Many of our donors have reached out in recent days to ask about how to support humanitarian efforts underway in the unfolding crisis in Ukraine.

Below are some eligible 501(c)(3) nonprofit organizations that are active in the region. 

Note for our donors: FJC has recently upgraded its donor portal, so you will need to update your password this first time you use it.   Please use the EIN numbers provided to search for these organizations in the donor portal.

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Razom for Ukraine (EIN 46-4604398) was founded on purely volunteering efforts of Ukrainian Americans in NYC during the 2013-14 Revolution of Dignity in Ukraine.  Razom has maintained an open Emergency Response project since the Russian annexation of Crimea in 2014 where they mobilized to procure medical and tactical supplies to the eastern front.  They picked up this project again in 2020 at the start of the COVID-19 pandemic to fundraise for, procure, and deliver medical supplies across covid hot spots in Ukraine.  Since 2014, the Emergency Response fund has always remained open for donors so that they were in a position to act swiftly in support of Ukrainians in crisis situations.

United Help Ukraine (EIN 47-1837509) is working to provide life-saving individual first aid kits (IFAKs) containing blood-stopping bandages and tourniquets and other emergency medical supplies to the front lines and is cooperating with other emergency response organizations to prepare humanitarian aid to civilians that might be directly affected by Russia’s attack.

The Ukrainian Congress Committee of America (UCCA) (EIN 13-6219868) has developed a relief fund to support  provision of vital humanitarian aid to Ukrainians.  UCCA is a non-profit, non-partisan community-based organization that has represented the interests of Ukrainians in the United States since 1940.  With a National Office in New York City, a bureau in Washington, D.C. and dozens of local grassroots chapters throughout the United States, UCCA’s staff and a nationwide network of volunteers advocate in the name of over 1.5 million Americans of Ukrainian descent.

The International Rescue Committee (EIN 13-5660870 is launching an emergency appeal to help support displaced families in Ukraine with critical aid.  Since the International Rescue Committee (IRC) was first founded at the request of Albert Einstein in 1933, our global team of more than 17,000 staff have helped people upended by conflict and crisis to survive, recover, and regain control of their lives.

HIAS (EIN 13-5633307) is closely monitoring the situation in Ukraine and neighboring countries and is responding with emergency humanitarian assistance to those who are displaced.  HIAS team members are on the ground right now in Poland and Moldova to assess the humanitarian situation and determine the appropriate next steps. Closer to home, HIAS is advocating in the US for appropriations to fund the humanitarian response, as well as Temporary Protected Status (TPS) for Ukrainians..

UJA-Federation of New York (EIN 51-0172429) hosted a webinar on March 1, 2022 featuring nonprofit practitioners who will provide real-time information on the Ukraine Jewish community.  The webinar will feature two organizations active in Ukraine: American Jewish Joint Distribution Committee (JDC) (EIN 13-1656634) and the Jewish Agency (JAFI) (EIN 23-0053483).  The webinar is available here.

In anticipation of possible changes to U.S. Tax Code, FJC CEO Sam Marks interviewed FJC Board Member, Neal Myerberg, Principal at Myerberg Philanthropic Advisors, who consults with charitable organizations, foundations and philanthropists.  A transcript of the conversation, edited for length and clarity, is below.

Please note that FJC does not offer tax advice; any prospective donor should seek the advice of a qualified estate and/or tax professional to determine the consequence of his/her gift.

Sam Marks: We know that changes the U.S. tax code may be coming, but we still don’t know which policy proposals will become law.  Should FJC donors be planning for a future that’s still uncertain?

Neal Myerberg: Yes.  While we still don’t know many of the details, the general shape of the coming tax reform is coming into focus.  There is a lot that FJC donors can do in 2021, particularly as it relates to charitable giving, that could position them well for 2022 and future years.

Sam Marks: So, what do we know and what don’t we know?

Neal Myerberg: As of October 2021 there are still some key differences between the Biden Administration tax proposals and what’s under discussion in the U.S. House of Representatives.  We can expect a lot of horse trading and negotiations in the coming months. The U.S. Senate will also play a role in tax legislation.   

So the exact details are still to be determined, but there are a few areas where it appears that consensus is emerging in terms of what may become law next year.

The first relates to income tax rates.  Proposed changes include raising the top individual federal income tax rate to 39.6% from its current level of 37% and extending the 12.4% portion of the Social Security tax — which is shared by employers and employees — to earnings over $400,000. Currently, wages up to $137,700 are subject to the tax.  Biden has also called for the federal capital gains rate to rise to 39.6% for taxpayers with income over $1 million. Currently, wealthy investors face long-term capital gains rates of up to 20%.  The House is proposing different rates and mechanisms, but their proposals also anticipate increased tax rates.

