New & Next: Don't Cry Uncle, Call the Colorado Nonprofit Loan Fund

Nonprofit executive directors often tell me about their insomnia. Acutely aware of the bills to be paid, some executive directors chew their nails to the quick when a funder is late with a grant check. As cash balances dwindle and government reimbursements are delayed, many directors gnash their teeth. They quake when operating reserves shrink after funders shift their grant-making priorities. They dream of wealthy benevolent aunts who might bestow unrestricted financial gifts to help their nonprofit organizations in a pinch.

Rosanne Sterne.Or uncles. That's how Maruca Salazar, executive director of Museo de las Americas, describes the Colorado Nonprofit Loan Fund (CNLF). Founded in 1981, the CNLF provides short-term cash flow loans to Colorado-based nonprofit organizations experiencing short-term cash flow issues. Now a supporting organization of the Denver Foundation, CNLF makes loans ranging from $1,000 to $50,000 for a maximum loan term of eleven months. CNLF's loans are generally unsecured and typically bridge to a known grant or fundraising event with a track record.

"This fund is like a wealthy uncle that can be tapped when you have a financial need," says Salazar. "Even with detailed budgets and plans, something unexpected can occur that is out of the organization's control. The fund brings back our control and confidence so that we can continue to serve the public in a successful manner."

The CNLF offers a helpful and convenient service by providing short-term loans to Colorado-based nonprofit organizations. Our streamlined process makes it easy for nonprofit organizations to borrow cash for short-term needs.

One year, a diligent and committed executive director with a financially sound organization called me in a state of extreme duress. A family emergency had necessitated her immediate departure to attend to the illness of a family member. She was beside herself because her organization missed an extremely important grant deadline during her absence. In prior years, this particular funder had provided a significant portion of the organization's budget. Despite the extenuating circumstances, the funder remained strict about deadlines.

Thus, the organization lost out on important funding for a full year. The executive director called me asking if CNLF could help -- and we did. The organization applied and was approved for a loan that helped them to meet payroll, continue seamless operations and bridge to a future grant. The executive director then had time to do additional fundraising to make up for the lost revenue.

While nonprofits are often hesitant to borrow in order to meet debts and payroll, there can be benefits. In addition to helping nonprofits survive tight financial periods, organizations that borrow from CNLF establish a credit history that may help them to apply for loans and credit from traditional commercial banks. Damon McLeese, executive director of VSA Arts, says, "Thanks to the CNLF we were able to weather a very tight financial time for our organization and access more traditional credit."

CNLF has monthly loan application deadlines and loan committee meetings. Information, deadlines and application materials can be found at www.denverfoundation.org/cnlf. It's a user-friendly process: The application is easy to complete and CNLF requests standard supplementary materials.

As the executive director of CNLF, I am available to answer questions and provide immediate financial technical assistance to nonprofit executive directors, board, and staff members. If your organization has a question about CNLF or wishes to apply for a loan you are welcome to contact me at 303/300-1790 ext. 126 or rsterne@denverfoundation.org. At CNLF, we aim to help nonprofit organizations through rough patches and, by doing so, we have preserved hundreds of nonprofit jobs. Over the years, we have helped countless organizations through short-term pinches when a grant is late or "the unexpected" happens.

Are you the executive director of a nonprofit organization in a cash crunch? Give us a call. You, too, could catch some Zs -- and your aunts and uncles can leave their checkbooks at home (at least for now).

Rosanne Sterne has been the executive director of the Colorado Nonprofit Loan Fund, a supporting organization of the Denver Foundation, since 1991. Rosanne also provides consulting services to a variety of foundations and nonprofit organizations. She holds a B. A. from Harvard University and an M.B.A. from the University of Denver.