Photo courtesy of Services for the UnderServed.

FJC Borrower S:US Offers Hope to Homeless Families

Finding permanent housing has been challenging for Naquana, 30, and her family, but she has a team supporting her.  A housing specialist is helping her navigate the dizzying bureaucratic obstacles that face homeless families attempting to find an affordable apartment.  She and her family, which includes her partner and two children aged 3 and 9, also receive mental health services and access to a full range of vocational and recreational programs.  With a dedicated staff and a safe and clean place for her family to sleep every night, Naquana and her family can transition into permanent housing with dignity, a peace of mind, community support and hope for the future.

These services and many more are provided at Echo Family Residence, a temporary housing residence for homeless families, which opened in the Bronx in November, 2020 and is operated by the nonprofit Services for the UnderServed (S:US).  The project was made possible in part by an $868,000 loan from FJC’s Agency Loan Fund, which bridged public sector commitments from the New York City Department of Homeless Services.

In recent years homelessness has reached the highest levels since the Great Depression.  Although homeless individuals on the street are surely the most visible manifestation of the city’s homelessness crisis, in fact 62% of New York City’s homeless are families with children.  In 2020, 122,926 people slept in the New York City municipal shelter system. 39,300 of these homeless New Yorkers were children. Since New York is the only city in the U.S. that is legally required to provide shelter to homeless families and single adults, the City works with providers like S:US to operate “Tier II shelters,” which provide temporary housing and social services to homeless families until viable housing alternatives become available.

Although homeless individuals on the street are surely the most visible manifestation of the city’s homelessness crisis, in fact 62% of New York City’s homeless are families with children.

Families enter the shelter system for a variety of reasons, but New York City’s chronic lack of affordable housing is a primary driver.  It is estimated that there are only 35 affordable apartments available per 100 extremely low-income renters in New York. Although a moratorium on evictions is currently in place statewide due to the Covid-19 pandemic, numerous other factors drive low-income families into homelessness, including domestic violence and hazardous housing conditions.  In Naquana’s case, her family fled her apartment due to an incident of neighborhood violence that resulted in her partner being hospitalized.

For families like Naquana’s, S:US’s Echo Family Residence offers a ray of hope in the face of crisis: newly constructed individual apartments with their own kitchens and bathrooms, and amenities that one might find in permanent housing, including 24/7 security, on-site laundry, a communal back yard and indoor recreational space.  The staff at S:US provide services that are designed to support homeless families including individual and group counseling, case management and referrals, housing placement and employment assistance, and vocational training. 

Echo Family Residence offers a ray of hope in the face of crisis: newly constructed individual apartments with their own kitchens and bathrooms, and amenities that one might find in permanent housing, including 24/7 security, on-site laundry, a communal back yard and indoor recreational space.

Naquana greatly values the support she is receiving from Echo Family Residence’s housing specialist and notes the supportive culture of the S:US staff.  “Everybody here is on the same page,” she says.

The Doe Fund Acquires Bronx Building Site with FJC Loan

Time was running short for The Doe Fund. The organization was in contract to purchase a property in the Hunts Point section of the Bronx for The Casanova, their new affordable housing development to be financed by both private and public dollars. As with any experience competing for properties in the New York City real estate market, for the Doe Fund time was of the essence.

When conversations with their acquisition lender fell through, The Doe Fund called FJC. “FJC was ready to provide financing almost quicker than we were ready to accept it,” explains John McDonald, The Doe Fund’s Chief Operating Officer. “Their speed and accessibility were a key factor in our ability to secure the site.”

In a period of three weeks, FJC approved a loan that covered the $4.25 million asking price, as well as $750,000 in predevelopment expenses, to cover those necessary costs the developers need to initiate a complex real estate project: environmental reviews, architectural plans, legal fees, and other costs. The loan is expected to be repaid when the Doe Fund secures $40 million in project financing, which will come from a range of public and private sources.

