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RiversideCA.gov
City CouncilOctober 22, 2024 Riverside Nonprofit Resilience FundContract Approval for The Nonprofit Revolving Loan Fund for Riverside’s Nonprofit BusinessesOffice of the City Manager Presented by: Mike Futrell – Riverside City ManagerMichelle Decker – President & CEO of the Inland Empire Community Foundation RiversideCA.gov2
•City received $73.5Min Coronavirus State and Local Fiscal Recovery Funds•November 9, 2021: City Council allocated $2M for Grants to support nonprofit organizations. •February 7, 2023: City Council allocated $1M for Grants to support nonprofit partners community programs. •October 10, 2023: City Council reaffirmed their commitment to funding Riverside’s nonprofits with American Rescue Plan Act (ARPA) Dollars and sought to find a more effective way to support nonprofits with the funding that was not distributed. –To support disproportionately impacted communities;–To mitigate nonprofits’ economic hardships;–To address nonprofit development and sustainability.•Staff was directed to return to Council with a plan.Background1 2 10/10/2024
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•November 3, 2023: Convened a focus group of nonprofit and philanthropy leaders (IECF, United Way, Blindness Support Services, Parkview Legacy Foundation, Big Brothers Big Sisters).•We heard: Riverside’s nonprofits struggle to quickly access funding for capital improvements & acquisitions, innovations, and working capital, and struggle with grants requiring upfront payments.Outreach to Non-Profit Community RiversideCA.gov4
•Nonprofit businesses provide important contracted and free services for the City of Riverside and employ many of our residents •Nonprofit businesses need finance options as they wait on committed funding from government contracts;•Nonprofit businesses find it difficult to access private capital to grow services and/or improve or purchase properties, due to a lack of collateral or the bank’s difficulty identifying a nonprofit’s repayment method;•There is almost no seed capital in Riverside to innovate around new ideas or market-based strategies like social enterprises;•Charitable and philanthropic giving is less robust in the Inland Empire than in our neighboring counties.Articulating the Need3 4 10/10/2024
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•March 12, 2024: City Council unanimously approved funding for a Nonprofit Resilience Fund using ARPA dollars. •Staff was directed to return to Council with a contract between the City and the IE Community Foundation.Background RiversideCA.gov6
Why a Revolving Loan Fund?•ARPA dollars are one-time funds intended to support impacted communities and build resilience against future disasters.•ARPA is temporary, but community needs are perpetual.•A revolving loan fund leverages ARPA funds into perpetuity, thus deepening the impact over any one-time use. 5 6
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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, providing much needed access to capital into perpetuity.An Innovative Idea RiversideCA.gov8
New to Riverside (But Not a New Idea)
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•Formed in 1941 in Riverside to help RCC students;•Stewards $130M in assets + 430 funds;•Experience managing community-specific funds;•Distributed over $30 million in 2023 including over $5 million in scholarships.The Inland Empire Community Foundation RiversideCA.gov10
Building on Riverside’s positive vote, over the summer IECF researched ARPA funding for nonprofits and met with other jurisdictions and funders.Riverside + San Bernardino Counties received $1.7 billion$63 million was allocated to nonprofits in the IE or 3.6% of all funding. Nonprofits are roughly 7% GDP (2020, UCR).IECF and partners continue to advocate for ARPA dollars before the End of the Year with both counties, City of San Bernardino. Seeking additional $1 million in investment capital from the WeingartFoundation.9 10 10/10/2024
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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 (similar to the city’s use of funds); andFunding that enables eligible nonprofits to develop and expand services (similar to the city’s use of funds).Fund Structure:
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Governance:–The Inland Empire Community Foundation as the fiscal host;–Outsourced Loan Manager Contracted by the Inland Empire Community Foundation;–Loan Committee Coordinated by the Inland Empire Community Foundation.Fund Structure:11 12 10/10/2024
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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.Fund Structure:
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Capital Investment: $2,363,766Startup costs: $150,000 for legal, contractor to write and manage scope, establishing documents and processes with Loan Manager. Paid only after specific deliverables met.Operating costs for outsourced loan manager, year 1 & 2: $150,000 per year (5.6% of total expenditure) paid directly only for work done on behalf of non-profits.IECF receives no funding for its operating costs and will seek additional funding from donors and foundation partners to cover estimated 2% of fund management costs (roughly $48K) which IECF will incur.Fund cost & capitalization13 14 10/10/2024
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•Approve grant contract with IECF today•Form Advisory Committee (managed by IECF); •Hire a Loan Manager (managed by IECF);•Finalize documents and outreach plan (managed by IECF);•Establish training and technical assistance program(managed by IECF);•IECF will lead outreach in first half of 2025; and•Open applications in mid-2025.Next Steps:
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Next StepsYear 1IECF Builds Infrastructure and Enters Contracts for Fund Operations$150,000.00 (5.6%)Year 2IECF Manages and Operates Fund& Grows Fund through Commitments from Other Cities$150,000.00 (5.6%)Year 3IECF Manages and Operates Fund& Grows Fund through Commitments from Other Cities$150,000.00 (5.6%)October 22, 2024City Council Vote to Approve Contract for IECF Administration of Non-Profit Resilience FundOngoingIECF Manages and Operates Fund$0 (0%)15 16 10/10/2024
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STRATEGIC PLAN ALIGNMENT:Envision Riverside 2025 Strategic Plan Priorities:Cross-Cutting Threads#3 Fiscal Responsibility#4 Innovation Community Trust Fiscal Responsibility Sustainability & ResiliencyEquity Innovation Supports vital services for vulnerable populations. Support for groups working in the Riverside community. Transparent and Collaborative Process. Accessible program using a trusted partner. Loan repayments and interest keep program capitalized. Aligns with intent of COVID funding. Longer term viability than a grant program. Fund able to attract outside funding and other support.
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A Leveraging Opportunity: Riverside Leads the Pack17
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19 That the City Council:
1. Authorize the City Manager pursuant to Council Direction on March 12, 2024 and City Purchasing Resolution 23914 Section 602 (c) to execute a sole source contract and any amendments with the Inland Empire Community Foundation, not to exceed $3,813,766 of ARPA funds to provide funding and technical assistance to not-for-profit agencies located in or benefitting the City of Riverside;
2. Authorize the City Manager or designee to sign any-and-all associated contracts, extensions, and associated documents to establish a revolving loan fund and to establish a partnership with the Inland Empire Community Foundation for this purpose, making minor corrections as necessary.
RECOMMENDATIONS:
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