Photo credit Maria Baranova, courtesy The In[HEIR]itance Project

Incubating, and then Financing, a Growing Nonprofit Theater

This summer, FJC closed a $50,000 loan to the nonprofit The In[Heir]itance Project, to assist the theater organization’s growth while it waited for committed foundation grants to be paid. The loan represented a satisfying “second act” in the relationship between FJC and the nonprofit, which had previously been incubated at FJC as a fiscally sponsored project.

“It’s always great when one of the programs that ‘graduates’ from FJC’s fiscal sponsorship can become one of our borrowers,” says Laura Hoffman, Program Manager of FJC’s Fiscal Sponsorship Program. 

“Our organization wouldn’t exist today without the mentorship, guidance, and incubation time we received from FJC when it served as our fiscal sponsor. Having [the lending] relationship endure after we left the nest is not only reassuring, it’s an exciting next step in our maturation as an organization.”

Jon Adam Ross, Co-Founding Artist & Executive Director

The In[HEIR]itance Project works with intergenerational, intersectional, and interfaith communities to build relationships across divides through collaborative theater projects inspired by shared cultural touchstones. They are currently beginning work in Memphis on the fifth play in a series exploring Exodus narratives across the United States. Previous stops in the playmaking series included projects in Harlem, NYC working with formerly incarcerated New Yorkers, Omaha working with recently resettled refugees, Cincinnati working with the Black and Jewish communities to explore the rituals of Exodus (resulting in a Juneteenth Seder ritual performance), and in Coastal Virginia exploring displacement and white flight.

Hoffman recalls that Co-Founding Artist and Executive Director Jon Adam Ross joined FJC’s fiscal sponsorship program in 2015.  The initial proposal projected a three-year initial project of modest ambition. (The original budget was $50,000 per year).  During its period as a fiscally sponsored project, FJC acted as the 501(c)(3), receiving charitable contributions on the organization’s behalf and acting as a fiscal back office. 

Over time the organization grew into a national arts organization of artists, scholars and activists that could bring people together to listen, learn and collaborate to create theater. Since beginning operation in January of 2015, In[HEIR]itance Project artists have led projects in over a dozen cities around the country, engaging over 10,000 community participants, paying over 170 local artists, and partnering with more than 400 partnering organizations, institutions, and schools. The In[HEIR]itance Project received its 501(c)(3) status in 2020, and it has been operating independently since.

“It’s always great when one of the programs that ‘graduates’ from FJC’s fiscal sponsorship can become one of our borrowers.”

Laura Hoffman, Program Director, Fiscal Sponsorship Program, FJC

The loan came at a critical time for the organization. In the summer of 2020, the pandemic, along with the national awakening that occurred in response to the murder of George Floyd, created a surge in demand from community partners for collaborations with the In[Heir]itance Project.  The organization has a 27-city waiting list of project inquiries, and they have had to scale up quickly while maintaining the high quality of their collaborations and productions.  With philanthropic commitments in hand but payments expected later in the year, the organization was in need of some working capital to bridge the timing gap. FJC made the bridge loan from its Agency Loan Fund, an impact investment vehicle that pools together funds from donor accounts and makes loans to nonprofits.

“Our organization wouldn’t exist today without the mentorship, guidance, and incubation time we received from FJC when it served as our fiscal sponsor,” says Ross. “Having that relationship endure after we left the nest is not only reassuring, it’s an exciting next step in our maturation as an organization. And we are so grateful.”

Photo courtesy of India Home.

Financing a Home for India Home

Months after India Home re-opened its elder care centers after a brief closure due to the Covid-19 pandemic, Dr. Vasundhara Kalasapudi still fondly remembers reuniting with the center’s residents.

“When the seniors saw me, they came up to me and started speaking to me in their mother tongues,” recalls Dr. Kalasapudi, co-founder of India Home, which serves the South Asian and Indo-Caribbean immigrant community. “I don’t speak every language at India Home. But the staff who did speak the same language translated every word. They said that the seniors told me they are so happy that we are having our centers re-opened and they feel like India Home is a home away from home for them.”

The organization began when Dr. Kalasapudi struggled to find culturally sensitive care for her father. Undeterred, she started India Home in 2008 as a first step in creating elder care that was culturally competent, community oriented, and that piloted innovative solutions to combat alienation, loneliness and depression in the senior community.

“For the first time, India Home has a home, a central place to coordinate with all our centers.”

Dr. Vasundhara Kalaspudi

While India Home flourished and became a home away from home for its residents, the organization was itself without a home until 2018. Despite receiving a substantial government grant from New York City, India Home still did not have the means to purchase property for use as an office or program space. That is, until India Home got in touch with FJC.

