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.”

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.

Discussing innovative and responsive uses of DAFs on the EPCNYC webinar: Mark Cohen (FJC), Sam Marks (FJC), Dolores Kordon (Brighter Tomorrows), Hank Snyder (JP Morgan, moderator), and Annie Polland (The Tenement Museum)

Innovative, Revolving Uses of DAFs Featured in Webinar

Leaders of two nonprofit organizations whose urgent financial needs were met by innovative FJC donors were featured on a webinar hosted by the Estate Planning Council of NYC (EPCNYC), titled “Multiplying your Impact: Innovative Approaches to Revolving Philanthropic Dollars”.  The nonprofit Executive Directors, Annie Polland of The Tenement Museum and Dolores Kordon of Brighter Tomorrows, were joined by members of FJC’s leadership, CEO Sam Marks and Chief Legal Officer Mark Cohen, who described the foundation’s role executing the transactions.  The event was moderated by Henry Snyder, Executive Director of JP Morgan’s Private Bank, and a member of EPCNYC.

While most holders of Donor Advised Fund (DAF) accounts use their philanthropic funds for grants, the webinar highlighted cases where donors identified financing gaps in the organizations that could be addressed with solutions that combined philanthropic intent with investment strategies.

“We’re trying to inspire more of our donors to approach philanthropy in this way, and bring new donors that are inspired by examples like these.”

Sam Marks, Chief Executive Officer, FJC

In the case of Brighter Tomorrows, a domestic violence nonprofit serving women and families on Long Island, the donor was solving for a cash flow problem.  As Ms. Kordon explained, the majority of the organization’s work is funded with government contracts.  These contracts, typically administered through the state or county, are notoriously slow to pay even during normal times and are typically paid on a reimbursement basis.  During the pandemic, when the needs of clients for shelter, food, and emergency assistance were at an all-time high, the public agency offices administering payments on the contracts were also facing major capacity issues.  “Payments slowed to a snail’s pace,” Ms. Kordon lamented. “With the pandemic came all sorts of additional emergency costs, and we had to still keep the lights on and pay rent.”

Enter Sandy Wheeler, one of Brighter Tomorrows’ most steadfast donors.  Ms. Wheeler worked with FJC to deploy $100,000 in her DAF account as a 0% interest revolving line of credit.  This cash resource allowed Brighter Tomorrows to continue meeting the urgent needs of clients, even in the face of slower contract payments.  In the year since the loan was closed, the funds have been fully drawn, repaid, and drawn again. “I can’t say enough about the importance of having a donor provide this resource,” says Ms. Kordon. “It was a godsend for us.” 

“I can’t say enough about the importance of having a donor provide this resource. It was a godsend for us.”

Dolores Kordon, Executive Director, Brighter Tomorrows

FJC facilitated a more complex transaction with The Tenement Museum, a vital organization that has been researching and telling the stories of immigrant New Yorkers for the past 25 years. In the early days of the pandemic, the organization faced significant financial distress, as documented in an New York Times article, “A Museum Devoted to Survivors Faces Its Own Fight for Survival” (April 24, 2020). The article noted that 75% of the museum’s revenue came from earned income, reflecting admissions and gift shop revenue of its 285,000 annual visitors.  As a result of the pandemic their visitors (and attendant revenue) had dried up, but the museum carried significant fixed costs due to its mortgage, which cost the museum $585,000 per year.

One of FJC’s donors read the New York Times article and reached out to inquire whether he could refinance the museum’s mortgage with funds in his DAF account.  Upon further conversation with the Museum’s leadership, it was revealed that the mortgage was in the form of a tax-exempt bond, issued by the City of New York through its Build NYC Resource Corporation, a division of the NYC Economic Development Corporation.  In coordination with the donor, FJC purchased the bond from the bondholder, and amended the terms to interest-only at 1% per year, reducing the museum’s annual debt service payment from $585,000 per year to $80,000.  “We are paying $2.5 million less out of pocket for debt service over these five years,” explains Ms. Polland. “This has bought us time to figure out how we manage through this pandemic year, but it also freed us up to think of creative ways to operate.” Ms. Polland noted that the museum has been able to develop distance learning modules that have engaged students virtually from as far away as California.  She also noted its new exhibit focusing on a Black family and a walking tour called “Reclaiming Black Spaces,” which explores sites connected with nearly 400 years of African-American presence on the Lower East Side.  “The Museum is not just pausing,” she said. “We’re taking on new and addressing the questions important to this country.  How does learning our history help us move forward?”  The Museum’s new programs and strong emergence from the pandemic were featured again in the New York Times this month, a story that Ms. Polland describes as a “bookend” to the previous year’s story on the organization’s distressed financial picture.

