"Like a bridge over troubled water, I will ease your mind." – Paul Simon
I would like to introduce you to Marc Rand, a fellow with a vision, and the courage and energy to make that vision become reality. I was introduced to Marc through a mutual friend and have seriously fallen in love with his desire to do good within the nonprofit sector. This man makes things happen, and his new venture, the Bridge to Bridge Fund, is just one example of his determination.
I conducted an interview with Marc a few weeks ago and I’d like to share it with you. I think you’ll see why I find this new fund particularly enticing as it addresses a need that many a nonprofit has experienced.
Cynthia: Perhaps you can tell us a bit about this new fund, and how it will operate?
Marc: The Bridge to Bridge Fund is designed to provide small to medium sized nonprofit organizations in the Bay Area with short-term cash flow loans. The loans are meant to support operations while the organization is waiting for a confirmed grant or late paying reimbursable contract. Initially, our loans will be up to $50,000, have a 12-month term, and carry a 6 to 8% fixed interest rate. There is also an application fee tied to the amount of the loan. One other point to make – the loans are unsecured! This means that organizations don’t need collateral or a board guarantee to access this financing.
Each loan will be underwritten based on several factors, including historical financials (typically 990s), our unique risk factor algorithm, 12 months of cash flow projections, and recommendations from other funders. Our goal is to turn around each loan request within 30 days from application. Ultimately, we’re trying to build a model to create a same day approval process, but we’re not quite there yet.
In order to make the process as efficient as possible, we’re trying to leverage existing technology platforms. Borrowers can sign onto our website – americannonprofits.org – to share documentation. We’ll also be using Automated Clearing House (ACH) for loan payments.
Cynthia: Clearly you felt the need to establish a new loan fund for nonprofits. What were the big issues – the problems – you saw that made you want to create such a fund?
Marc: Most small to medium sized nonprofits (less than $4 million of revenue) have a difficult time accessing credit from banks and community development financial institutions (CDFIs). This is mostly due to federal regulations placed on banks and other lenders. Furthermore, underwriting $50,000 loans is unprofitable, thereby creating a disincentive to support this marketplace.
In order to survive, some organizations fund operations with high priced credit cards or loans from board members. Even worse, the Executive Director may float the organization while not taking a salary. Clearly this is unsustainable.
Like the for-profit sector, nonprofits need access to affordable financing in order to maintain operations, achieve growth, and meet the growing demands on their mission. American Nonprofits is here to help organizations in the San Francisco Bay Area. We can also implement our program in other geographies, so please contact me for additional information.
Cynthia: It is unusual for one person to take on this kind of task. What compelled you, personally, to do this?
Marc: I’ve been a lender for twenty years; the past 15 years were spent focusing on the nonprofit sector. During this time, I’ve made many friends and had excellent mentors in the space, so I’m hardly alone. I also have a board of directors, to whom I report. But ultimately, my drive comes from seeking a solution to support nonprofits doing great work in so many critical areas including childcare, arts, health, environment, and affordable housing. The financial distress late payments and poorly understood contracts creates is recognized and acknowledged across the board. Since there was no obvious solution, we created the Bridge to Bridge Fund. While this is not a panacea, we are working towards solution.
I also need to point to the visionary who helped put me on this path, Pamela Davis, Founder, President and CEO of Nonprofit Insurance Alliance of California. She’s been my coach for years. Pamela and I first met around creating a nonprofit credit union, but that’s a story for another day.
Cynthia: Where do you get your capital?
Marc: We have been very fortunate to attract funding from a variety of sources. Our first visionary investor was Nonprofits Insurance Alliance of California (NIAC). They seeded our efforts early on. We also have loan capital from Santa Cruz County Bank. Together, they have provided $1,000,000 in loan capital. Over the years, we have also received grant support from Comerica and Wells Fargo. We also have some exciting news to announce this summer.
Cynthia: Can others invest in the Bridge to Bridge Fund?
Marc: Oh yes, yes indeed! While it’s great to have seed capital, we would like to expand our geographic reach and improve efficiencies. We’re always looking for the right philanthropic and banking partner, so please don’t hesitate to email. As we are a 501©(3), we can also receive support from private donors.
One other important point to make here is that we can replicate this model in any geography. If you’re a foundation and understand bridge financing is an issue in your community, please let us know how we can help create a fund in your area.
Cynthia: This makes me think that perhaps community foundations could be partners? Do you think they would be an appropriate venue for establishing a bridge fund?
Marc: Community foundations are the perfect partners since they're so invested in organizations within a defined geography. They typically know the needs of the community and can easily vet prospective borrowers. My experience shows that so many smaller, vital organizations need these funds and foundations may not have the internal capacity to support them. Sometimes foundations may grant their way out the issue; however, many times a loan may be a better solution. If this resonates with readers, feel free to contact me or share the article with your program staff at your local foundation.
Cynthia: I know you are literally just ‘up and running’ but have you made any loans so far?
Marc: Through work with NIAC, we’ve successfully made more than $3 million in loans over the past several years; however, Bridge to Bridge is new. That said, we made our first Bridge to Bridge loan to an amazing organization called Place Lab. They created a new financing model to develop vibrant public spaces by bringing together the community and government.
Cynthia: Tell us a little bit about Place Lab – what’s their story?
The Place Lab team from left to right: Toral Patel, Brooke Ray Rivera, Jared Press
Marc: Place Lab is a small San Francisco nonprofit whose mission is to apply the spirit of innovation to empower communities to create and sustain great public spaces. They’re a team of urban planners working at the intersection of community groups, city agencies, and implementation partners (funders, designers, builders), bringing everyone together to create public spaces that are clean, safe, and welcoming for all, for the long term. They’ve been around for five years now and are managing nine major public space improvement projects throughout San Francisco.
As is quite common, much of their funding comes from city grants that are often delayed, and typically don’t allow for project management time — the most expensive part of a capital improvement project. This has led to extremely “lumpy” cash flow, and much stress for Place Lab’s Executive Director. Place Lab is thrilled to continue its mission focus on being a pioneer, by helping this great Bridge to Bridge loan program get up and running.
Cynthia: Can we just touch on the nonprofit credit union you mentioned earlier? Is establishing this credit union part of the work you’re doing now?
Marc: We’re currently focusing our efforts on the Bridge to Bridge Fund. We feel if we can further prove this model, we’ll be able to expand into other geographies. We’re also exploring becoming a community development financial institution, or CDFI. If we’re able to pull this off next year, that opens the doors to new opportunities. Once we obtain CDFI status, then we’ll reexamine the credit union idea. But first things first – let’s launch the Bridge to Bridge Fund.
Cynthia: Thank you Marc for taking the time for this interview. Maybe you can leave us with some parting thoughts and ideas you’d like to share with potential applicants?
Marc: Innovation happens many times when resources are scarce and common themes emerge. By having a collective strategy and funders who are willing to invest in early phase projects, innovation can happen. This is a great role for philanthropy.