Nonprofit Sector

One Billion Dollars: What This Milestone Means to Me

December 9, 2021

When I joined NFF in 1993, we were a very different organization than we are today. We had a different name (the Nonprofit Facilities Fund). I was one of just ten staff members – and the only lender. And I was entering an institution on the cusp of a significant growth spurt. Before, we had been supporting and financing New York City nonprofits undertaking facility projects. But after I joined, we began helping nonprofits in multiple cities plan for the broader business model implications of their new facilities – and financing those projects.

Today, we have more than 100 employees based around five urban hubs and in several remote locations across the country. Our lending team alone is 30 people strong. We have incorporated a racial equity lens with concrete targets into every department of our organization, including our lending work. And we’re in the midst of a new strategic transition: from providing ostensibly “race-neutral” products and services that were actually often inaccessible to organizations led by people of color, to now recognizing the role we’ve played in a financial system that has harmed communities of color and intentionally designing products for and channeling resources to organizations led by and serving people of color. 

Recently, we hit some important milestones in pursuit of this larger vision. I’m pleased to share that, with a $1.75 million loan to Sacred Heart Community Services in San Jose, California, we achieved our goal of lending $50 million to community-centered organizations in 2021. I'm happier still to report that 60% of that lending – more than $30 million – went to nonprofits led by people of color. And last, but certainly not least, with a $500,000 loan to Westside Infant-Family Network in Los Angeles, we reached $1 billion in cumulative lending to nonprofits since we were founded in 1980.

After 28 years with the organization, I'm stepping down from my role. The end of this stage, the beginning of the next, and the milestones we're celebrating in my final year give me a great opportunity to reflect on what I – and NFF – have learned so far on our journey ... and the critical questions we must answer now.

Balancing responsiveness and scale

For most of my tenure, NFF and many of our CDFI peers have been striving to achieve financial equilibrium while making loans that align with our missions. We’ve used multiple strategies to improve the efficiency and economics of our lending and to grow our balance sheet. One of these strategies was increasing the size of our portfolio; a larger portfolio means that we earn more interest, giving us a predictable and unrestricted source of revenue. This scaling meant that we, like many organizations in our position, standardized the programs and services we offered, in essence tightening our credit parameters. As a result, we declined more opportunities to make impactful loans that no longer fit our guidelines. While we hoped that those we couldn’t assist found help elsewhere, we know that we said no to many organizations who might not have had (any) other options.

Spurred by internal and external forces, we started to reassess this trade-off – and asked ourselves if there might be another way. While our business model pushes us to standardize, our strategy is now pushing us to customize – to co-create with community leaders the tailored solutions that each organization and each community demands. It's also leading us to work with organizations like Athletics & Beyond, a Black-led nonprofit that offers sports-based education, academic support, and workforce development programs to young people in the Denver area. The zero-interest loan we offered Athletics & Beyond doesn’t generate revenue for NFF, but it does unlock a major opportunity for the organization and the community it supports; Athletics & Beyond used this financing to open a gym that serves as the nonprofit’s new permanent home.

So, what is the business model that allows us to balance these two competing pressures? What are the products, processes, and staffing model that allow us to reach more organizations without jeopardizing our own financial viability? We don’t have a final answer, and we’re not sure that this is something we’ll ever “perfect.” But we have started to try different approaches and we’re learning as we go. 

The capital conundrum

The CDFI industry is more than forty years old. Yet, like most of the communities and borrowers we finance, we are not adequately capitalized for the work we need to do. Those communities and borrowers – as well as our own employees – are calling on us to shift our approach to be more responsive and inclusive, to design and pilot new products, and to adapt our technical assistance for specific contexts. If we’re to succeed in these efforts, we need both a greater amount of capital and a wider range of capital to make these investments.

The federal government’s CDFI Fund has been an important source of capital. However, the amounts it offers are relatively small and funding is unreliable. Banks motivated by the Community Reinvestment Act have fueled NFF’s growth and served as good partners. But, for the most part, these banks are limited in their ability to finance innovative products and pilot programs in a timely way.

We need more capital, and we need that capital to be flexible. So where will that capital come from?

At the onset of COVID-19, we received $37 million of very flexible program-related investments within weeks of the national shutdown. It was a “make it so” moment that required multiple parties to work outside of our normal channels and practices. And we did it – we got capital into the hands of community organizations, eliminating day-to-day cash crises that had hindered them from delivering services that were more important than ever. 

We also received an unexpected influx: $20 million in unrestricted grants from Mackenzie Scott and the Ford Foundation. For an organization that has long advocated for the importance of unrestricted funding for nonprofits, this was an incredible gift. We're using this capital to develop new financial products and practices, like the zero-interest CARE Fund that supported organizations like the Dominican Women’s Development Center, a Dominican-led nonprofit with a 40-year history that provides critical services to people and families across New York City. We’ve also drawn from these funds to hire the staff needed to continue providing increasingly customized lending products and technical assistance that responds to the unique needs of each nonprofit and community we work with. 

These examples support a point we – and many other CDFIs and community leaders – have been making for years. We need more flexible money, on a sustained basis, to do our work effectively and to reach more communities. One billion dollars in cumulative lending may seem like a lot of money, but it's a drop in the bucket compared to the trillions invested in traditional capital markets each year. It's time to flip the script and make the communities long left out of those markets the priorities for investment -- and structure investments to meet their specific needs. 

Looking forward

Each of the $1 billion dollars we've loaned to date has been invested into an organization working to support strong, vibrant communities. Behind each loan is the story of an organization like Hill Country Community Clinic, a healthcare provider in Shasta County in Northern California that has remained flexible and community-centered in response to the unique needs of the people it serves. I'm immensely proud of this milestone and of the hardworking NFFers who helped channel resources to where they're most needed. Most of all, I’m grateful for the community leaders and their incredibly committed and talented (and overworked and underpaid) staff – who engage daily with clients, funders and policy-makers to build a more equitable society.

But even as I recognize these achievements, I'm looking toward what comes next.

I share NFF's vision of a society where money and knowledge come together to support vibrant communities – especially communities of color that have been historically denied access to capital. As we move forward, I see us playing an ever-greater role in making that vision possible – by channeling capital to communities, leveraging our expertise to help community leaders achieve their goals, and advocating for a more equitable nonprofit funding system.

As I close this chapter with NFF and prepare to watch it thrive from afar, I leave with a few parting aspirations. Never lose focus on the people at the center of our work. Keep pushing for a fairer nonprofit funding system. Don't let financial stability come at the expense of the specific, tailored solutions that communities need. Be a role model for equitable financing. And press and advocate for more catalytic capital for CDFIs so they can continue fulfilling their missions for decades to come.

Thank you for a wonderful 28 years, NFF. I look forward to seeing what you do next. 

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