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.

Asha Cannon, owner of 2LC Bakery, a small business raising loan capital from the crowd. Photo courtesy of Honeycomb Credit.

FJC Enables Philanthropy To Participate in Crowdsourced Lending to Small Businesses

FJC has applied its customizable operational platform to a new use case: facilitating foundation microloans to underserved small businesses that are taking advantage of a crowd-sourced lending program. This Loan Participation Fund vehicle was designed by FJC in partnership with Upstart Co-Lab, a non-profit that is disrupting how creativity is funded, and Honeycomb Credit, a first-of-its kind loan crowdfunding platform.

[Update: This initiative has been featured in Forbes: “Novel Approach Helps Foundations Make Crowdfunding Loans To Creative Economy Businesses” (May 31, 2022)]

Through the Loan Participation Fund, three foundations — the Jessie Ball duPont Fund, the A.L. Mailman Foundation, and Souls Grown Deep Foundation and Community Partnership — will invest $600,000 with Honeycomb Credit. The capital will be used to provide loans to small businesses in across the U.S. that have been underserved by traditional financial institutions. The foundations will participate alongside “the crowd”—small, local investors including family, friends, customers and other stakeholders.

The three investments have specific areas of focus. The capital from Souls Grown Deep and the A.L. Mailman Family Foundation will be invested in Black-owned businesses in nine southern states. The investment from the Jessie Ball duPont Fund will be directed toward entrepreneurs in seven Northeast Florida counties, prioritizing borrowers who are low-income, women or people of color.

“It’s great to work with a partner [like Honeycomb Credit] that can put our capabilities to work at the intersection of philanthropy, small business lending, and impact investing.”

Sam Marks, CEO, FJC

As of 2022, the average loan size on the Honeycomb Credit platform is $70,000. About half of the businesses on the platform were previously unable to access credit or were referred by a lender who declined to provide them a loan. To date, 46 percent of businesses financed through Honeycomb Credit have been in low-to-moderate income communities, 49 percent were woman-owned, and 24 percent were BIPOC-owned.

In the early stages of this initiative, all of the foundations had expressed concern about operational challenges about participating. The foundations agreed that providing loan capital to underserved small businesses fit their missions, but none of the foundations were set up to efficiently disburse loan capital in small $5,000 to $10,000 increments (as well as receive loan repayments). Upstart Co-Lab and Honeycomb Credit invited FJC to arrange Loan Participation Funds, a customized solution that provides efficient financial intermediation for any foundations participating in the initiative.

“We were thrilled to work with Honeycomb Credit to create fiduciary accounts that could make it easy for foundations to implement Loan Participation Funds,” said Sam Marks, CEO of FJC.  “Our scaled operational platform has so many potential applications, and it’s great to work with a partner that can put our capabilities to work at the intersection of philanthropy, small business lending, and impact investing.”

“Large foundations tend to design their infrastructure around deploying capital in hundreds of thousands, even millions of dollars at a time — which is much more than any one small business needs,” said George Cook, CEO and co-founder of Honeycomb Credit. “The Loan Participation Fund bridges that gap, allowing foundations to write large checks but allocate the money to small businesses with the help of an intermediary. This way, big foundations can invest alongside the crowd at the scale that makes sense for helping local entrepreneurs grow their businesses.” 

“We know how difficult it is for low-wealth entrepreneurs, especially those in under-invested communities, to access affordable loans. We are excited about promoting innovative online lending technology locally to unlock equitable and affordable capital.”

Mari Kuraishi, President of the Jessie Ball duPont Fund

Since 2017, Honeycomb Credit has channeled $11.3 million through more than 180 loan campaigns to businesses in 23 states and Washington, D.C. 80 percent of the businesses that have raised capital through the Honeycomb Credit platform are creative economy businesses such as local cafés, breweries, and fashion brands that create jobs and contribute to vibrant economic activity in their communities. After raising capital via a Honeycomb Credit campaign, businesses experienced an average 60 percent increase in revenue — in part thanks to the engagement that a Honeycomb campaign encourages by galvanizing local investors around businesses in their areas.

