By Leonard Glickman
Chief Executive Officer
FJC – A Foundation of Philanthropic Funds
“Neither a borrower nor a lender be” is a well-known early seventeenth century sound bite (from Shakespeare’s Hamlet; Polonius’ advice to his son, Laertes). Yet sound bites or one-sentence quotes found in cute management books are no way to manage a twenty-first century organization.
Financial management of nonprofits has grown into a complex field requiring sophisticated expertise and, if one will excuse another borrowed idea from Hamlet, certain methods to what may well seem like madness. After all, nonprofit organizations are expected to be run as well as any successful for-profit enterprise.
How a nonprofit is financially structured—in terms of access to revenue to keep its operations running—is crucial to its sustainability and growth. Yet, as a recent Johns Hopkins study explained, nonprofits have historically struggled to generate investment capital because they are nonprofits and have difficulty accessing the equity markets. The recession has only made things worse. In fact, even excluding hospitals and higher education, the survey found over $166 billion worth of community infrastructure projects ready to go if funding were available.
Tight credit markets continue to pinch the overall economy. As recently as July 27, 2009, The Wall Street Journal reported that loan portfolios at “Big Banks” fell 2.8% in the last quarter. What this means is if nonprofits have always had a difficult time obtaining access to credit, obtaining financing from traditional sources, such as banks, is now even harder.
At FJC – A Foundation of Philanthropic Funds, we have always had a unique source of funds available to be loaned to credit-worthy nonprofit borrowers. Our Agency Loan Fund (ALF) program was specifically created to help nonprofit organizations have access to credit so that they could expand their services or infrastructure. The fund’s liquidity is managed entirely in-house.
The loans are made at market rates and capital comes from our donors, who recommend some or all of their funds be invested in such loans. The interest earned on these mission-related loans is credited to the accounts of our donors.
In the case that a nonprofit doesn’t have the necessary creditworthiness to obtain an FJC Agency Loan, we have a creative financing program available. Our donors may use assets in their donor-advised funds to secure loans for charities. Each of these loan arrangements is unique and customized.
The FJC Agency Loan Fund has enabled organizations to continue construction pending the receipt of government financing. For example, the Museum of Chinese in America‘s newly renovated facilities at 215 Centre Street in Manhattan (which were designed by Maya Lin) are being helped by the loan fund in such a way. The Agency Loan Fund also helps agencies, such as the One Acre Fund, with their operations. This Kenyan-based organization provides seeds and fertilizer to farmers and teaches them how to increase their crop yields.
Today’s economic and credit crises demand creative solutions. FJC’s loan fund has provided over $175 million in loan capital to the nonprofit sector. The Agency Loan Fund has proven to be a critical source of capital for numerous and varied nonprofits here in New York and across the country. It is vital that our sector, so important to our economy and to the people and causes we serve, find creative ways to help those organizations squeezed by the credit crunch and challenged by reduced contributions.
Leonard Glickman is the Chief Executive Officer of FJC – A Foundation of Philanthropic Funds. FJC manages over $200 million in assets and administers donor-advised funds, fiscal sponsorships, and an Agency Loan Fund. Prior to his work with FJC, Mr. Glickman had twenty years of experience holding key positions in Congress and the Executive Branch and as the head of an international nonprofit organization. He was the Minority Staff Director on the Government Affairs Committee for the late U.S. Senator John Heinz, Press Secretary to U.S. Rep. Tom Ridge, the top career official at the U.S. Office of Refugee Resettlement, and President and CEO of HIAS, Inc., an international refugee and immigrant services agency. Mr. Glickman is the author of numerous articles, has given live testimony to Congress, has appeared on national television programs, and is the recipient of numerous government and human rights awards and citations. He holds a Master’s Degree in International Relations from the American University in Washington, DC and a B.A. in Political Science from the University of Pittsburgh. Mr. Glickman also has a Certificate in Non-Profit Management from Brookdale’s Department of Community Development and Business.