“The experience of taking the loan from FJC was extremely pleasant and easy,” Dr. Kalasapudi recounts. “With FJC’s loan, for the first time India Home has a home, a central place to coordinate with all of our centers.”

Recently, FJC has collaborated with India Home again to finance the organization’s bold initiative to experiment in New York City with creating co-living spaces for isolated seniors to live together like friends or family. Again, FJC was able to provide an acquisition loan that was responsive to the organization’s needs. 

“When we asked for the loan for this initiative, we thought that we would make a twenty percent down payment and FJC would maybe give an eighty percent loan,” says Dr. Kalasapudi. “We were so pleasantly surprised when we received a ninety five percent loan to close the property.”

 With financing in place for this new co-living experiment, Dr. Kalasapudi has time to enjoy interacting with the senior residents across India Home’s various centers, something that is particularly meaningful to her. “Everyone will have two parents. But at India Home I feel like I have hundreds of parents blessing me all of the time.”

Special thanks to Rachel Goldman, FJC’s Program Assistant, for authoring this post.

Photo courtesy of The Bronx Defenders

Bridge Loan Maintains Vital Programs at The Bronx Defenders

The nonprofit Bronx Defenders encountered an unwelcome surprise with their longtime commercial bank this spring: the bank would not be renewing its line of credit in the coming fiscal year.  The bank’s credit officers had grown alarmed about persistently delayed payments on New York City government contracts and declared that it was pulling back on making loans that financed these contract payments.

Like any business, nonprofits like The Bronx Defenders depend on access to financing to even out cash flow, ensuring that lumpy cash payments from contract receivables don’t delay services for clients, jeopardize paychecks to staff, or threaten operational necessities like (literally) keeping the lights on.  Lines of credit and other bridge financing mechanisms have become even more critical for nonprofits in recent years as payments on city social service contracts have become even more chronically delayed. 

“The loan from FJC could not have come at a better time. We had run out of options and were facing the possibility of having to close our doors and turn away New Yorkers in dire need of our services.”

Justine Olderman, Executive Director, The Bronx Defenders

The issue was highlighted in a recent report sponsored by NYC Mayor Eric Adams and NYC Comptroller Brad Lander, A Better Contract for New York: A Joint Task Force to Get Nonprofits Paid On Time.  The Task Force wrote, “For years, the City’s onerous and slow procurement process has created considerable registration delays that hinder nonprofits’ ability to get paid on time and meet their obligations. In Fiscal Year 2022, over three-quarters of the City’s contracts with nonprofit organizations were registered after the start date.”  The Task Force has recommended a series of reforms to the contracting process, which have been embraced by both the Mayor and Comptroller, and which may take some time to implement.

While remaining hopeful that the City will make necessary reforms in the long run, the finance team at The Bronx Defenders began immediately shopping around for a new banking relationship that is more comfortable with the notion that the City, while chronically late, will ultimately stand behind its commitments.

In the meantime, FJC has provided a $4 million bridge loan, which will give The Bronx Defenders some breathing rooms as it secures a banking relationship with a new financial institution.  The loan bridges proceeds from contracts with the NYC Mayor’s Office of Criminal Justice and the NYC Office of Human Resources Administration.

“The loan from FJC could not have come at a better time.  We had run out of options and were facing the possibility of having to close our doors and turn away New Yorkers in dire need of our services,” says Justine Olderman, Executive Director of The Bronx Defenders.

FJC’s $4 million bridge loan will give The Bronx Defenders some breathing room as it secures a banking relationship with a new financial institution.

The Bronx Defenders is a public defender nonprofit that also seeks to transform the legal system to make it more equitable for low-income people. They have pioneered a ground-breaking, nationally recognized team-based model of representation called holistic defense that connects clients to an interdisciplinary team of lawyers, social workers, and advocates. Each year, they defend over 20,000 low-income New Yorkers in criminal, civil, family, and immigration cases, and reach hundreds more through their community intake and outreach programs. They take what they learn from this holistic approach and launch innovative initiatives designed to bring about real and lasting change for the communities they serve.

Says Olderman, “Thanks to the loan from FJC, BxD will be able to continue its mission of defending low-income people facing incarceration, deportation, family separation, and eviction; advocating for laws and policies that advance fairness and equity; and training public defenders from one end of the country to the next on our holistic model. “

Teen radio producers for Ouro Negro da Malta, a youth-focused initiative developed in partnership with PCI Media, UNICEF and Ministry of Health (Mozambique).

