Nonprofit organizations struggling to fund expansion plans and capital improvements could get a boost from a new program included in the next state budget.
Gov. Dannel P. Malloy announced before hundreds of people at a Capitol rally last week that his biennial budget will establish a new state bond pool specifically designated for nonprofit community-based providers.
Ron Cretaro, executive director of Connecticut Association of Nonprofits, said hundreds of workers and advocates from the state’s nonprofit sector urged political leaders to preserve services for poor and disabled residents.
The $20 million pool will allow nonprofits to invest in capital projects that will lower administrative costs and improve the delivery of services to physically, mentally and developmentally disabled people in Connecticut. For example, a nonprofit organization could purchase a new furnace to cut monthly energy bills or consolidate locations to reduce overhead.
Cretaro calls Malloy’s plan “a positive step in the right direction.”
State officials said the new program will streamline the application process and simplify administrative tasks. Under the proposal, the Secretary of the Office of Policy & Management will develop eligibility criteria.
This bond pool would allow for small and large infrastructure projects.
Some examples of how organizations could utilize the funding include investing in technology that will improve the delivery of services; upgrading energy systems, such as converting to less expansive natural gas to lower administrative costs; and helping with the consolidation of disparate rental properties into one new building to save on maintenance and rental costs.
Priority will be given to proposals under $1 million.
Cretaro, whose agency provides networking, training and advocacy to over 525 organizations in Connecticut, is cautiously optimistic.
“The government and legislature has been very generous to nonprofits with traditional bonding programs through various state human service agencies,” said Cretaro. “But many times, the funds come with so many restrictions and take more than a year to access.”
“One of the items that has not been permitted for these traditional bond funds are technology uses,” said Cretaro. “The useful life on technology is limited so traditional capital funds must have a useful life of 7-10 years.”
“It is our desire that nonprofits will have input into the development of the new program guidelines and will include language regarding lien forgiveness for those programs/facilities which are forced to close due to state budget reductions, program eliminations or policy changes.”
Cretaro also wants to know what Malloy’s budget for the next fiscal year recommends for operating funds. “My question is whether this is an additional $20 million or whether the governor is pulling existing authorizations from the state agencies into a central pool?”
Others share his sense that this could be a positive step.
“We are excited and pleased by what the governor is doing,” said Heather Gates, president and CEO of Community Health Resources. “This is a great first step, but only part of what needs to be done to help a very fragile system.”
Community Health Resources helps children, adults and families who struggle with mental health and substance abuse issues. Gates said that if her organization was able to receive bond money from the state, it would help free up more operating funds for direct services to clients.
Gates explained that in the past, nonprofits had to seek commercial financing if they wanted to undergo a large capital improvement like installing a new roof or creating an electronic medical record system.
Gates said there are many downfalls to borrowing money from a bank, including higher interest rates and the fact that the organization must tap its operating budget to pay off the debt at the expense of services.
“But these expenses are not optional,” said Gates. “We have several shovel-ready projects that would fit under this plan.”
Gates said her organization, which leases two properties, is looking to consolidate into a new facility in Manchester. She will look to apply to state bonding to help complete that project.
“This will help Community Health Resources accrue equity and establish greater financial stability,” she said.
Gates said she also wants to use some of the funding to create an electronic medical records system and to install electric generators. Many nonprofit providers scrambled in recent years during storms and power outages to make sure their clients were safe and adequately cared for.
Like Gates, Barry Simon, executive director of Gilead Community Services, said bond money from the state would help free up more operating funds for services to clients and address some overdue critical projects.
The bond funds would allow Gilead, which provides housing and support services to people with mental illnesses, to repair roofs, fix windows and install generators at some or all of the organization’s group homes.
Gilead operates 17 programs in 14 different buildings, according to Simon.
“Then you have the health care reform on our door step. We’re required to modernize our systems but we don’t have the funds to do it,” said Simon. “There is little, if any, money available for improvements like that.”
