Skip to main content
You are the owner of this article.
You have permission to edit this article.
New loan funding program to bridge flow gaps for nonprofits

New loan funding program to bridge flow gaps for nonprofits

Wingspan, the YWCA and the International School of Tucson are the first three recipients of loans through a new program created to help nonprofit organizations bridge funding gaps while they await reimbursements, grants, donations, membership fees or other income.

The Nonprofit Loan Fund of Tucson and Southern Arizona, or NPLF, was founded in 2012 as a supporting organization of the Community Foundation of Southern Arizona, and is governed by a 12-member board of directors with expertise in the areas of philanthropy, finance and nonprofit management. Its goal is to provide affordable short-term loans to nonprofit organizations that need a bridge to cover a cash-flow gap while waiting for funds and to provide financial advice and counseling.

For example, if a theater company books an act now but won’t get paid for six months, the loan would cover that six-month gap, said Clint Mabie, president and CEO of the Community Foundation of Southern Arizona.

Helaine Levy, vice chair of the board of directors for NLPF, in 2011 brought the idea to Mabie of establishing a nonprofit loan fund for the community. “I represent Diamond Foundation, and as a major funder in our community, I saw the effects the recession was having on nonprofits,” Levy said. “There was an increase in demand for services, but also a decline in operating support ... not only from individual donations, but government grants as well.”

Many nonprofits told Levy that budgeting was cut and money was coming in more slowly, so they needed something to bridge their cash-flow gap. “And that’s really what the Nonprofit Loan Foundation does ... bridge financing.”

There are more than 3,500 nonprofit organizations in Pima County. The need for services that nonprofits provide, particularly in the human-services sector, have increased, said Patti Caldwell, executive director of Our Family Services. However, as a result of federal sequestration, many nonprofits have seen anywhere from a 5 to 10 percent cut in revenue from government sources, she said.

The Nonprofit Loan Fund “is a great additional resource for nonprofit organizations with short-term cash needs,” Caldwell said. But, the fund wasn’t designed to help organizations that have larger issues with longer-term funding stream issues and challenges involving contracts, such as last week’s closing of Open Inn, a shelter for homeless teens.

“The purpose of the loan is not to save organizations who are operationally in a tough situation,” Mabie said. “It’s to provide that cash flow to organizations that are being run well, and that’s a big difference.”

Approximately 73 percent of nonprofit organizations have less than six months of operating reserves, Mabie said. “It doesn’t mean they’re not doing great work or are not operationally sustainable. They just have a gap in cash flow.”

NPLF is the only short-term bridge funding plan for nonprofits in the area, said Patrick McWhortor, president and CEO of the Alliance of Arizona Nonprofits. “I think it’s very important,” he said. “We in the field have been through a rough six years with the recession, and need every creative financial tool available to help us sustain our core work or even bridge funding to manage through the tough times.”

Although the economy is on the upswing, the economic environment for nonprofits is still pretty shaky, McWhortor said. While individual giving is back up, corporate giving and government money have not returned to its pre-recession state.

“Without a doubt, for many organizations, this might be just the kind of financing they need,” McWhortor said.

YWCA Tucson borrowed $50,000 — the maximum loan amount possible — from NPLF, to bridge the gap between now and its launch of new entrepreneurial initiatives that it expects to bring in more revenue, which include a cafe and gift shop. “This provides a bridge until six months from now when we start to see our income come in,” said Kelly Fryer, executive director of YWCA Tucson.

Since government money and corporate dollars are harder to come by, Fryer said her organization is “getting much more creative with the funding matrix.”

In addition to philanthropy and grants, it’s having to think of entrepreneurial ways to bring in revenue. “The challenge and opportunity is to become more entrepreneurial in how we think and how we do our work,” Fryer said. “Personally, I think it’s a very exciting time.”

Wingspan borrowed $35,000 from NPLF that will be set aside and utilized as a bridge. “It really assists in helping to manage cash flow between the time things are invoiced and anticipated revenue,” said Carol Grimsby, executive director of Wingspan. “We’re very careful about lines of credit and borrowing money, but every once in a while when you’re throwing a major event or waiting for grants to come in, a bridge is necessary.”

Loans range between $10,000 and $50,000 with terms up to 12 months. To qualify, the nonprofit must be a 501(c)(3) in Pima County with annual revenues more than $250,000. The organization must provide three years of statements and tax returns, a verifiable source of funds for repayment and a minimum of a three-year operating history.

“This type of service really allows a nonprofit peace of mind for those short-term needs,” Grimsby said.

Money for the loans comes from different organizations that are investing into the loan pool. Investors are paid interest on their money, so they are not only making a community investment, but are also getting paid. The Nonprofit Loan Fund is currently fundraising in the community to solicit investors, donations and grants. To date, it has raised $500,000, with the goal of $1 million.

Once a loan is paid off, that money goes back into the fund and is recirculated into the community through other nonprofit loans.

“The beauty of this is it’s renewable capital, and it comes back to help more nonprofits,” Mabie said.

Contact reporter Angela Pittenger at 573-4137 or Follow her on Twitter @CentsibleMama or on Facebook at

Subscribe to stay connected to Tucson. A subscription helps you access more of the local stories that keep you connected to the community.

Get local news delivered to your inbox!

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Related to this story

Get up-to-the-minute news sent straight to your device.


News Alerts

Breaking News