Cashflow Loan Program Overview
In an effort to increase the impact of the Foundation’s resources and respond more quickly to the needs of our nonprofit community, the Knott Foundation began engaging in Program Related Investing (PRI) in 2003. Unlike grants, PRIs (Cash Flow Loans) take the form of investments, usually requiring the return of capital within an established time frame, plus modest interest payments or dividends. For the recipient, the primary benefit of PRIs is access to capital at lower rates than may otherwise be available. For the funder, the principal benefit is that the repayment or return of equity can be recycled for another charitable purpose. PRIs are valued as a means of leveraging philanthropic dollars.
What is a PRI/Cash Flow Loan?
Program-related investments are loans and equity investments that foundations provide at favorable rates to support activities that have a direct charitable purpose. Frequently referred to as PRIs, they expand the resources from foundations and, in the right circumstances, can be even more effective than grants.
Who is eligible?
Nonprofits that have been in existence for at least one year and who work in the Foundation’s area of geographic and programmatic giving.
Eligible nonprofits may apply for short-term (30–180 days) cash flow loans against delayed receivables from government, foundation or corporate grants and contracts. Loan amounts can range from a minimum of $10,000 to $25,000 for organizations that the Foundation has never funded and $30,000 for previously funded organizations. Loans are made in alignment with the Foundation’s funding guidelines, policies, criteria and priorities. The loans will be made on a first-come, first-served basis from a revolving pool of $200,000.
Does a Cash Flow Loan count against me in the formal Grant Process?
No. In fact, the Foundation views dual eligibility as a way to not only be of greater service to the community but as a way to get to know the community and its service providers better.
What are the loan terms?
- Size
- Minimum: $10,000
- Maximum: $25,000 - $30,000
- Repayment period
- Up to six months
- Loan fee
- 0.75% if repaid within 45 days
- 1% if repaid before 90 days
- 2% if repaid anytime after 90 days within the allotted six month period
Is there required follow-up?
Yes. Each Borrower is to furnish a written report to the Knott Foundation Cash Flow Loan Program upon completion of the loan period. This report is critical to our ability to evaluate the effectiveness of the program. Upon receipt of the Borrower’s repayment, the Foundation will provide a form designed to meet this reporting requirement.
How can I get more information?
We realize that many nonprofits encounter cash flow problems at some point. If you are interested in exploring ways that the Knott Foundation may help, please contact either Carol Hoffman or Greg Cantori to discuss your situation and how we might help, at 410-235-7068 or e-mail at choffman@knottfoundation.org or gcantori@knottfoundation.org.