So there seems to be consensus from DC policymakers that income and capital gains rates are likely to go up. 

The second major change we can anticipate is to the estate tax.  The Biden Administration would eliminate the step-up in basis, which allows heirs to receive assets valued as of the date of death as basis for subsequent sales. Instead, any capital gains from the sale of inherited assets would be subject to tax using the decedent’s basis which if it were to be implemented would require wealthy households to make significant changes to their estate planning.  The Administration also proposes to reduce the amount that an individual can transfer free of estate and gift taxes from $11.7 million (in 2021) to $3.5 million for transfers at death and $1 million in lifetime gifts.  The tax rate above the exempt amount may be 40% or higher.  Again, the House plan differs considerably (and does not advocate eliminating the step-up in basis), but it also proposes reducing the exemption level from $11.7 million to $6 million, among other changes.

 The specifics are still uncertain, but it seems clear that more families will be subject to the federal estate tax, and probably at higher rates.

Sam Marks: So given that these changes are coming, what planning ideas should families be exploring with their advisors?

Neal Myerberg: I have four general planning suggestions.

One, harvest long-term capital gains before the end of 2021.  If you have appreciated assets, whether it’s publicly-traded stock or something else, you may want to take steps to realize those gains before the end of the year. Donating them to charity may also make sense for some families. Donations may be outright or to establish various life income vehicles.

Second, accelerate receipt of income before the end of 2021. If you have a bonus or deferred compensation that you can take in 2021 instead of next year, that may be advisable.

Third, apply some of all of the current unified gift and estate tax credit ($11.7 million) before the end of 2021 to particularly remove appreciating assets from your estate.  There are a variety of ways to accomplish this including the use of a charitable lead trust to pass assets generationally at low gift or estate tax costs.

Finally, and this may be relevant to donors at FJC, consider using a Charitable Remainder  Trust (CRT) for succession planning.  This is particularly relevant when planning for after-life transfers of IRA assets which are now subject to the 10-year withdrawal rule for most beneficiaries.  The remainder interest in the CRT can be designated for the family’s donor advised fund at FJC.

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. 

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.” 

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.

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.

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.” 

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.

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.”
 

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.

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.

FJC celebrates the release of partner organization The Cultural Heritage Finance Alliance (CHiFA)’s report Impact and Identity, Investing in Heritage for Sustainable Development.  The white paper makes the case for historic resources as investable assets for the comprehensive and sustainable revitalization of many at-risk and culturally significant communities throughout the world. Particularly timely, the report reflects on successful models to define a path forward that is an antidote to environmental degradation, civic erosion, the loss of irreplaceable cultural treasures and the displacement of local populations.

The report presents studies of six examples from across the world where heritage investment has restored vibrancy to historic urban centers that had been in economic and cultural decline.  A housing investment company in Amsterdam, a World Bank loan in Fez, a visionary private investor in Mexico City, entrepreneurial businesses in Panama City and Yangon, and a government-supported loan program in the UK succeeded in catalyzing more than a billion USD in leveraged capital. 

FJC formed a strategic partnership with CHiFA last year as loan servicer and finance administrator.  As CHiFA raises philanthropic loan capital to invest in sites globally, FJC’s role will be to manage the operations of aggregating and deploying these funds, including servicing for its international project loan fund. This arrangement will allow CHiFA to remain lean and focused on mission, with FJC leveraging its scaled operational platform to deliver back office support and ancillary services. FJC will also manage payments for most of CHiFA’s day to day expenses.

The Cultural Heritage Finance Alliance (CHiFA) was founded in 2019 to promote heritage-led regeneration through innovative financing solutions.   Its goal is to position historically and culturally significant built environments as anchors of environmental, social and economic development.  Bonnie Burnham, president and founder of CHiFA and president emerita of the World Monuments Fund, stated: “Preserving heritage is among the targets set by the UN Sustainable Development Goals, but it is not on the radar screen of investors and institutions who are aligning behind sustainable development.  And yet there are inspiring and highly impactful examples of how it can transform the places we live, for the better.  We want to call attention to these examples so that people around the world can learn from them.”  

Public agencies are responsible for heritage preservation in most countries.  But with an increasing number of sites under protection, decreasing budgets, and low political priority, these agencies face a crisis of inadequate resources.  There is a tendency to focus on landmark structures, whereas the more encompassing urban fabric — where people live and work — offers the greatest potential for impact. While public commitments are necessary, dynamic success requires a complement of NGO engagement, private investment and mission-motivated entrepreneurs who together can advance heritage preservation at the urban and district levels. Currently, no entity exists within the heritage conservation field to facilitate these partnerships and to align capital to bring projects to fruition.

