Donors can transfer $25,000 or more from their existing DAF to a pool that will make loans to local nonprofits. The Pool will consider two kinds of loans:
- 5-7 year loans for the purchase, expansion, or renovation of property or equipment. Including energy efficiency improvements
- short-term working capital loans to help nonprofits make it through low cash flow periods.
Loans may be made directly to local nonprofits and through experienced intermediaries called Community Development Financial Institutions ("CDFI"). Pool loans through a CDFI may have a return of 2-3%. Loans made directly to nonprofits will likely have a similar expected return, but the risks of these loans may be higher due to single-entity concentration.
When the terms of the Pool are completed, donors can choose to have funds (with any interest earned) returned to the DAF or have them redeployed into the Pool to make additional new loans to local nonprofits.
Arthur W. Thomas III
Director of Entrepreneurial Initiatives and Inclusive Economic Opportunity