“We are paying $2.5 million less out of pocket for debt service over these five years. This has bought us time to figure out how we manage through this pandemic year, but it also freed us up to think of creative ways to operate.”

Annie Polland, Executive Director, The Tenement Museum

Mr. Cohen explained that after five years, FJC intends to sell the bond back to the bond market, and will aim to recoup the $9.5 million face value of the bond for the donor’s account.  These funds can then be recycled as grants or additional loans or impact investments.

The moderator Mr. Snyder noted that customized transactions like these do not appear to be standard offerings at most DAF sponsors.  Mr. Marks noted that philanthropic lending and impact investing are more common at the more sophisticated, professionalized foundations and that FJC had a long history of applying best practices from philanthropy more broadly to their DAF account holders.  “We’re trying to inspire more of our donors to approach philanthropy in this way,” says Mr. Marks, “and work with new donors that are inspired by examples like these.”

Image courtesy of Center for Effective Philanthropy

Center for Effective Philanthropy Highlights FJC Revolving Funds

The Center for Effective Philanthropy has published a blog by FJC’s CEO Sam Marks titled, “Stretching Dollars without Straining Donors: The Case for Revolving Funds.”  The blog post features a donor’s innovative use of a DAF-like account at FJC to support the nonprofit Southern Environmental Law Center’s pioneering anti-pollution litigation work, as well as additional applications of revolving funds.  An excerpt is below.

At FJC – A Foundation of Philanthropic Funds, we have worked with imaginative donors to structure revolving accounts (essentially, variations on Donor Advised Fund accounts) with a goal of empowering nonprofits to take on significant campaigns and projects. Such arrangements can be incredibly catalytic, giving nonprofits the confidence to move forward on complex projects while mitigating financial risk. Also, by prioritizing activities with a high likelihood of recovery, these structures create the potential for donors to amplify their impact, revolving their funds so that the same philanthropic dollar can have multiple impacts on multiple projects. 

A case in point is our work with the Southern Environmental Law Center (SELC), a 35-year-old nonprofit organization active across six states.

As impact investing becomes further mainstreamed among foundations and holders of Donor Advised Funds, imaginative donors should consider recoverable grants and revolving fund structures as an additional tool in their continuing philanthropy.

To achieve their mission, SELC uses a broad array of law and policy approaches including strategic litigation which can be expensive and resource intensive.  Enter an anonymous donor at FJC. The donor worked with FJC to create an account where charitable grants to SELC are deposited and from which SELC can draw funds specifically to pay for direct litigation expenses (like expert fees) in potential fee-recovery cases. Periodically, when SELC wins a case and recovers attorney fees, they make a deposit back into the FJC fund to replenish it in the event of future need. To date, SELC has drawn approximately $1 million from the revolving fund to pay for professional experts and other direct litigation expenses. With an incoming payment of fees recovered from SELC’s landmark Atlantic Coast Pipeline litigation, SELC will have redeposited some $270,000 back into the fund. 

As impact investing becomes further mainstreamed among foundations and holders of Donor Advised Funds, imaginative donors should consider recoverable grants and revolving fund structures as an additional tool in their continuing philanthropy. A fundraising campaign around this type of fund may engage donors that wish to invest in the organization’s growth and capacity while simultaneously compelling donors who would find value in seeing significant, multiple impacts over a long period of time as a result of a one-time gift.

For more information about revolving funds and how SELC put this unique resource to work, read the full blog post at Center for Effective Philanthropy.

Donor’s Revolving Fund Finances Energy Efficient Shelter For the Homeless

Through a revolving account at FJC, a donor passionate about the environment has provided financing to create a state-of-the-art transitional shelter for New York City homeless families, through an innovative philanthropic partnership with the New York City Energy Efficiency Corporation (NYCEEC). 

The donor has created a revolving account at FJC that NYCEEC can use to cover critical project activities like energy modeling, feasibility analysis, design drawings, and land-use approvals.  These costs are reimbursable when construction financing closes, allowing funds in the FJC account to be redeployed for NYCEEC’s future worthy projects. 