Bridge Financing a Bequest: The Case of PCI Media

Under Meesha Brown’s leadership as President, PCI Media developed a strategic plan with an ambitious path for growth.  As an organization that uses storytelling and communications across the world to shift mindsets and make meaningful cultural and positive behavioral change, Ms. Brown and her team were determined to increase impact, develop new partnerships, and achieve economies of scale.  “We had this new plan for growth that required us to develop a new, more robust private donor base,” said Ms. Brown, “but the question was, how would we get started?”

The answer to this question came from out of the blue, in the form of a bequest.  A donor, who had made occasional grants to PCI Media over the years, had passed away and selected PCI Media for a major gift, alongside dozens of nonprofit organizations devoted to conservation, family planning and health, women and girls, and arts and culture.  PCI Media, whose mission spans all of these program areas, expects to receive between $4 – $8 million from this bequest, a windfall that will catapult the organization into its next phase, allowing them to execute on their strategic vision.  (The donor has requested anonymity).

A $550,000 loan from FJC and SeaChange Capital Partners will bridge a $4 – $8 million bequest from a donor, while they wait for the estate to wind its way through the probate process.

The urgent needs of PCI Media’s stakeholders, however, required the organization to begin implementation immediately, even as the estate winds its way through the probate process.  (The legal process for sorting through the donor’s last wishes can take several months to resolve, sometimes longer with complicated estates).  PCI Media’s plans required immediate action: hiring new staff, investing in program expansion, and establishing systems for sustainable growth.

Enter FJC and its fellow nonprofit lender SeaChange Capital Partners.  FJC and SeaChange are co-lenders on a $550,000 loan to bridge PCI Media’s bequest.  The loan will allow PCI Media to jumpstart their next phase of work as they wait for the funds from the bequest to arrive. 

PCI Media’s mission is to create a healthier, more just, and sustainable world using the power of storytelling and community. The organization partners with local organizations across the world to shift social norms and mobilize communities through culturally resonant radio programs, social media, and interactive communication campaigns.  Their local partnerships have taken them to over 70 countries, including in recent years Peru, Colombia, Bangladesh, Sri Lanka and Mozambique, just to name a few. Beyond helping their partners produce effective content, PCI Media builds partner capacity for the long term, helping them format programs to produce positive change, organize as networks of media stations and community coalitions, and engage their audiences on a host of issues. 

“It’s such a pleasure to work with lenders like FJC and SeaChange that are so sensitive to the needs of nonprofits.”

Meesha Brown, President, PCI Media

In Mozambique, for example, PCI Media has launched a multi-pronged communication initiative  Ouro Negro  (Black Gold), in partnership with UNICEF Mozambique and the Ministry of Health, focused on improving public health outcomes in childhood nutrition and maternal health. As the longest-running radio drama in the country, it has broadcast over 394 episodes on 116 national radio and local stations. In the drama, worlds collide as a fictional African village is confronted with the arrival of a foreign mining company.  Against this backdrop of tension and change, listeners learn essential maternal, newborn, and child health practices. Rapid assessment surveys showed widespread impact after season one. Ouro Negro is currently in its 7th season.

The Covid-19 pandemic only intensified the need for media that improved access to health information and services.   In response to the pandemic, PCI Media’s production teams practiced social distancing, recording voices one by one, and disinfecting the studio between each actor. PCI Media recreated community discussion forums online. “We know our work is important, but with the increases in risks to women and girls, children, and overall health, the pandemic made it clear that the need for our programs exceeds what we can provide with our current funding,” said Ms. Brown.

Receiving this bridge financing from FJC and SeaChange allows PCI Media to smooth the cash flow challenges associated with government and bilateral organizations, close program funding gaps and ensure there is no disruption to the 4 million listeners who rely on their programming for reliable health information.

Ms. Brown notes that bridge lending against donor bequests is not a typical product in the banking sector.   “It’s such a pleasure to work with lenders like FJC and SeaChange that are so sensitive to the needs of nonprofits,” said Ms. Brown.

Clockwise: Chris Jensen, Google News Initiative; Elizabeth Hansen Shapiro, National Trust for Local News; Sam Marks, FJC; and Lillian Ruiz, National Trust for Local News.