FJC’s speed was in part a function of the longstanding lending relationship with the Doe Fund, which has spanned decades and involved borrowing multiple loans from FJC’s Agency Loan Fund (ALF). This particular loan was somewhat unconventional. Because they hoped to finance reimbursable predevelopment expenses along with the acquisition, The Doe Fund was requesting a loan that exceeded the full amount of the appraised value of the property. This high “loan to value” may have been a stumbling block for other lenders with more rigid underwriting criteria, but FJC’s intimate knowledge of The Doe Fund and its principals allowed them to get comfortable approving the loan.

The acquisition is the first step in the Doe Fund’s development of the Casanova, an 94-unit affordable housing development with supportive services for people who would otherwise be homeless, with a special focus on people living with pre-existing conditions and seniors. The project aligns with The Doe Fund’s commitment to providing the most vulnerable New Yorkers with safe and dignified homes, and adds to their portfolio of 11 buildings offering 427 units. The Doe Fund was recently selected to the prestigious “Top 50” Affordable Housing Developer List by Affordable Housing Finance.

And housing is just one component of The Doe Fund’s work breaking the cycle of homelessness, drug addiction and criminal recidivism. New Yorkers may know The Doe Fund from the street cleaning work of the “Men in Blue”, the participants in Ready, Willing, and Able program, which provides paid work alongside holistic social services, career training, education, and sobriety support. (FJC also recently provided a loan to bridge a city government grant to provide career development, educational services and occupational training to formerly incarcerated individuals).

“It takes a lot of different partners to do this vital work for New York City,” says McDonald.  “We really appreciate FJC’s ability to provide loans to support so many of our activities, from program contracts to real estate.”

A DAF Sponsor Mobilizes Resources for the Nonprofit Sector

Part Two of the Nonprofit Lowdown podcast featuring CEO Sam Marks (air date: March 12, 2020)

In November 2019, Sam Marks, Chief Executive Officer of FJC, was interviewed for the podcast Nonprofit Lowdown with Rhea Wong. The interview was a reunion of sorts for these two, as Sam was Rhea’s first boss in 1999 when she worked at Summerbridge at the Town School (now known as Breakthrough New York, an organization Rhea later ran for over a decade).

Part One of this interview focuses on Sam’s professional journey from his early years in youth development and education to “the dollars and cents side” of the nonprofit sector.

Part Two of the interview focuses on his particular vantage point at FJC, and covers Donor Advised Funds, nonprofit lending, and fiscal sponsorships.

The interview has been condensed and edited for clarity.

So now you’re the CEO of FJC.  What is that and what do you do?

FJC is a foundation, primarily comprised of Donor Advised Funds or DAFs.  The way a DAF works is, you set up an account, you move money into it.  That money becomes legally the asset of FJC. The donor gets the full tax benefit of making that donation.  But the donor can recommend two things: how that money is invested over time, similar to a foundation endowment.  We provide donors with a menu of investment options like stocks and fixed income. They can also recommend how those funds are turned into grants to nonprofit organizations they care about.

“The [DAF] donor can recommend two things: how that money is invested over time, similar to a foundation endowment, and how those funds are turned into grants to nonprofit organizations they care about.”

You have another part of the house so to speak.  Explain the investment side.

The investment side is how we steward the assets of our donors over time.  Donors can choose to put it in stocks or bonds. There are some donors, if they’re  big enough, they can bring a hedge fund or an alternative investment onto our platform.  But one of the most popular ways is our impact investing opportunity, FJC’s Agency Loan Fund, which is a pool of donor capital that is deployed as loans to nonprofit organizations. So it’s great for the donors, because their money can be put to work in the community, supporting the missions of organizations.  The principal and interest payments come back to their accounts, so those accounts can grow.  They can still make grants with them, but in the meantime, that money is being lent to a full gamut of organizations. Our borrowers are making energy efficiency improvements in buildings, doing homeless services, arts organizations, and more.

Why would a nonprofit organization be interested in taking out a loan?

It’s typically to bridge some kind of commitment.  If you have a city or state contract for services, and you’re working with youth afterschool or doing foreclosure counseling, it’s great to have that contract but you can’t pay the bills with a contract.  You can only pay the bills with cash. Many city and state contracts for various reasons take a long time to pay. So many of the nonprofits that come to us have an urgent cash flow need, and we’re a pretty nimble, flexible organization.  We can turn a decision around about a loan in just a couple or three weeks. A lot of nonprofits find that to be a critical service to even out their cash flow, make payroll, or pay their vendors.

