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Should we lend to charter schools?
Nonprofits Assistance Fund (NAF) hosted a
great turnout at the Bankers Forum in March to discuss lending to charter
schools. The forum included a primer on charter schools from the Minnesota
Association of Charter Schools, a panel of bankers and school representatives,
and our lessons learned and tips.
NAF's expertise in lending to charter schools
developed from more than 50 loans - and we shared some lessons we learned about
how charter schools and banks can work together to form good, long-term
relationships:
- Understand student-based
revenue sources - general education aid, supplemental revenue, lease aid and
special education
- Understand grant revenue
sources - state and federal startup grants, foundation grants, special project
grants
- Focus on the importance
of student enrollment projections, recruitment and retention
For a full list of
"lessons learned" and more information about lending to charter schools, please
visit the click here or read Kate Barr's blog entry on the topic.
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Summer 2007
This issue of Banking
on Nonprofits:
Tips for lending to charter
schools
Profile of Success - WRC
Analyzing nonprofit financial
information
Where does NAF get its capital?
Nonprofits Assistance Fund
2801 21st Ave S, Suite 210
Minneapolis, MN 55407
612.278.7180 – Main
612.278.7181 – Fax
info@nonprofitsassistancefund.org
www.nonprofitsassistancefund.org
Nonprofits Assistance
Fund is a nonprofit community development
organization that fosters community development and vitality by building
financially healthy nonprofits. Nonprofits Assistance Fund provides financing
for working capital, cash flow, equipment and facilities projects with a
focus on strengthening the operation and mission of nonprofits. We also offer
financial management workshops and advice that improve nonprofits' capacity
to carry out their mission.
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Helping Nonprofits Thrive:
Wildlife Rehabilitation Center
Serving approximately 8,300 wild animals each year, the Wildlife Rehabilitation Center (WRC) in Roseville, Minnesota is one of the largest wildlife hospitals in the nation. The center was established in 1979 at the University of Minnesota by a group of veterinary students and as it began to offer more services, it needed to find a new facility.
With a line of credit issued from its bank, WRC broke
ground on a new location in 2002 and moved in to its new facility the next year.
However, due to uncertainties in cash flow and grant timelines, WRC decided it
needed another line of credit to help cover gaps between revenue. Because of the
large amount issued and still outstanding for the new site construction, the
bank could not offer WRC additional credit. Fortunately, the bank had worked
closely with Nonprofits Assistance Fund (NAF) in the past and referred it to
WRC.
WRC met with NAF loan officer Janet Ogden-Brackett and after seeing
the strength of the WRC and its leadership, Ogden-Brackett was able to issue the
line of credit that was needed to allow WRC to continue offering its numerous
services.
This inspiring story can be found, along with many others,
on the NAF Web site.
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Resource: Analyzing
Nonprofit Financial Information
 Financial analysis for nonprofit loan requests is a lot like
business loan reviews – except when it isn’t. Many ratios that are useful for
for-profit business are also important for nonprofits, but the definitions and
calculations might need modifying. The current ratio is the same – but how
should you treat “restricted net assets”?
Nonprofits Assistance Fund offers a resource for nonprofits
wanting to use financial ratios in their financial management. Bankers find
these useful as well. A description of key
financial ratios for nonprofits is now available on the NAF Web
site. Once you’ve explored the ratios, use the financial
ratio calculator to begin translating what the financial reports are
telling you.
Your nonprofit business clients may find this helpful as
well – please encourage them to use this and the other resources available on
our Web site.
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Where does Nonprofits
Assistance Fund get its capital?
Bankers often ask where we get the
capital for our loan fund. NAF is a community development financial institution
(CDFI) – a financial institution that invests in individuals, small businesses,
quality affordable housing and vital community services that benefit
economically disadvantaged people and communities.
As of March 2007, our
Minnesota loan funds have $9 million in loan capital available. This is a
combination of grant funds and long-term debt.
As a CDFI, NAF gets its
funding from three major sources:
- Mission-driven institutions
including private foundations and religious organizations that look for
effective ways to promote social and economic justice.
- Banks and other financial
institutions that partner with CDFIs in creative ways to reach people and
communities they do not serve.
- Federal and local government
that use the grassroots network of local and national CDFIs to bring
private-sector solutions to address poverty and communities on the margins of
the mainstream economy.
Click here to view a list of our financial partners.
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