What is the Community Forward Fund?
Our vision: a well-financed and sustainable charitable and nonprofit sector.
Our mission: To advance a sustainable charitable and nonprofit sector by providing access to loans and financial coaching; tools organizations need to help them assess their current financial picture and implement plans for their future.
Research indicates that there is a market for one year bridge loans, and three and five year term loans.
Loan interest will be dependent on the type of loan or guarantee plus other fees.
Why a loan fund?
While grants will always be important for charities and nonprofits, there are gaps that traditional sources of financing for the sector can’t fill, particularly for growth and working capital. Longer lead times for grants, the requirement to pay for a project prior to receiving government funding, and the lack of funding for core operations, growth and diversification, have led organizations to seek new forms of financing. In the US, foundations have concluded that loans are a great place for sector groups to start and even improve their financial capacity.
In Canada, few traditional lenders feel comfortable evaluating the ability of nonprofits and charities to accept loans and many won’t offer them. Some lenders are willing to make loans to larger charities; however even larger organizations are experiencing difficulty finding the financing they need.
While there is some notable activity in nonprofit lending in a small number of regions, there remains a significant gap in availability of debt financing for the sector in most communities.
Where lending exists, there is a place for co-lending, loan guarantees and syndication to allow existing organizations to meet the demand, particular for growth financing.
While a small number of intermediary organizations offer loans for social housing, to help organizations acquire buildings or to create a business or enterprise, there are few offering financing for working or growth capital.
What is happening in other countries?
For over 30 years in the United States and the UK, charities and nonprofits have used loans successfully as part of their financing strategy and have benefited from the availability of this option.
The Nonprofit Finance Fund alone (one of dozens of community development financial institutions in the US) has provided over $200 million in loans to charities and nonprofits, using private sector and Foundation funds.
Of the 161,000 nonprofits in Canada, we conservatively estimate that at least 37,000 organizations would be of a size and scope to be able to use loans as part of their financing strategies.
A study published in 2010 in Ontario, entitled Social Finance Census 2010: A Summary of results from the social finance census of nonprofits and social purpose businesses, indicated a significant demand for loans and financing in the sector .The ONN/SVX survey on lending indicated interest by 50% of nonprofits and charities in Ontario in loan products and estimated the capital needs of the sector in Ontario to be $170 million.
Community Forward Fund (“CFF”)
In brief: The Community Forward Fund is a Trust that holds the Loan Investments as security to the Investors for their Subscriptions. Investors invest with CFF and borrowers borrow from CFF.
- Established under a Trust Agreement as a “for profit” organization
- The initial Trustee of CFF is Concentra Trust located in Saskatoon, SK
- Organization draws funding through Subscription Agreements with qualifying Community Foundations and other philanthropic organizations
- Funds are drawn on these subscriptions based upon loan funding requirements
- CFF funds loans to Not-for-profit sector under strict guidelines administered through its Management Agreement
- CFF has hired CFFAC as Manager of its operations through a Management Agreement
- Through the Trust Agreement, a regular financial reporting structure is in place that explains current financial activity and results to the Investors of CFF.
- CFF has a year-end of December 31st at which time audited statements are prepared for Investor review.
- The initial auditors of CFF are Pricewaterhouse Coopers (Saskatoon)
Community Forward Fund Assistance Corp (“CFFAC”)
In brief: CFFAC, a nonprofit, is the Management Company for CFF. CFFAC engages the nonprofit/charitable sector, oversees the loan process, and holds financial coaching sessions. It does not, however, make the loans.
- Established federally as a nonprofit organization
- CFFAC is a registered Investment Fund Manager and a restricted dealer and restricted Portfolio Manager with the Ontario Securities Commission, the Autorité des marchés financiers, the British Columbia Securities Commission, the Alberta Securities Commission and the Securities Commission of Newfoundland and Labrador.
- A regular reporting structure is maintained by CFFAC to various government agencies
- CFFAC has been engaged by CFF as the initial Manager of its operations under a Management Agreement
- CFFAC sources qualifying loans for CFF within the nonprofit/charitable sectors, manages the collection of loans, provides advisory services to Investors and lending groups, etc. under the terms of the Management Agreement
- CFFAC has a year-end of December 31st at which time audited statements are prepared for Regulators and Stakeholders
- The current auditors of CFFAC are Logan Katz (Ottawa)
If your charity or nonprofit is interested in finding out more please visit our web pages dedicated to your sector.
If you are interested in finding out about impact investing, please visit our web pages outlining our value proposition.