Independent Sector, a coalition of charities and foundations, said today it is working on a proposal for a government revolving-loan fund to help cash-strapped nonprofit groups respond to growing caseloads as the economic crisis takes its toll.
“There’s simply not enough cash to respond to the amount of the needs,” Diana Aviv, president of the group, told a Congressional briefing in Washington. “The demand is much greater and the dollars that are secured from traditional sources are shrinking.”
Ms. Aviv told House staff members that her organization planned to hold a meeting on Wednesday with affected charities and others to discuss how to structure such a loan fund. She said some groups are unable to get “bridge loans” from banks as they did in the past to tide them over when expected revenues have not yet arrived.
“State and local governments who contract with nonprofits to deliver services are facing huge deficits and cash shortages and many simply don’t have the dollars to reimburse nonprofits in a timely manner for expenses those nonprofits have already incurred on government’s behalf,” she said.
A revolving-loan fund sets up a pool of money and as repayments come in, the money is made available to new borrowers.
Ms. Aviv said after the briefing that participants in Wednesday’s meeting will explore how the federal government could set up a program, perhaps dubbed an “essential-services revolving-loan fund,” looking at questions like which charities would qualify for the money. She said the fund could be set up, for example, in the Health and Human Services Department.
Feeling the Impact
Ms. Aviv joined four other nonprofit leaders at the briefing, which was designed to highlight the strain that many charities are under as foundations, individuals, and governments pull back on giving in response to the financial downturn.
Candy Hill, senior vice president for social policy at Catholic Charities USA, said that while charities could use loans to get through short-term budget gaps, they also need cash infusions to operate in the longer run. She said the Emergency Food and Shelter Program, an existing federal effort that provides money to local charities and government agencies to help hungry and homeless people, could provide a model.
Ford Bell, president of the American Association of Museums, named some museums that have been forced to curtail activities due to budget problems.
For example, the New York Botanical Garden is laying off staff members and canceling exhibitions planned for 2009 following a 20 percent fall in earned income, while the Virginia Air and Space Center, in Hampton, has started shutting down on Mondays due to a fall in corporate giving and a decline in school field trips when gas prices spiked he said. Santa Cruz, California, city leaders have proposed closing the Santa Cruz Museum of Natural History.
Audrey Tayse Haynes, senior vice president of YMCA of the USA, said her organization is normally recession-proof because it has three streams of income — fees, government contracts, and private donations. For the first time in its history, all three streams are down, she said.