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City Council
March 12, 2024
Riverside Nonprofit Resilience Fund
A Revolving Loan Fund for Riverside’s Nonprofits
Office of the City Manager Presented by:
Mike Futrell – Riverside City Manager
Michelle Decker – CEO & President of the
Inland Empire Community Foundation
RiversideCA.gov
2 • October 10, 2023: City Council affirmed their commitment to funding Riverside’s nonprofits with American Rescue Plan Act (ARPA) Dollars.
– To support disproportionally impacted communities;
– To mitigate nonprofits’ economic hardships;
– To address nonprofit development and sustainability.
• Staff is directed to return to Council with a plan.
Background
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3 • November 3, 2023: Convened a small focus group of
nonprofit and philanthropy leaders.
• We heard:
Riverside’s nonprofits struggle to quickly access funding for capital improvements & acquisitions, innovations, and working capital.
Hearing from the Experts
RiversideCA.gov
4 • Nonprofits need a financial safety net as they wait on committed funding from government contracts;
• There is almost no seed capital in Riverside to innovate around new ideas or market-based strategies like social enterprises;
• Nonprofits find it difficult to access private capital to improve or purchase properties, due to a lack of collateral or the bank’s difficulty identifying a nonprofit’s repayment method;
• Charitable and philanthropic giving is less robust in the Inland Empire than in our neighboring counties.
Articulating the Need
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5 ARPA dollars are one-time funds.
But the need for nonprofit support is perpetual.
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6 Impact investing is a tool for nonprofit resilience over time.
The Riverside Nonprofit Resilience Fund would provide loans to local nonprofit organizations serving the City’s most vulnerable populations, including seniors, youth ages 0-5, and those living in low-income communities.
The fund would regenerate with loans and interest paid, supporting Riverside’s nonprofit sector for the long-term.
A Bold Idea
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7 New to Riverside (But Not a New Idea)
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8 • The oldest community foundation in the Inland Empire; • Stewards $130M in assets;
• Experience managing community-specific funds.
The Inland Empire Community Foundation
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9 The Inland Empire Community Foundation believes that
impact investing is a key tool and needed infrastructure to grow nonprofit capacity in the City of Riverside.
The IECF’s Investment Committee has researched
this concept over the last two years and
is ready to move forward.
RiversideCA.gov
10 Overview:
– Working capital and bridge loans repaid with revenues from government or corporate contracts;
– Pre-development, acquisition and improvement loans to real estate;
– Loans to finance energy retrofits and improvements that reduce energy costs; and
– Funding that enables eligible nonprofits to develop and expand services.
Fund Structure:
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11 Governance:
– The Inland Empire Community Foundation as the fiscal host; – Partnership with a loan manager;
– Establishing an Advisory committee.
Fund Structure:
RiversideCA.gov
12 Loans:
– Senior or subordinated loans with interest rates designed to make loans repayable for nonprofits;
– Terms dependent on underlying use of proceeds and repayment sources; – Guarantees and credit enhancements to facilitate loans from local banks for worthy projects that cannot get market financing; and
– Value-added social, community and/or environmental impact to the services or solutions provided by the borrower.
Fund Structure:
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13 Startup and operations for years one and two*:
$450,000 TOTAL
*Future years management costs could potentially be covered from the interest charged and outside funding sources.
APRA funds must be spent by the end of 2025. If the City Council approves staff’s recommendations, the proposed Loan Program would be capitalized with the General Fund Reserve Account, and the actual ARPA allocations previously approved for non-profit assistance would then become allowable revenue replacement to the City.
Proposed Funding:
RiversideCA.gov
14 A Leveraging Opportunity
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15 • If approved, return to City Council with a Sub-recipient Agreement (90-120 days);
• Form Advisory Committee and build Fund infrastructure; • Hire a Loan Manager;
• IECF will lead outreach in late fall of 2024; and
• Open applications in late 2024 / early 2025.
Next Steps:
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16 STRATEGIC PLAN ALIGNMENT:
Envision Riverside 2025 Strategic Plan Priorities:
Cross-Cutting Threads
#3 Fiscal Responsibility
#4 Innovation
Community Trust
Equity
Fiscal Responsibility
Innovation
Sustainability &
Resiliency
Support for groups working in the
Riverside community.
Accessible program using a
trusted partner.
Loan repayments and interest
keep program capitalized.
Longer term viability than a grant
program.
Fund able to attract outside
funding and other support.
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17 That the City Council:
1. Authorize the establishment of a new Non-Profit Revolving Loan Fund-the Riverside Nonprofit Resilience Fund under the general parameters specified in this report; and
2. With at least five affirmative votes, authorize the Chief Financial Officer, or designee, to:
a. Record a reallocation of funds from various American Rescue Plan Act Expenditure Plan Projects to General Fund revenue replacement in the amount of $1,363,766; and
a. A llocate American Rescue Plan Act Expenditure Plan interest earnings in the amount of $1,000,000 to General Fund revenue replacement; RECOMMENDATIONS:
RiversideCA.gov
18 c. Record a supplemental appropriation in the Grants and Restricted Fund, American Rescue Plan Act accounts in the combined amounts of $2,363,766 and record an interfund transfer of the same amount to the General Fund to effectuate the American Rescue Plan Act revenue replacement allocation; d. Record a supplemental appropriation in the General Fund the amount of $2,363,766 and record an interfund transfer of the same amount to the Grants and Restricted Fund, Non-Profit Revolving Loan Fund Account; and e. Record a supplemental appropriation in the Grants and Restricted Fund, Non- Profit Revolving Loan Fund Account in the amount of $2,363,766 to establish a revolving loan fund; and
RECOMMENDATIONS:
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19 f. Record a supplemental appropriation in the General Fund in the amount of $450,000 of previously transferred ARPA revenue replacement dollars and record an interfund transfer of the same amount to the Grants and Restricted Fund, Nonprofit Revolving Loan Fund Management Account
; and
g. Record a supplemental appropriation in th e Grants and Restricted Fund, Nonprofit Revolving Loan Fund Management Account in the amount of $450,000 of previously transferred ARPA revenue replacement dollars for start-up and ongoing management costs directly related to a Nonprofit Revolving Loan Fund); and
3. Authorize the City Manager or designee to establish a partnership with the Inland Empire Community Foundation for a nonprofit revolving loan fund and prepare a subrecipient agreement and all other necessary legal documents related to the program, returning to City Council for review within 90-120 days.
RECOMMENDATIONS:
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