What do you look for when you’re making a loan?

The types of organizations we work with are a range of sizes and missions, but they have to be credit-worthy. That means they have to have some experience, not necessarily being a borrower (a lot of our borrowers have never borrowed money before), but they have to have some ability to have an informed conversation about their finances and their plan to repay the loan. Typically, we’re bridging a city or state contract, or a capital grant.  They have to be able to understand their business well enough to say how they are going to pay it back.

They will also need some kind of collateral. In some cases that can be a piece of real estate that we can secure the loan, but other times they may be able to provide a guarantee. Perhaps a guarantor on their board or some other asset that can serve as collateral.

Is there a general size of loan that you’re looking at?

It runs the gamut. We’ve made loans as small as $10,000 and as high as $4 million.  Above $4 million we sometimes work with a co-lender or two. So we’re pretty flexible.

“[FJC’s Agency Loan Fund] is great for the donors, because their money can be put to work in the community, supporting the missions of organizations. The principal and interest payments come back to their accounts, so those accounts can grow.”

What other lending options are there out there for nonprofits?

There are banks and credit unions.  There are banks with very focused nonprofit business lines like Amalgamated Bank or M&T.  There are also community development financial institutions, or CDFIs. Examples include LISC, where I used to work, Nonprofit Finance Fund, Low income Investment Fund, and many others.  These are specialized nonprofit lenders.  They are nonprofits themselves, and they lend to nonprofits.  They tend to focus more on capital projects, like affordable housing or community centers.  They tend to lend secured against real estate, though not always. The Fund for the City of New York will also lend against city contracts. So there is an ecosystem that serves this niche.

“We’re a good [lending] option for organizations whose needs are maybe a little bit more urgent, and we can be pretty flexible and nimble about getting to yes.”

Why would an organization choose to approach you for a loan, as opposed to getting a line of credit from a bank?

Bank loans are probably going to be a little bit cheaper, if you can get one.  The reason we are competitive is that we are very fast and nimble in terms of our decision making. We’re a pretty small outfit.  A bank or larger institutions may have credit committees and layers or approval processes, and they may have people making decisions about loans that don’t particularly know about the nonprofit sector. They might not be comfortable with a city or state contract acting as repayment source. But we know the nonprofit sector really well, and we can get to a decision pretty quickly.

If a nonprofit has enough lead time and relationships at a bank, maybe they keep their deposits there, if they can make a line of credit work, they should definitely do that. We’re a good option for organizations whose needs are maybe a little bit more urgent, and we can be pretty flexible and nimble about getting to yes.

What else should nonprofits consider if thinking about taking out a loan?  What else do you look for in deciding if a nonprofit is ready for a loan? Do they need to have a CFO?

Nonprofit organizations can get to that level of sophistication in a lot of different ways.  It can be an Executive Director or a Board Member where that expertise sits. There are organizations that become big and complex enough, where the business fundamentals include different revenue sources like earned revenue, grants and multiple city and state contracts. Then the cash flow forecasting gets to be more complicated.  You might have an investment portfolio.  In those cases we often see organizations with CFOs. We see a lot of organizations starting to outsource their CFO function. There are companies like BTQ Financial that work with a lot of organizations we know.  FMA is another one. So there are a lot of different solutions that are tailored to nonprofits.

I should mention also, another part of our business is fiscal sponsorships. These are with organizations that are earlier in their life cycle. These are organizations that don’t have their own 501(c)(3) status. They want to get donations but they don’t have that IRS determination letter yet. We can act as the 501(c)(3), we can accept grant payments, we can pay their vendors and provide them with some pretty basic accounting of their income and expenses. We have about 160 organizations we work with. We are set up to do that because having DAFs, we’re set up to be accepting money and getting payments out in a pretty rapid way, so those capabilities fit well with a fiscal sponsorship program.

