Summary: In today’s podcast episode, Stephen Halasnik and Todd Tarbert discuss some of the possible ways in which nonprofit organizations can finance real estate. Working within a nonprofit, there comes a time when board members and the board of directors come together and analyze their mission and organization, and often come to the conclusion that purchasing real estate is smart. But where do you start? It is no secret that financing and fundraising for a building can be a challenge at first for nonprofits, so here are some tips to get you started.
Summary
Start a Capital Campaign for Your Nonprofit Organization
If you are part of a nonprofit organization, you most likely are familiar with fundraising and finding potential donors who support your mission. Well, take this time to use your knowledge and skills about fundraising in order to benefit your organization, find a new location, affordable housing, or building options. What is a capital campaign? It is a campaign composed of efforts such as raising money over a period of time, or donors to contribute to your cause. A capital campaign is all about helping find funders who will help support your financing for your nonprofit property.
What if you don’t raise enough money? It is okay if your capital campaign doesn’t reach the full desired amount. Using the funds of a capital campaign can be paired with any of the options discussed below. You can combine the funds from your capital campaign with your bank loan, or loan/grant from the Government. Combining two or more of these options will help aid in speeding up this process for you and increase functionality.
Finding potential donors not only helps build capital for your organization, but will help expand your contacts, grow connections, and help your organization gain acknowledgment within your communities and the communities which your nonprofit aims to serve. In support of your capital campaign, you may also come across people or organizations who would like to give a private endowment to your nonprofit. With this option, the principal has to remain maintained intact and invested to create a source of income for an organization. This is a very generous way for people who genuinely care about your nonprofit’s mission to have a direct impact.
Working With Financial Institutions
There are many different types of financial institutions you can go to when looking to finance your nonprofit building. For a real estate transaction, you are going to want to make sure you are looking for a loan and non a line of credit. Typically lines of credit are used for smaller, short-term, and smaller operating expenses such as payroll or equipment. With that being said, you make sure you aren’t wasting your time looking for an institution only to find out they are going to deny you.
With that being said, prior to being your active search, ensure that you have the best financial situation possible at the time of any applications. Just because your nonprofit organization is tax-exempt, doesn’t mean banks and other financial institutions won’t look thoroughly to check your credibility. An important part to this is having the proper collateral, or somebody to ensure the credit, and some proof of a feasible business, such as accounts receivables and inventory.
Financial institutions can be tricky to work with at times and can be discouraging if you are denied. However, that is why combining this step with the funds from your capital campaign is so important. It will reduce the loan amount that you need, and can also help reduce interest rates.
Government Nonprofit Grants and Term Loans
Any nonprofit can apply for a Governmental loan or grant in order to help fund at least a park of their building or property. The IRS can often be overlooked due to the association with the long applications and tedious work that is required. However, if you take the proper time and are willing to research all your options, this can be one of the best and most efficient options. Consider checking out their website here to read about options for personal loans and loans for charitable organizations.
Personal Loans to Help With Funding
Personal loans are one of the last resort options you want to consider. When it comes to nonprofit building financing, personal loans can be difficult to get, and risky too. If you need a fantastic credit score, a personal guarantee, and collateral in case the loan defaults. This option if used should be used in combination with any of the other options discussed above.
These loans can come from the Government, or any bank or third party financial lender. The downfall with this option is the high interest rates and risks and liabilities attached to your name. However, if you have tried all your other options, you can look into this option. Only a very small amount of your property should be used by a personal loan, in preparation for the worst. You don’t want to risk your credit score getting ruined or losing your car or home.
Benefits of Semble: Low-Cost Loans for Nonprofit Organizations
1. Semble helps expand loan options, and works with many different institutions to help get you your loan.
2. Working with Semble will help result in the lowest monthly loan repayments possible. They also want to reduce capital costs and interest rates down as much as possible.
3. Lastly, working with Semble will help aid in gaining an experimental increase in charitable donations. Semble will help grow your connections, and help find the right financial institutions to support your nonprofit organization.
The Final Takeaway
At the end of the day, gaining the funds to support your nonprofit property can be challenging, and won’t happen overnight. Donations are also a possibility, but can be rare to come across. However check out this article that talks about how to get a property donated to your nonprofit. Don’t get discouraged because with a dedicated team and important mission, there are going to be plenty of people who will want to support your journey to finding real estate.
Conclusion:
I would like to thank so very much Todd Tarbert, CEO from Semble. If you like today’s podcast, please feel free to share it with a friend and also subscribe on your favorite podcasting app. If you liked today’s podcast please give us a review on your podcasting app to help us get the word out, and of course, if you are looking for a Line of Credit for your nonprofit, you can call us at 862-207-4118 or visit our website at nonprofitmbapodcast.com.
Thank you all for making the world a better place.
About the Guest Todd Tarbert, Semble
I am excited to be speaking with Todd Tarbert who is the CEO of Semble.
Semble is an expert financial solutions provider specializing in low-cost loans for nonprofit organizations and social impact enterprises. Since 2007, Semble’s creative finance options have helped nonprofits significantly reduce loan payments by 30% to 60%, releasing precious resources for missional impact and donor retention. Their novel hybrid funding approach combines crowdfunding and bank gap financing uniquely tailored to meet individualized loan needs for refinancing debt, working capital, or new facilities.
Todd Lives in Seattle Washington and has been an attorney since 1988. Todd worked for one of the oldest law firms, The Ryan Firm, in Seattle Washington before starting Semble in 2007.
About The Host Stephen Halasnik, Financing Solutions
Stephen Halasnik is the host of the popular, The Nonprofit MBA Podcast. The Nonprofit MBA podcast’s purpose is to help nonprofit leaders. Mr. Halasnik is the Co-founder and Managing Partner of Financing Solutions. Financing Solutions is a leading provider of Lines of Credit to nonprofits and small businesses.
Mr. Halasnik is a graduate of Rutgers University and has an Executive Masters from the MIT Birthing of Giants Entrepreneurship program. Mr. Halasnik is a best selling Amazon author and is considered a leading authority on building great, purpose-driven businesses. Mr. Halasnik lives in New Jersey with his best friend, his wife Gina. Mr. Halasnik’s number one purpose is raising his two boys, Michael and Maxwell, to be good men.
About Financing Solutions Nonprofit Line of Credit
Financing Solutions, an A+ and 5 stars rated BBB company since 2002, is a direct lender that provides lines of credit to nonprofits and small businesses.
Financing Solutions nonprofit financing product is a great alternative to a traditional bank line of credit because it costs nothing to set up, nothing until used, and when used, is inexpensive. The credit line requires no collateral and no personal guarantees.
Nonprofit Organizations use their line of credit to help with emergencies or opportunities when cash flow is temporarily down (i.e. Payroll funding)
Please feel free to fill out the no-obligation, 2-minute nonprofit line of credit application here. The time to set up a credit line is when you don’t need it so that it is ready to be used, just in case.