Independent Banker - December 2023 - 57

money comes into a nonprofit. Is it funded by annual
fundraising drives, grants or other sources of money? In
some cases, it can be a complicated mix of sources.
Another difference in lending to nonprofits versus forprofit
businesses is that there are typically no personal
guarantees. " The funding mechanisms of the organizations
dictate how you can lend to them, " says McComb. " So,
once you understand the funding and how consistent that
is, you can help them bring their goals to fruition. "
For example, Heartland Bank worked with the high
school's athletic boosters group in Gahanna, Ohio. The
school wanted to install new
turf on its baseball field,
which would cost $350,000.
The booster club runs a
big fundraising event each
year where it sells discount
cards to local businesses.
That fundraiser creates
an annual income stream
that the community bank
could leverage due to the
fundraiser's successful track
record. The booster club
had funds to pay for more
than half of the cost, and
the bank set them up with
a $170,000 loan to make
up the difference, which the
group fully paid off after
four years.
" Oftentimes, nonprofits'
loan or financing requests
are exception based, "
McComb explains.
" Nonprofits need those
exceptions, and they need
people who can understand
how they operate and how
they're funded, which makes
it a nice fertile ground
for community banks
to flourish. "
TAKING TIME TO LISTEN
Ahl notes that bankers need to work closely with the
nonprofit to understand what the monthly cash flow
projections are so they can base the loan schedule on their
fundraising activities.
Pledge campaigns, for example, may be received in
December of each year. So, instead of a monthly payment
schedule, perhaps that loan has a principal payment in
December of every year.
" A really important
piece for our
nonprofits is they
also come to the
bank to be heard, to
be appreciated and
to be acknowledged
for the work that
they're doing. "
-Mary Edmeades, Beneficial State Bank
" It is very customized, and you really have to listen to
your customer to understand their needs and how the
repayment of the loan will work, " Ahl says.
Much like any business, attracting and retaining
nonprofit customers starts with good customer service.
Service was a big reason why the 501(c)(3) nonprofit
Hammond Climate Solutions Foundation moved its
business to Beneficial State Bank. The nonprofit provides
project management for initiatives such as community
e-bikes, electrical vehicle charging and solar programs.
" I knew I wanted a banking partner that would be more
responsive, " says Tara
Hammond, founder and
executive director of the San
Diego-based foundation.
She used to work with a
credit union, but Hammond
grew frustrated with the
" run around " of not being
able to get someone on the
phone. At Beneficial State
Bank, she was assigned her
own representative who she
can directly reach out to
when she has questions.
" When the phone rings,
he picks up, and when
I email, he responds
very, very quickly, and
I really appreciate the
responsiveness, " says
Hammond.
She says, the community
bank also offers a money
market account specific
to nonprofits, as well as
a grant program. " We
have applied to one of
their grants, and we love
the idea that our banking
partner can help support
our climate initiatives with
their program. "
At the end of the day, servicing nonprofits comes down
to what community bankers often do best: listen.
" One of the things that is really important for our
nonprofit sector is to listen to what they are doing and
how they fit into the community, " says Edmeades. " A
really important piece for our nonprofits is they also
come to the bank to be heard, to be appreciated and to be
acknowledged for the work that they're doing. " 
Beth Mattson-Teig is a writer in Minnesota.
independentbanker.org // 57
http://www.independentbanker.org
Independent Banker - December 2023

Table of Contents for the Digital Edition of Independent Banker - December 2023