“[Our fiscal sponsorship program works with] organizations that are earlier in their life cycle. They want to get donations but they don’t have that IRS determination letter yet.  We can act as the 501(c)(3).”

What’s the cost of your fiscal sponsorship program?

Our fiscal sponsorship program is pretty reasonably priced.  It’s generally 4-6% of inbound donations (plus 1% annually on the average daily balance).  And the reason why we’re reasonable is that we’re a pretty bare-bones fiscal sponsorship program. Other organizations will provide a lot more types of services or technical assistance.  We engage with our organizations a lot and give them a lot of advice and contacts but it’s done in a more informal way.

Part One of this interview focuses on Sam’s professional journey from his early years in youth development and education to “the dollars and cents side” of the nonprofit sector.

For an audio version of this interview (and dozens of others with nonprofit leaders), check out Nonprofit Lowdown, Rhea Wong’s fabulous podcast, where she reviews and recommends the best ideas, resources, tools, tricks and tips to “run your nonprofit like a pro!”

Photo of Ready, Wiling, and Able, courtesy of The Doe Fund

2019 Year In Review: Loans

FJC’s Agency Loan Fund invests donors’ philanthropic capital in loans that advance critical work of our partners on the ground. As of December 31, 2019, the Agency Loan Fund capital pool represents $67 million in assets. Loans committed in 2019 included the following:

Communities Resist borrowed $1 million to jump start anti-eviction programs for low-income tenants in Brooklyn…The Doe Fund borrowed $1 Million for working capital to support their mission to break cycles of homelessness, addiction and criminal recidivism…Eden II borrowed $1.5 million for the purchase of a group home in Staten Island for adults with Autism Spectrum Disorder…Jewish Family Service Agency of NJ borrowed $370,000 to bridge government contract receivables so they can provide social and health services to families…Lantern Group borrowed $1.5 million to bridge contract receivables to enable them to serve formerly homeless individuals and families…Ohel Children’s Home & Family Services borrowed $1.2 million for the purchase and renovation of a group home for developmentally disabled individuals…Older Adults Technology Services borrowed $1 million to bridge public sector contract receivables to fund a technology training programs for older adults…Pro Mujer borrowed $200,000 to make microloans to foster economic development for low-income women in Latin America… Public Media Group borrowed $4 million to finance the purchase and development of an infrastructure platform for next-generation broadcasting format to be used with their affiliated public television networks

Photo of Crash Detroit, courtesy of ioby

ioby GROWS WITH LOAN FROM FJC

A community group in Queens, NY doubles their neighborhood park space through the creation of a temporary plaza. A community-owned cooperative is founded to build solar powered streetlights in Highland Park, Michigan. A group of residents raise $60,000 to fund the first mile of the Firefly Trail, a rail trail in Athens-Clarke County Georgia, inspiring voters to approve $16 million to fully complete a much longer section.

These local projects all have one thing in common: they were supported by ioby, a nonprofit civic crowdfunding platform that helps connect local leaders with funding and resources from within their communities to make our neighborhoods more sustainable, healthier, greener, more livable, and more fun. The organization blends a technology platform with fundraising coaching, and it connects local leaders to a whole array of resources and relationships to help them succeed.

ioby stands for “in our backyards,” the positive opposite of NIMBY (“Not In My Backyard”). When it was founded in 2008, ioby followed the lead of DonorsChoose.org and Kiva.org, the first online micro-philanthropy platforms, long before the term “crowdfunding” was in popular use. Since then, the organization has seen over 2,100 neighborhood leaders step up and lead positive change in their neighborhoods.

ioby has also expanded nationally, thanks in part to a loan from FJC’s Agency Loan Fund. When the organization began to expand beyond its initial NYC and Miami pilots, ioby had almost no funding to support their strategic planning, market research, or to support projects coming in from everywhere in the U.S. outside NYC and Miami. “With the flexible lending from FJC,” explains ioby CEO and co-founder Erin Barnes, “we were able to do the appropriate planning and capacity building so that we could open offices in Detroit, Cleveland and Pittsburgh.”

We are thrilled that FJC donor capital has been put to work through ioby, increasing civic engagement and building community power.