Best Practices for Taking on Debt

Debt can be a powerful tool to achieve your nonprofit’s goals. As a lender and nonprofit ourselves, we’ve seen firsthand how nonprofits use debt strategically to advance their missions and contribute to the well-being of their communities.  

The series below distills NFF’s 40+ years of lending experience into brief, easy-to-follow videos to help you decide if debt is right for you, how to successfully apply for loans, and how to manage debt to achieve positive impact for your community.   

Don’t have time for these videos? Then just remember these key best practices:  

• Know why you are choosing to pursue debt financing, how it supports your mission, and how it fits into your larger financial strategy. 
• Remember that taking on debt requires consistent and accurate financial monitoring, reporting, and communication. 
• Be prepared to meet the terms of a loan before deciding to enter into any agreement.  
• Talk to your lender and ask questions throughout the process.

What Is Debt?  

In this video, we define debt as a financial tool for nonprofits – both what it is and what it is not. We also name some reasons why nonprofits borrow money, as well as different types of debt products available to organizations, including the needs each can help fill. 

When Is Debt Right for My Nonprofit? 

This video will cover ways to determine if debt is the right financial tool for your nonprofit’s particular challenge or opportunity. 

What Lenders Look For 

Knowing that debt is the right tool and being able to access that tool are two different things. This video covers what a potential lender will likely consider before they extend a loan to your nonprofit. 

Types of Lenders 

This video covers the different types of lenders who offer debt to nonprofits. 

The Lending Process 

In this video, we provide a brief overview of the full life cycle for taking on debt, from first having the idea to fully paying off the loan.   

Stay tuned for more videos in this series in the coming weeks!

These recordings were made possible with support from Empire State Development.