Banking on Nonprofits
Banking on Nonprofits, a newsletter from Nonprofits Assistance Fund to provide the finance industry with useful news and information on nonprofit financial management.
From the last issue
Nonprofits and Commercial Real Estate:
How can you help
nonprofit customers who are buying or renovating a building?
There are a variety of reasons for nonprofit organizations to own a building. Hopefully, the primary driver is based in mission and program quality, with financial consideration a close second. In a study of the finances of nonprofits in Minnesota, Nonprofits Assistance Fund found that about 40% of these organizations own their building, and many others would like to become an owner. Social service, health care, and education nonprofits are more likely to own than arts or advocacy organizations. The financial analysis of a buy versus lease decision is essentially the same as one a business would conduct; however, nonprofits have one advantage that businesses do not - the ability to pay for all or part of the building with donated dollars through a capital campaign. Donated funds may provide the equity portion needed to finance a long-term mortgage, or may pay the full cost of the building over a three to five year capital campaign period. There are many opportunities for banks to provide financing and support to nonprofit customers during a capital project. Most nonprofit executive directors will be involved with one or two capital projects during their career - and the expertise and guidance of a banker with commercial real estate experience will be invaluable. Nonprofits Assistance Fund can help both the nonprofit and the bank review and finance capital projects with flexible, subordinate mortgage and bridge loans. Your nonprofit business clients may find this helpful as well – please encourage them to use the resources available on our website.
Resource: Real Estate Planning Guides
There are a lot of great resources for your nonprofit customers who are interested in buying or renovating a building. A good place to start is with these great Real Estate Planning Guides from IFF, a nonprofit real estate lender based in Illinois. Other financial resources are available on our website.
Continue reading the February 2008 issue of Banking on Nonprofits.