CNY Community Foundation teams up with NBT Bank to provide low-interest bridge loans to nonprofits in need of cash
The Central New York Community Foundation’s local impact investing program has closed on a $750,000 deal to secure a low interest line of credit for Volunteer Lawyers Project of CNY, Inc. (VLPCNY).
The funding will help the organization continue its legal aid services until funding from state grant contracts are fulfilled.
This will be the first project receiving funding from a new certificate of deposit (CD) funding program the Community Foundation has established in partnership with NBT Bank.
VLPCNY is a nonprofit legal aid organization that engages the legal community in volunteer service to low-income community members throughout Central New York. Its volunteer panel consists of over 500 lawyers who serve more than 3,500 clients a year with civil law needs.
The new agreement will allow the organization to continue funding legal aid and anti-poverty programming while awaiting reimbursement from state agencies such as the Department of State and the Department of Health for multiple executed contracts.
“VLPCNY, like so many nonprofit organizations, receives most of its funding from New York state to provide critical services that that State has identified as essential to life,” said Sal Curran, executive director of VLPCNY. “Unfortunately, contracting and reimbursement from the state has become increasingly challenging, regularly leading to four to six month or longer delays for organizations like VLPCNY to get paid for work already completed. This impact investment from the Central New York Community Foundation will alleviate a tremendous financial pressure on VLPCNY during this time when interest rates on lines of credit are so high. We are so grateful to CNYCF for its leadership and vision in finding practical solutions for local nonprofits.”
A standing agreement with NBT will allow the Community Foundation to provide similar deposits for the benefit of other nonprofit organizations and unincorporated organizations working with a 501(c)(3) fiscal sponsor that seek larger amounts of support than its nonprofit bridge loan program can provide.
The Community Foundation is responsible for intake and preliminary due diligence review. Applications that meet the Community Foundation’s internal standards could be eligible to receive a lower interest rate from NBT over the duration of a CD term.
The bridge loan and CD line of credit programs are designed to help nonprofit organizations continue essential community services while awaiting the receipt of approved grant funding. It is common for government agencies and other funders to require awardees to draw down funds on a reimbursement basis, often taking several months to process reimbursements.
A Community Foundation survey of more than 50 local nonprofit organizations found that 58% have experienced funding delays from New York State grant contracts.
This investment marks a total of more than $4.36 million now advancing housing, business development and lending through the Community Foundation’s local impact investing program. Impact investing allows the organization to use its financial resources to make investments that generate both financial returns and positive social outcomes. In 2023, the foundation’s board of directors approved a policy that allows the use of up to 5% of its main investment pool for the purpose of impact investment.
“It is not uncommon for Central New York nonprofits to wait several months to receive grant payments, forcing them to alter services or find other stop-gap measures,” said Frank Ridzi, vice president of community investment at the Community Foundation. “The vital work of local community organizations is our top priority, so by providing flexible support through this loan fund, we hope to help ensure their services continue.”
The Community Foundation’s local impact investing program is designed to tackle a wide range of community needs with an emphasis on helping Central New York residents build wealth, equipping residents with the opportunity to contribute to the economic performance of the region and providing under-resourced communities and nonprofit organizations access to capital. Learn more at cnycf.org/impactinvesting.