CHiFA’s research, conducted over the course of 2020, has revealed a spectrum of  successful models. The full case study analyses are linked to the appendix, and will be released as a second volume in early April 2021. 

Gary Hattem, a co-founder of CHiFA and former head of Global Social Finance at Deutsche Bank, concluded: “The experiences, ideas, strategies, and plans presented in this paper explore a new frontier: that of how to go about healing our planet and preserving the richness of the world’s cultural assets. CHiFA builds upon lessons learned to identify a financially viable ecosystem capable of validating heritage sites by leveraging their irreplaceable value to the benefit of existing residents.” 

In times of global crisis, philanthropy can play a critical role in deploying resources quickly as governments and multi-lateral organizations mobilize for action. In our latest webinar, “Global Health in the Pandemic Age,” Kate Dodson, VP of Global Health at the UN Foundation spoke about how individual donors came together with corporate, foundation, and others to enable to the distribution of personal protective equipment (PPE) to over 173 countries. “We used a nimble mix of partnership to get this done,” said Ms. Dodson, which included over 631,000 individuals from 193 countries (FJC donors among them!). The conversation was moderated by FJC’s Chief Executive Officer, Sam Marks. See the full recording here.

FJC’s first-ever Collective Giving Campaign, focused on addressing the Covid-19 pandemic, raised over $147,000 for six outstanding organizations that are tackling the impacts of the pandemic in a range of ways: food security, employment, grassroots organizing, small business support, public health, and research and development. During the campaign period in May 2020, donor contributions were matched dollar-for-dollar by FJC’s Special Initiatives Fund.

Over 90 percent of participating donors who responded to a post-campaign survey found many compelling reasons to participate, such as the elevation of strong, effective organizations (many of which were new to them); the ability to align their resources with other donors at FJC; and the opportunity to have their gifts matched, effectively doubling their giving. As one donor said in her survey response, “Let’s do more work together!”

The Center for Effective Philanthropy published a blog post by Sam Marks, CEO of FJC, with further reflections on the successes and challenges of the campaign. “The initiative suggests the power that DAF sponsors can bring when they provide focused guidance to rally disparate donors around a common cause,” he writes.

FJC also hosted a subsequent webinar highlighting the work of Food Bank for New York City, the top choice among FJC donors. Food Bank CEO Leslie Gordon spoke of the operational and logistical challenges of keeping food flowing where it has been needed most during the pandemic, and cautioned that the economic fallout of the crisis may create even greater need. “This is not a sprint, it’s a marathon.” See a summary and link to the full webinar recording here.

Leslie Gordon, CEO of Food Bank for New York City, joined FJC’s CEO Sam Marks and dozens of FJC donors for our first-ever “Lunch and Learn” webinar on June 30 to discuss Food Bank’s extraordinary work during the Covid-19 pandemic. Food Bank was the most popular choice by FJC donors during its recent Collective Giving Campaign, receiving over $85,000 from FJC and its donors to mitigate the effects of the pandemic among New York City’s most vulnerable.

Gordon placed her own professional journey in a multigenerational family context, contrasting the informal approach to voluntary food delivery service in her grandfather’s day with the scale, sophistication and data driven approach of the Food Bank. Food Bank’s network of food pantries, community kitchens, and local, civic, and religious organizations are committed to preserving the dignity and choice of the individuals and families they work with, and they address food insecurity with the larger goal of developing New Yorkers’ self-sufficiency with other programs and services. Across all the partners, she said, “This is a human-centered problem, we want to treat people with respect and care.”

She also spoke of the operational and logistical challenges of keeping food flowing where it has been needed most during the pandemic, and cautioned that the economic fallout of the crisis may create even greater need. “This is not a sprint, it’s a marathon.”

See the full webinar recording here.

Part One 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). The episode aired on March 12, 2020.

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 what is it that you do?

I’m the CEO of a foundation called FJC.  It’s been around about 25 years.  It has over $300 million under management across about 1,000 accounts. As a sponsor of Donor Advised Funds, it’s almost it’s like we have a thousand little mini-foundations under our roof. I sort of sit at the intersection of supporting the nonprofit sector and financial services industry and global financial capital flows.

When I first met you, you were an education guy and a teacher.   Now you’re like this quasi-finance guy.  What happened?

