Nonprofit Try to Plan for Uncertain Future
By MEGHAN PIERCE
Granite State News Collaborative
The economic impact of COVID-19 has hit nonprofits hard.
But as Mandy Sliver, assistant director of the nonprofit Leadership New Hampshire, says, “Not all nonprofits are in the same boat.”
New Hampshire Charitable Foundation Senior Program Officer Simon Delekta agrees.
“It’s really a case-by-case basis,” he said.
Sliver, a Peterborough resident, also sits on the board of River Center, a Peterborough nonprofit that provides resources and programs for area residents. Neither of the nonprofits she is involved with are providing what would be considered essential services so neither will be considered for the New Hampshire Charitable Fund’s newly created Community Crisis Action Fund, which is collecting donations to disburse to nonprofits throughout the state that are on the frontlines.
Normally these nonprofits would be running spring campaigns, which would just seem insensitive right now, she said.
“It’s just a tough time to ask people for money, because a lot of people don’t have it or are not sure of their own situation,” Sliver said. “We’re starting to plan and starting to be as proactive as we can, and try to cut costs where we can.”
Delekta said many of the nonprofits in the state do provide essential services and will eventually be reimbursed by the state for services through state contracts and payment for services.
“A lot of those larger organizations are well prepared to weather a crisis,” Delekta said, either through a large cash reserve or through an existing relationship with a bank that would allow a longer line of credit.
“We know that most nonprofits in the state of New Hampshire have less than three months cash reserve and that’s especially true for the smaller organizations,” Delekta said.
And while most nonprofits that are not essential are shut down right now, such as museums, educational and arts organizations, when and how to reopen and with what funds is the challenge.
“They can’t just open back up without some cash on hand,” Delekta said. “Organizations are really struggling with, ‘How much do I leave in the bank, if I have anything.’”
Delekta said what all nonprofits should be doing right now, if they haven’t already done so, is reach out to their financial institution to secure a Small Business Administration loan. Through the SBA the federal government is dispersing $350 billion to businesses and nonprofits with fewer than 500 employees. The organizations that are best able to access stimulus funds, and larger amounts of it, will be the “larger nonprofits with existing relationship financial institutions,” he said.
“I think there are a lot of concerns in the nonprofit sector as to how much will this $350 billion go,” Delekta said.
Large national banks such as Wells Fargo and Bank of America have already allotted their loan funds based on their existing relationships with businesses and nonprofits, he said.
“Each bank is given a certain amount that they can lend based on that bank’s association with the Small Business Administration,” he said. “It has a focus on small businesses with less than 500 employees, which nonprofits are counted as part of that.”
And if the loan funds are used by businesses or nonprofits to pay employees it can be forgiven and won’t have to be repaid.
“If you meet the loan requirements that loan is transitioned into a grant that you don’t have to pay back,” Delekta said. “It’s called the Paycheck Protection Program. Its purpose is ideally to keep people off of unemployment.”
The other thing nonprofits should be doing right now is using this crisis to take a good look at how they operate and how they are prepared for times like these.
“I think one of the most important things that we are talking about is using this as an opportunity at looking at your contingency,” Delekta said.
Maybe you run a childcare center and are busy providing services for the essential workers, Delekta said, you need to find a way to step back and analyze the situation and look at different scenarios of what cash flow looks like in the short, medium and long term. In the next three months, six months and 18 months, he said. Now is the time to deploy your board members in different ways, he said. “The role of board members is going to change a little bit.”
“It can be really hard to stop what you are doing and think about these things, but it’s so important for these organizations,” he said. “I don’t envy the position that a lot of nonprofit leaders are in right now.”
Sliver said her nonprofits are not as worried about 2020 as they are about 2021, since the SBA loans, which can be grants if used to pay staff, will help with this year’s impact.
“The ones that I’m involved in are counting on less income for next year,” Sliver said. “Honestly it’s hard to work on it cause we still don’t know the impact.”
Sliver said she will be falling back on her nonprofit philosophy and encourages others to do so.
“Keep doing your mission, keep doing what you do and eventually it will bounce back,” she said.
On Wednesday, the New Hampshire Community Development Finance Authority and New Hampshire Business Finance Authority announced they are partnering to support the state’s non-profit organizations during the COVID-19 outbreak. The CDFA and BFA plan to administer the resources of the newly created New Hampshire Nonprofit Response Fund, which is being funded in part by contributions from the business community. The NH Nonprofit Response Fund will provide nonprofit organizations with resources up to $100,000 for working capital, equipment purchases and programming expenses, the announcement said, and is prioritizing “the most immediate public health needs and economic impacts from COVID-19, focusing on service providers that support vulnerable populations. The CDFA and BFA will administer loans, including deferred loans and grants to qualified nonprofits.”
“We know that New Hampshire’s non-profit organizations are on the front lines of this epidemic and during these difficult times they are playing critical roles in our communities,” Governor Chris Sununu said in the announcement. “Ensuring their ability to continue delivering critical services now and into the future is at the core of this proposal and paramount to the wellbeing of Granite Staters. I applaud the CDFA and BFA for getting this important program running.”
For a current list of contributors or to contribute go online to the CDFA’s website.
“This fund will allow us to rapidly deploy resources to the community-based organizations at the front lines of the outbreak and nonprofits supporting the most vulnerable individuals and families directly impacted,” James Key-Wallace, executive director of the New Hampshire Business Finance Authority, said in the announcement. “We are proud to be partnering with the CDFA to provide this critical support during this challenging time.”
The applications are being accepted on April 13 and the funds will be released on a rolling basis as they are raised.
Non-Profits can apply online here. (https://nhcdfa.org/investing-in-nh-communities/nh-nonprofit-response-fund/)
Participating businesses are to receive a 75 percent State Tax Credit that can be used for up to five years. For more information on the Tax Credit Program, click here. (https://nhcdfa.org/investing-in-nh-communities/tax-credit-program/)
Resources provided by the New Hampshire Charitable Foundation:
NH Center for Nonprofit resources:
https://www.nhnonprofits.org/page/coronavirus-covid-19-resources-nonprofits
Letter from sector leaders outlining concern about nonprofits being able to access stimulus funds:
https://independentsector.org/wp-content/uploads/2020/04/letter-financial-institutions-April2020.pdf
Overview of the SBA Loan programs:
Some of the advice we are giving organizations is outlined well in this Nonprofit Finance Fund series:
https://nff.org/blog/covid-19-what-nonprofits-should-do-right-now
These articles are being shared by partners in The Granite State News Collaborative. For more information visit collaborativenh.org.