A growing number of nonprofits around the country report that they are having trouble maintaining services and staff because of the ever-lengthening delays in payments from state and local governments, their inability to obtain necessary lines of credit, and declining private contributions. IS estimates that approximately $15 billion – 18 percent of the annual funding government agencies provide to nonprofit human service providers – is currently being held in delayed reimbursements or will be delayed if the problem is not addressed quickly
Status As part of nonprofit advocacy efforts for the American Recovery and Reinvestment Act of 2009, IS issued a statement, and submitted letters (PDF) to congressional leaders outlining the details of a proposal which would provide bridge loan funding to cover the $15 billion gap at relatively little cost to the federal government. Impact Op Ed by Diana Aviv and Neil Nicoll (PDF)
Independent Sector is encouraging lawmakers to include nonprofits in any efforts to open lines of credit and investment for organizations seeking to maintain or expand their operations in the current economic climate. Due to ongoing state and local budget crises, many nonprofits are experiencing severe delays in government reimbursements that are threatening their ability to continue providing services to the growing numbers of Americans in need. IS has recently submitted statements to House and Senate committees investigating lending practices to small businesses to highlight the need for extending lines of credit to struggling nonprofit organizations and outlining the details of proposal to provide funding to open up short-term lending for nonprofits awaiting reimbursements through existing government programs.
By alleviating the cash flow constraints of nonprofits providing services on behalf of governments, loans under the program would preserve the full-time jobs of over 300,000 individuals in the next two years, and thereby maintain services to at least 7.8 million people in need. Much of this funding will be repaid to the federal government when state and local governments are able to resume their normal reimbursement procedures and schedules.