I am even more surprised than you to find myself doing this work and thinking so much about the dollars and cents and the financing side of the nonprofit sector. But I haven’t left behind that commitment to youth development and community development and impact and all of the things we want the nonprofit sector to do.  I’ve had this interesting path where I’ve been increasingly exposed to how the money part of the sector works.

I think it started when Summerbridge was hosted back in the 1990s and 2000s at The Town School, and the first exposure I had to the money side came with one of my favorite staff people, Linda Larkin, the business manager at Town.  She was an amazing mentor to me. I had my own little mini budget to manage within the context of Town School’s budget, and she was the first person who explained to me, when you buy pencils and paper and crayons, that’s an expense. When you buy a chair or a desk, you’re purchasing an asset, something you’re not going to consume over a year, and we’re going to depreciate it over time. And that was a lightbulb to me like, Oh there’s a whole industry of people and an expertise set to help nonprofits figure out how to intersect with audit and finance.

When I went to graduate school at the Harvard Kennedy School, I took a great class with Christine Letts who was a professor in nonprofit management.   She asked us to look at audited financial statements, climb inside them, look at the balance sheet, income statement, cash flow, because those documents could help you tell a story about the organization, to connect the mission to the operations and with the way money came in and out.  It was another way to analyze an organization, and it became a fundamental skill set in my career.

At the core when you look at the financial statements you really understand what the organization values and prioritizes.

Absolutely! And when you’re doing due diligence on the lending side, having audited financial statements means there’s a third party coming in with a set of Generally Accepted Accounting Principals and you’re able to separate the story someone’s telling you from what’s actually happening in the organization.  When those things don’t match up, that can be a red flag.

So you went to grad school, you found out financials could be super fun, and then what happened?

While I was in graduate school I found myself gravitating to the part of the nonprofit sector involved in affordable housing and community economic development.  I became focused on issues of inequality, the differences among neighborhoods in New York City, where I grew up, and how nonprofits could best intervene to address issues of inequality.  The affordable housing sector was fascinating because it was the place where community investment, government, financial institutions, the public sector, and nonprofits were all collaborating to advance a public agenda. When I was first stepping into it, I was more interested in the softer side, the programmatic side, the urban planning aspects, the pieces that appealed to a more generalist skill set. But at the end of the day, the financing and the analysis about project feasibility was where the action was. And the decision makers driving resources into cities and neighborhoods really had to develop that skill set.

I came out of graduate school, landed at WHEDCO, a nonprofit in the South Bronx that was focused on housing and economic development. And from there I went to Deutsche Bank. I spent 7 years in the Community Development Finance Group. I got to focus on lending, investing, program related investments (which are below market rate loans) and I got to straddle the foundation side as well, making grants to community based organizations. So it was a whole range of capital from grants, to loans, to equity investments and how to tailor the right type of capital to the right problems in the communities.

You talked about organizations that use financial analysis to connect mission to operations.  Can you explain with an example?

I’ll give you a great example from my own experience. After I left Deutsche Bank and before I came to FJC, I spent about five years running the New York City local office of Local Initiatives Support Corporation (LISC).  LISC is a national organization that brings financing and technical assistance to low-income neighborhoods all over the country. When I started at the NYC office, LISC was in the middle of a major set of programs that we implemented after Hurricane Sandy.  We had an infusion of both private and public sector dollars, and these were time-limited programs and we knew that money was going to come to an end.  So when I came in, I knew I had a two-year runway, maybe three if the contracts were extended, and we knew that we had to do a deep dive on our business model and figure out what was making money and what wasn’t.  We had a team of lenders that were making loans to nonprofits, we had a team that were designing and implementing programs around commercial corridors and a whole bunch of other things. It was a very complex organization. 

So I climbed into the organization with the help of my finance director Wilber Gonzalez, an amazing guy with amazing skills in Excel. Working with senior management, we looked at every single program that we were running, and we looked at all the grants that were attached to those, we looked at all the revenues attached to all the various programs, and then we looked at our costs. And primarily the costs were our people power. We had a staff of 15 people, and we began to estimate the percentage of each’s person’s time on each program, and we were able to create an analysis that helped us look at what pieces of our work were earning money, what was in the black, what was in the red. That didn’t mean we were going to just shut down the money-losing programs, but it meant that we had much better handle on the true costs of running each of our program lines. And that influenced our way of thinking about how we fundraise. It made us understand that even though our lending was earning revenue, that scale of activity wasn’t going to be enough to have the whole organization operating in the black. We said, hey that’s important data, we can increase our lending but we also need to spend more time on fundraising, and making our annual gala bigger and better. That would have a bigger impact on our bottom line than trying to just double our lending. The process helped us make some strategic decisions we couldn’t have done without the data.

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

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!”