Small businesses with crowd-funding campaigns eligible for loan disbursements through the Loan Participation Funds include:

“We know how difficult it is for low-wealth entrepreneurs, especially those in under-invested communities, to access affordable loans – capital that allows them to grow and create sustainable wealth that raises up the entire community,” said Mari Kuraishi, President of the Jessie Ball duPont Fund. “We are excited about promoting innovative online lending technology locally to unlock equitable and affordable capital for Northeast Florida businesspeople who are currently only able to access high-interest lenders.”

“Since 2019, Souls Grown Deep has committed 100% of our endowment to impact investments, mobilizing our capital towards meaningful and mission-aligned opportunities in the arts and to fund Black-owned businesses, especially those in the southern United States. This new financial vehicle allows us to invest at scale in a substantial way for relevant small businesses, broadening our distributions while continuing to deepen our impact,” said Dr. Maxwell L. Anderson, president, Souls Grown Deep Foundation and Community Partnership.

The three participating foundations are part of Upstart Co-Lab’s community of impact investors with an interest in supporting the creative economy.

“We’ve been working with Honeycomb Credit to bring this new impact investment vehicle to the foundations we advise since the fall of 2020,” said Laura Callanan, founding partner of Upstart Co-Lab. “We’re thrilled to see this collaboration bear fruit, both in expanding what’s possible in the world of impact investing and in bringing much-needed financing to businesses in creative industries, which play a vital role in every thriving local economy.” 

SAFE is a nationwide initiative designed to help the over 70,000 Afghan humanitarian parolees build a financial foundation in their new neighborhoods. Photo courtesy of International Rescue Committee.

Donor Loan Facilitates Emergency Resettlement of Afghan Allies

An FJC donor has provided a 0%-interest philanthropic loan to help kick-start a $10 million initiative to help newly arrived Afghans rebuild their lives in the United States.  The loan program is a component of Support for Afghan Financial Empowerment (SAFE), an initiative launched by the International Rescue Committee (IRC) and their Center for Economic Opportunity (CEO) to empower Afghan families as they begin their journey to financial stability and economic security in their new homes across the U.S.

“This status [of humanitarian parole] poses unique challenges for building credit, making it harder for them to apply for rental housing, finance a car, and in some cases may limit access to certain jobs.”

Kasra Movahedi, Executive Director of IRC’s Center for Economic Opportunity

More than 70,000 Afghans have arrived through Operations Allies Welcome, a federal effort to support vulnerable Afghans, including those who worked alongside us in Afghanistan for the past two decades, as they safely resettle in the United States.  These families have had to endure a challenging, emergency resettlement experience in the midst of a pandemic and an economy still reeling from COVID-19 impacts.

“Unlike newcomers with refugee status, Afghans are humanitarian parolees, meaning they have official permission to enter and remain temporarily in the United States,” explains Kasra Movahedi, the Executive Director of IRC’s Center for Economic Opportunity. “This status poses unique challenges for building credit, making it harder for them to apply for rental housing, finance a car, and in some cases may limit access to certain jobs.” 

SAFE fills this gap by providing small, 0%-interest credit-building auto, education, immigration and personal loans, coupled with financial education and counselling.  IRC has trained a team of financial coaches, native to Afghanistan, to offer these services to any Afghan who arrived through Operations Allies Welcome.

The 0%-interest immigration loans will help reunify families separated by the chaotic military withdrawal. Immigration services are costly, and time is of the essence. Few Afghans have the funds necessary to pay for immigration services, and access to a 0%-interest, no fee immigration loan can be the difference between life and death for separated family members.

“We are honored to use FJC’s boutique philanthropic platform to galvanize support for Afghan humanitarian parolees at this historic moment.”

Donor, Anonymous

FJC has a long history of making loans to the nonprofit sector.  The majority of FJC’s loans are made from the organization’s Agency Loan Fund, a pool of donor capital that is actively managed by FJC staff and is invested in loans to nonprofits earning a floating interest rate of the prime rate plus 3 percent (currently 6.5%).   Donors may also recommend below-market rate loans (also known as program-related investments) using funds in their donor advised fund accounts, on customized terms of their choosing.

“We are honored to use FJC’s boutique philanthropic platform to galvanize support for Afghan humanitarian parolees at this historic moment,” said the donor, who wishes to remain anonymous. “Having resources set aside in our FJC account enabled us to provide CEO exactly the 0%-interest capital source they needed to launch this critical economic empowerment initiative.”

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.

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.”
 

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”

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.”