Google News Initiative Celebrates Milestone for Local Ownership of Local News

Key practitioners forming a new model of community media ownership reflected on a critical milestone: the acquisition of 24 local newspapers in Colorado by the National Trust for Local News (NTLN).  Staff from NTLN and its financing partner FJC discussed the origins of this unique partnership during a breakout session at the Public Media Development and Marketing Conference, which was hosted and sponsored by The Google News Initiative.  [VIDEO]

The acquisition of Colorado Community Media (CCM) represents a first-of-its-kind partnership to preserve local mission-focused community ownership. The Colorado News Conservancy, a public benefit corporation jointly owned and operated by NTLN and The Colorado Sun, acquired CCM, an independent, family-owned group of 24 community newspapers and websites.  The acquisition was financed with a $1.5 million loan from FJC, alongside a coalition of local and national impact investors. 

Chris Jansen, the Head of Local News, Global Partnerships at Google, framed the conversation, describing this acquisition as “unlocking a new path forward for acquiring—and financing transformation of—local newspapers, and bringing in both local and national funders.”  He said that the innovative partnership attracted the interest of the Google News Initiative, which aims to help journalism thrive in the digital age and is a seed funder of NTLN. 

“Patient mission-aligned capital is necessary for these organizations.  When we’re talking about community media, it’s completely necessary.”

Lillian Ruiz, Co-Founder & Managing Director for Portolio, The National Trust For Local News

Asked about the origins of NTLN, co-founder Elizabeth Hansen Shapiro said that she and her co-founders intended to create an organization that was “like a nature conservancy for local media.”  The media landscape has evolved rapidly in recent decades, putting strain on traditional news business models.  She noted that public broadcasting companies had benefited from a combination of pooled investment along with technical assistance, and NTLN was formed to provide a similar series of supports to preserve trusted local news titles.  The acquisition of CCM is a model that NTLN intends to replicate across multiple markets across the United States.

Lillian Ruiz, NTLN co-founder and Managing Director for Portfolio, described how local newspapers can benefit from increased operational and business discipline. “From our expertise, partnerships and relationships, we can elevate the operational soundness, the efficiencies in how local newspapers look at innovation and revenue experimentation, and give [local newspapers] the headroom to get there. That’s where we see our opportunity and impact.”   She also noted the role of impact investment in the model.  “Patient mission-aligned capital is necessary for these organizations.  When we’re talking about community media, it’s completely necessary.” 

“Philanthropy and the nonprofit sector working together can figure out governance and financing [approaches] to make something that works for the public interest.”  

Sam Marks, Chief Executive Officer, FJC

Sam Marks, Chief Executive Officer of FJC, noted the underwriting challenges in financing the acquisition, since NTLN was a start-up nonprofit without significant assets to provide collateral for the loan.  FJC was able to get comfortable making the loan because three funders provided guarantees: The Colorado Trust, Gates Family Foundation, and American Journalism Project.  Mr. Marks noted the replicability of this approach to other new mission-based industries.  “Private foundations typically spend down around 5% of their assets per year on grants; the rest of their balance sheet could theoretically be put to work as guarantees for innovative structures like this, where it’s something new and impactful but the actors don’t have the balance sheets to stand it up.”

Mr. Marks noted that many local newspapers are being acquired by private equity firms whose profit motivations can run counter to the mission of having a thriving, well-resourced, independent press. “Philanthropy and the nonprofit sector working together can figure out governance and financing [approaches] to make something that works for the public interest.”  

A video of the webinar can be found at this link.

As Homeless Shelter Prepares for Renovation, A Timely Loan Bridges a Critical Service Gap

Crown Heights, Brooklyn—A $2.5 million bridge loan from FJC will ensure the continuity of services at the St. John’s Place Family Center, a 97-unit Tier II shelter for homeless families, as the nonprofit owner embarks on City-financed major renovations.  The project is a collaboration between Urban Resource Institute (URI) and Settlement Housing Fund.

The loan was necessary to bridge a timing and cash flow gap between when URI was to take over providing services to the families at the shelter, and the formal registration and execution of a contract from the New York City Department of Homeless Services (DHS), which will enable payment for the services.  “If we hadn’t figured this out, it would have been incredibly disruptive to the families at the shelter,” explains Alexa Sewell, President of Settlement Housing Fund, which had owned and operated the site since the 1990s.  Without the cash flow necessary to maintain continuity of services, St. John’s Place would have had to close down and move 97 families elsewhere, reducing the number of temporary apartments available during a time when homelessness remains at staggering levels in New York City.  With the loan in place, URI can continue running the shelter without interruption as the organization waits for city payments to begin.

“St. Johns offers us the opportunity to impact even more adults and children, and the continuity provided by the financial arrangement allows us to do so without adding to the trauma of the families in residence.”