NYCEEC will use the capital to fund early-stage predevelopment work on the adaptive reuse of a former nurses’ residence on the Greenpoint Hospital campus in Brooklyn. The renovated building will provide state of the art temporary accommodation to 200 of New York City’s most vulnerable residents.  The shelter is expected to achieve LEED Gold certification.  Savings in greenhouse gas emissions compared to conventional construction are projected to be 384 metric tonnes of carbon dioxide equivalent per year.

The shelter is a component of the $212.7 million redevelopment of the Greenpoint Hospital campus, in East Williamsburg, Brooklyn.  The redevelopment project is the culmination of years of advocacy by a consortium of neighborhood-based organizations, led by the nonprofit St. Nick’s Alliance.  The development will also include apartments for extremely low-income and very low-income residents and seniors, a community facility, and a network of new open spaces to connect the campus to the surrounding neighborhood. A partnership between St. Nick’s Alliance, Project Renewal, and Hudson Companies was designated by New York City to redevelop the site, which has been primarily vacant since 1982 when the Greenpoint Hospital was closed.

Philanthropic capital from FJC will fund over one-third of NYCEEC’s $1.3 million predevelopment loan. “We allocate capital from a range of public and private sources for projects like this,” explains Jay Merves, NYCEEC’s Director of Business Development. “Many of our capital providers put geographic or other restrictions on the use of their capital, so the flexibility of funds from the FJC donor is vital in allowing NYCEEC to provide financing for clean energy projects in underserved communities.”

Photo courtesy of Brighter Tomorrows

FJC Facilitates Donor Loan to Support Families Facing Domestic Violence

It took the collective efforts of a number of people to get it done: a committed donor, a philanthropic advisor, and the staff at FJC. All parties worked together this spring to close a $100,000 cash flow loan to Brighter Tomorrows, a nonprofit working with victims of domestic violence to provide shelter, counseling and legal advocacy to New York’s Suffolk and Nassau counties as well as New York City and the Tri-State area.

The process began with Sandy Wheeler, a longtime donor to Brighter Tomorrows. Over time, Ms. Wheeler developed a trusted relationship with Dolores Kordon, the organization’s Executive Director, who often lamented the difficulties she faced running an organization that relied heavily on state contracts that were typically slow to pay. “It seemed like the chronic cash flow challenges of Brighter Tomorrow could be creatively addressed with philanthropy,” said Ms. Wheeler.

The Wheelers spoke to their philanthropic advisor at a large financial institution, who made the introduction to FJC. “The Wheelers already had a Donor Advised Fund account, but the sponsor wasn’t really set up to originate loans,” their advisor explained. “We appreciated that FJC had the track record and infrastructure to make this proposed loan happen, and quickly.”

Within a few weeks, staff at FJC worked with the Wheelers to open and fund a new DAF account, review Brighter Tomorrow’s financials, and prepare the legal documents with terms customized according to the Wheelers’ wishes. Among other features, the loan carries no interest.

“Brighter Tomorrows is so grateful for this intervention by FJC and the Wheelers,” says Ms. Kordon. “Particularly during the COVID-19 pandemic, when cash was tight due to many competing programmatic demands, having the Wheeler’s loan to bridge our day-to-day expenses provided us the flexibility to be responsive to the families we were serving, like distributing food cards and helping clients pay rent.”

Photo credit: Ken Teerer, courtesy of SELC

2019 Year in Review: Revolving Funds for Legal Impact

Imaginative FJC donors have created specialized accounts that allow for revolving funds for recoverable expenses, so that nonprofits can recycle grant funds on an ongoing basis.

In 2019 organizations focused on criminal justice reform and impact litigation were particularly active users of these resources, putting nearly $1 million in aggregate to work for their missions. These organizations included: the Government Accountability Project, was able to represent whistleblowers exposing abuses of public trust throughout the federal government as well as corporate employees within the banking, energy, food, and health care industries; the New York Civil Liberties Union, is bringing an important voting rights case to challenge violations of the federal Voting Rights Act; the Southern Environmental Law Center, which has reached a settlement with a private company that will result in the largest coal ash cleanup ever in America; Brooklyn Community Bail Fund secured the freedom of 23 immigrants held in ICE detention and at imminent risk of deportation, and reunited them with their families and communities.