Published in Nonprofits

Holland/Zeeland loan program shows how nonprofits are getting creative during pandemic

BY Sunday, April 26, 2020 01:49pm

Mike Goorhouse isn’t a banker, but the coronavirus pandemic has him thinking like one.

As president and CEO of the Community Foundation of the Holland/Zeeland Area, Goorhouse is helping administer a loan program that’s expected to help 10 to 15 nonprofits maintain financial stability as the COVID-19 economic fallout continues.


The Line of Credit Guarantee Program includes a $2 million line of credit established through West Michigan Community Bank. Organizations with a 2019 operating budget of more than $1 million can apply for up to $200,000. Those with budgets of between $500,000 to $1 million are eligible for up to $100,000.

“The whole tool is meant to give nonprofits a way to have flexibility over the next two years,” Goorhouse said. “So many have had to cancel fundraising events or close their resale store. Instead of having that issue wholly impact that now, the line of credit will help to fill that gap, and they can pay it back without the same sense of impact.”

Asked where he came up with the idea for the program, Goorhouse said, “I stole it. Someone in the field of lending wrote a blog about the idea and basically encouraged foundations to go beyond grant making and make it easier to deploy their asset base to help their nonprofit partners.”

The foundation’s partnership with West Michigan Community Bank “enabled us to respond quickly and efficiently to the ongoing needs created by the COVID-19 pandemic,” he added.

In addition to guaranteeing the line of credit, the foundation will provide reimbursement to the nonprofit for all interest that the nonprofit has paid during the first two years. Going into the second year, the nonprofits will be expected to begin paying down the line of credit and by the third year it will all have to be paid back.

“We are guaranteeing the line of credit for the bank so they’re not holding collateral against the nonprofit for the line of credit,” Goorhouse said. “If, for some reason, a nonprofit is not able to pay down the line of credit, the CFZH will pay it off.”

The program is a “combination of the ability for us to utilize the flexible assets of the Community’s Endowment to respond to the changing needs of our community and the ingenuity of CFHZ to provide innovative solutions to serve our community in its time of need,” said Leslie Brown, board chair of the CFHZ and chairperson of Holland-based Metal Flow Corp.

Criteria for the program includes the financial strength of the nonprofit prior to the crisis, how severely it was affected by the pandemic, and its track record of results in the community.

“We will pick organizations that are a good financial choice and a good community choice and those that have a big impact in the community,” Goorhouse said. “This really is meant for a little bit stronger financial organizations that have had no decreased capacity during this time. We’re definitely putting our assets out there. The hope is that everyone can pay us back.”

Foundations’ role

Through emergency funding and providing flexibility on existing grant partnerships, the Grand Rapids Community Foundation also is finding ways to partner, said President Diana Sieger.

“We are also exploring how our Program Related Investments (low-interest loans from our endowment) and sponsorship resources can be adjusted or used in response to new community needs,” Sieger said. “We will continue to target our resources to support communities disproportionately impacted.”

Teri Behrens, executive director of the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University, said foundations are ensuring funding goes to organizations “on the frontlines,” such as those answering 211 calls and making sure homeless people are getting a place to shelter.

“Funders are creating funding pools to address those needs with resources,” Behrens said.  “What we’re seeing and hearing in Michigan and nationally is that they’re keeping equity in the center as we move into the longer recovery phase. They’re working with banks and financial institutions to make sure funds get to those most in need and they have access to capital.”

The Holland/Zeeland loan program and GRCF’s multifaceted approaches show the creative ways area foundations are stepping up to assist their communities, Behrens said. From a funding standpoint, she said the foundation community’s response has been much more rapid than funding from the government.

Philanthropic leaders have expressed concerns about the increasing role they are asked to play as government funding for social service programs is reduced.

Sieger said she believes many sectors – including philanthropy, business and government – have a role to play in the community’s recovery.

“Working collaboratively is how we’ll come to the best outcomes. The strong relationships, built over time and between these sectors, is an asset to our community’s recovery and something we are leaning on now,” Sieger said. “Businesses and corporations are, in some cases, supporting response funds or direct service organizations. The Community Foundation sees our philanthropic work as a bridge until governmental programs are available.”

Behrens said she hopes that the quick responses and actions of foundations and nonprofits during this crisis will help lawmakers and government officials appreciate the importance of the nonprofit sector and understand the critical role they play in their communities while also acknowledging that foundations can’t be the sole supporters of the work done by nonprofits.

“I like to remind people that philanthropy is such a small part of the funding for nonprofits,” she said. “Individual giving and corporate dollars account for the majority of funding.”

Loosening reporting requirements and restrictions on the use of funds, along with streamlining application processes, are among the efforts foundations are making, Behrens said.

“I think we’ve seen foundations doing much more advocacy on the part of the nonprofit sector as a whole, including making sure that nonprofits are included in the Payroll Protection Program,” she said.

Corporate and family foundation philanthropy also has been playing an important role through being nimble and using their core business to support efforts directed at keeping people safe.

“I know foundations who have particularly stepped up to make sure nonprofits have PPE (Personal Protection Equipment) materials,” Behrens said. “These are nonprofits on the front line dealing with the newly unemployed and homeless. It’s not medical hands on, but for human services people.”

Addressing inequities

As the movement to recovery begins and startups and nonprofits relaunch their work, the worst effects will be felt by organizations led by people of color, Behrens said.

“We know the impact will be long-term, especially for those who were already navigating racial, social and economic inequities, who have also been hardest hit by this crisis,” Sieger said. “We are focused on the most immediate needs, and will be working with many nonprofit partners now and into the future to address their near and long term needs. 

“Our primary focus is to address the deep and historic racial, social and economic inequities that exist in our community and are intensified in times of crisis.”

Behrens said nonprofits that service communities of color have the hardest time staying in business. She anticipates seeing many conversations with funders in Michigan about ways to support nonprofits that are struggling and helping them to find ways to collaborate with each other.

“There is an emphasis on supporting those nonprofits,” Behrens said. “We see higher unemployment rates among people of color and those with smaller nonprofits as they close and lay people off. We are starting to have conversations about how we create professional development and workforce development strategies to get these people back into the workforce.”

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