Nathaniel M. Fields, Chief Executive Officer, Urban Resource Institute

Approved and closed within 8 weeks of initial application submission, the loan required both speed and creativity from all parties.  While URI as the service provider needed to borrow the funds, it was the property owner, Settlement Housing Fund, that posted collateral.  This unique risk-sharing arrangement between the two nonprofits helped the FJC’s credit committee get comfortable approving the loan.

Settlement Housing Fund has owned the three buildings that comprise St John’s Place since the late 1990s.  The organization has operated the buildings as a Tier II shelter over these decades.  As part of its recent strategic planning process, Settlement Housing Fund’s leadership determined that the shelter would be best run by a specialized and scaled homeless services organization.  Settlement Housing Fund identified URI as their partner, a $98.3 million organization founded in 1980s that is now the nation’s largest provider of domestic violence shelter and services and a leading provider of shelter and programs for homeless families. URI shelters across New York City can accommodate some 2,200 adults and children every night, and innovative programs for prevention, intervention and direct services for domestic violence and homelessness reach 40,000 people a year.

“URI is committed to transforming the lives of vulnerable populations across New York City with comprehensive programs and services as well as shelter,” stated URI CEO Nathaniel M. Fields.  “St. Johns offers us the opportunity to impact even more adults and children, and the continuity provided by the financial arrangement allows us to do so without adding to the trauma of the families in residence.”

The St John’s Place Family Shelter represents one of the first capital rehabilitation project under the Purpose Built Shelter program of the NYC Department of Homeless Services (DHS). The goal of the city program is to provide capital resources and long-term contracts to enable nonprofits to own and operate Tier II shelters, which provide temporary housing to families while they seek affordable permanent housing solutions.

Representatives from Colorado Community Media, The National Trust for Local News, and The Colorado Sun announce the acquisition of the 24 local newspapers. Photo credit: Eric Lutzens

FJC Loan Preserves Community Stewardship of Local News in Colorado

A $1.5 million loan from FJC has enabled a first-of-its-kind local and national partnership to purchase a network of 24 weekly or monthly newspapers in Colorado, preserving local mission-focused community ownership.  The newly created partner, the Colorado News Conservancy, has acquired Colorado Community Media (CCM), an independent, family-owned group of 24 community newspapers and websites.

The Colorado New Conservancy is a public benefit corporation jointly owned and operated by The National Trust for Local News and The Colorado Sun, and backed by a coalition of local and national impact investors.  The transaction points a new way forward for communities in danger of losing control of local news enterprises that are in many cases the only independent news sources providing critical coverage of community issues.

“FJC’s role was so critical. While the local and national partners were organized and ready, the project wasn’t financed until FJC came in as a mission-based lender. We are so grateful for the opportunity to work with this incredible group of funders, owners, and journalists as our first transaction.”

Eliabeth Hansen Shapiro, CEO of The National Trust For Local News

Newspaper ownership in the U.S. has been rapidly consolidating over the last 15 years. As of 2018, the largest 25 newspaper owners held about one-third of all titles (with more consolidation since), and about 1,800 titles have been shuttered in the process. The most powerful newspaper owners are now private capital holding companies whose expectations for profit and return have strongly influenced local newsrooms’ size, quality, and resource levels. 

According to the National Trust for Local News, “The goal of maximizing returns on capital has put capital owners’ values at odds with the value to local communities and value to society of a thriving, well-resourced, independent press.”  The National Trust was formed to develop a new framework for newspaper ownership and governance that leverages national capital markets and supports accountability and decision-making in local communities.

“FJC’s role was so critical,” said Elizabeth Hansen Shapiro, CEO of The National Trust for Local News.  “While the local and national partners were organized and ready, the project wasn’t financed until FJC came in as a mission-based lender. We are so grateful for the opportunity to work with this incredible group of funders, owners, and journalists as our first transaction.”

FJC sources loan capital from the donor advised funds it sponsors, from donors who opt into the Agency Loan Fund pool as an impact investment vehicle.  Since National Trust was a relatively new organization, FJC’s loan was made possible by the participation of a number of the project’s stakeholders as guarantors: the Gates Family Foundation, the American Journalism Project, and the Colorado Trust. 

“We are thrilled to provide bridge financing to this vital initiative to strengthen local journalism,” said Sam Marks, Chief Executive Officer of FJC. “An ambitious project like this requires the coordination of a range of mission-motivated stakeholders, including capital providers.”

For additional coverage, see:

Washington Post, “New Deal: Colorado-national consortium buys community papers”

Denver Gazette, “National Trust for Local News, Colorado Sun buy 24 Colorado newspapers”

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!”