NMIIC LEARNING SESSION:
Supporting Access to Working Capital for Nonprofits
Tuesday, September 10th, 2024
Hosted on Zoom Webinar
Nonprofit organizations are vital partners to the government in delivering critically important safety-net services to vulnerable populations and in implementing innovative new policies like the Inflation Reduction Act (IRA).
However, nonprofit organizations reliant on government funding as their primary source of revenue – particularly state and local government funding – or those hoping to access resources made available by innovative policy often experience financial and administrative barriers and challenges. In research completed by BDO, analysis of IRS Form 990 data from 130,000 nonprofit organizations showed that high concentrations of revenue from government grants are correlated with inadequate financial reserves, limited cash on hand, and thin profit margins.
Among the many factors contributing to this are challenges with covering the full costs of services provided and long delays between the delivery of services and the receipt of reimbursement. This strains the availability of working capital for nonprofits, impeding their ability to cover the costs of delivering services. In addition, many nonprofits don’t typically have enough working capital available to take on significant projects like those contemplated through the IRA and then wait extended periods of time for partial reimbursement.
On Tuesday, September 10th, 2024, NMIIC held its second learning session of the year, “Supporting Access to Working Capital for Nonprofits.”
This session explored:
1. The challenges nonprofits face in being reliant on government funding as their primary source of revenue and in accessing resources provided by innovative policies.
2. The direct pay provision of the Inflation Reduction Act as an example of an innovative policy that seeks to enable tax-exempt entities to help advance a clean energy agenda but still presents financial and administrative barriers for nonprofits.
3. How integrated capital can help nonprofits overcome financial and administrative barriers. Learning Outcomes:
Participants in the session learned about:
1. How access to working capital can help nonprofits be more effective and more impactful in delivering safety net services.
2. How access to working capital can help tax exempt entities overcome barriers to accessing resources provided by the direct pay provision of the Inflation Reduction Act to help advance a clean energy agenda in NM.
3. How integrated capital can help improve access to working capital for nonprofits.
