March 23, 2010 | Read Time: 1 minute
Grants are not the only way that foundations are providing financial support to nonprofit groups on the Gulf Coast. A handful are also offering loans and other tools known as program-related investments.
The Louisiana Disaster Recovery Foundation has made $2-million in program-related investments — usually in the form of loans, but also one loan guarantee—ranging in size from $25,000 to $500,000.
Program-related investments are also part of the Ford Foundation’s response the 2005 hurricanes and the main focus of the Isaiah Fund’s work.
The Good Work Network, a charity in New Orleans that helps minority and women-owned businesses get a start, is putting together the financing to renovate a historic building it will use to create a business incubator and provide low-cost retail space.
Program-related investments will cover the gaps in financing created by historic-preservation tax credits the project has one, said Phyllis Cassidy, executive director of the Good Network.
“You don’t get those until six months after the project’s finished, so you need something to take the place of that,” she said.
The investment had the added benefit of providing a sort of seal of approval that helped the small organization as it approached other grant makers.
“To have the Louisiana Disaster Recovery Foundation invest in our project, that gives us some bona fides that the project might not have otherwise,” said Ms. Cassidy.
While foundations that make program-related investments do as much, if not more, due diligence as a bank would, they can make deals that a traditional financial never would, said James R. Kelly, chief executive of Providence Community Housing.
Said Mr. Kelly: “The difference is the flexibility of those dollars, and a more understanding lender who doesn’t have a bank regulator breathing down their neck.”
