18 billion funding 66 new projects across 130 facilities, adding 2,554 residential and inpatient beds and 4,273 outpatient treatment slots.

Why it matters: This is one of the largest behavioral health infrastructure investments in California history. Nonprofits providing mental health, substance use treatment, or supportive services should explore subcontracting and partnership opportunities.

SB-1240 establishes a new Office of Nonprofit Empowerment within the state government, set to become operational on July 1, 2026. The office will provide guidance, resources, and technical assistance to nonprofits on procurement laws, grantmaking, and regulatory compliance.

Why it matters: A dedicated state office means nonprofits will have a centralized resource for navigating state contracting and grant processes. Watch for announcements about the office's leadership and engagement opportunities.

California's Freedom to Birth Act (AB 55), effective since January 1, 2026, removes barriers to Medi-Cal doula reimbursement. The Medi-Cal Doula Hub now provides training and technical assistance to help doulas become enrolled providers.

Why it matters: For organizations focused on Black maternal health and birthing justice, community doula programs can now build sustainable revenue through Medi-Cal billing.

The San Francisco Department of Public Health released a preliminary list of $17 million in planned cuts to community-based organization contracts for FY 2026-27, part of efforts to address a $936 million structural deficit.

Why it matters: If your organization holds DPH contracts, engage in the stakeholder feedback process immediately — additional details go to the Health Commission by end of April. All SF nonprofits should prepare contingency budgets ahead of the June 1 final budget deadline.

Federal Home Loan Bank of San Francisco approved up to $45.7 million in voluntary grant funding for 2026, doubling its contribution rate. An additional $13 million was allocated for the Workforce Initiative Subsidy for Homeownership (WISH) Program.

Why it matters: Housing nonprofits developing or preserving affordable units should prioritize applications through the Affordable Housing Program.

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Valix Collective — Policy intelligence for nonprofit leaders who move communities forward.