Mixed message: is it credit, or actual money, that they need?

A report from Johns Hopkins estimates that nonprofit infrastructure projects worth $166 billion have been delayed by what its press release refers to as “the current credit crisis.”  But is the problem that nonprofits have been unable to build these projects because they can’t get construction loans (a credit problem) or because they can’t raise the money?

Not being able to borrow money is a serious problem, but it’s also a chronic and familiar one in the nonprofit sector.  When the credit markets were hot, nonprofits still mostly couldn’t borrow a dime.  Not being able to raise the money necessary to expand and serve more people is, by contrast, an artifact of the collapsing economy and the straitened circumstances of people who would others be donors–not lenders.

We need short-term solutions to the shortage of money; that’s what the stimulus package is about, and one certainly hopes nonprofits will get their share of those dollars.  We also need a long-term solution to the long-term problem that nonprofits can’t get credit.  If we conflate the two problems, we’ll never find a solution for either one.

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2 Responses to “Mixed message: is it credit, or actual money, that they need?”

  1. Jim Simpson Says:

    Non-profits – banks and financial institutions – ARE getting their share. Granted this is a tongue in cheek response, but it is bookended by the fact that banks and financial institutions’ problems with giving credit to non-profits is in the down side of collection from non-performing loans. If you consider the current issue of reduced donations, their hesitation to fund institutional debt that is going to be paid by “voluntary” donors, appears to them to have been the right decision. Imagine foreclosing on a habitat lot or a shelter building. Great PR for any bank.

    Non-profits have to grow up and stop relying on the success of begging, and to develop stable funding resources that aren’t based on economic cycles, unless you development people are warming to the idea of taking a spray bottle and squeegee and hitting the busy intersections in the immediate future.

    Jim Simpson

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