A new revolving-loan fund will soon be available to help nonprofit agencies withstand a one-two punch from the weak economy and delayed state payments.

The Community Foundation of East Central Illinois, using a $100,000 grant from the Marajen Stevick Foundation, will administer the "Program-Related Investment Fund," with loans of up to $15,000 for agencies facing a cash crunch.

Organizers are still finalizing details but hope to have the money available Dec. 1.

Joan Dixon, executive director of the Community Foundation, sees it as a "bridge" for agencies struggling to meet payroll or other obligations. With the state six to eight months in arrears – or more – on reimbursements for services already provided, some agencies are tapped out, she said.

Dixon surveyed about 125 nonprofit organizations and found that their most-urgent need was cash flow. They've used up their United Way funding and donations, exhausted lines of credit, and in some cases postponed payroll.

One executive director has not taken a salary so that minimum-wage employees could be paid. The only options left are layoffs or program cuts, she said.

"This seemed like a reasonable way to get money to the organizations that need it, but also have them have a vested interest in paying it back, so they don't see it as a bailout," Dixon said. "It is a loan. When they pay the money back, it can go to help another not-for-profit in the area."

The Stevick Foundation, which owns The News-Gazette, Inc., distributes dividends paid by the company to two "supported organizations" – the University of Illinois Foundation and the Community Foundation. It allocated the $100,000 for nonprofit organizations in need, and the Community Foundation suggested the loan fund.

"We felt that it was important to make a statement that we wanted to support the agencies in need," said Greg Cozad, chair of the Stevick Foundation's board. "We commend them for coming up with a creative way to provide for those groups that can really use the funds.

"But what I'm really excited about is that it allows for the recycling of those dollars back into the community over and over," he said. "We want to stretch the dollars that we can distribute as best we can."

Stevick board member Tammy Lemke said the task was a "huge undertaking, and even $100,000 doesn't go very far. We're very pleased as a foundation board that the Community Foundation and their volunteers came up with this very, very innovative plan."

The hope is the loans will help agencies retain staff who may be looking elsewhere for jobs because they're not sure if or when they'll be paid, said Lemke, former president and CEO of United Way of Champaign County and now executive director of the Illinois Children's Health Foundation.

The loans would have to be repaid within 12 months and would carry an interest rate of 1 to 2 percent. Agencies would pay a $25 application fee, and loans would be secured by their accounts receivable. The loan committee – made up of members of the Community Foundation – will review the applicants' debts, liabilities and potential cash-flow before approving any loan, Dixon said.

"We have to take a very deep look at their finances. We want to make sure they have sustainability, so this gets them over an immediate hump, but just doesn't forestall the inevitable," she said.

As a model, Dixon points to the Colorado Nonprofit Loan Fund at The Denver Foundation, which has a pool of $230,000 available for 11-month loans at 6 percent interest. Since its creation in 1981, the fund has had no defaults, Dixon said.

"I think this would just be a wonderful lifeline for many agencies and could make the difference between programs being able to hold on until the state finally comes through with the payment or having to cut back on services," said Sheryl Bautch, executive director of Family Service of Champaign County.

In early October, the state was $300,000 behind in its payments to Family Service for various contracts, the largest being the Senior Home Care program, which hadn't been paid since January, Bautch said.

Family Service had begun to consider temporary staffing cutbacks and a reduction of services to seniors, prioritizing those with the most critical home-care needs, such as help getting out of bed in the morning, versus other services like grocery shopping or housekeeping, she said.

Then Family Service applied for expedited payments from the state and got several months' worth of funding. It was enough to forestall any cuts, but the state still owes the agency about $150,000, some of it from June, during the last fiscal year.

About a third of the agency's $1.6 million budget comes from state funding. Bautch said she's gotten by so far with funding from the United Way, Champaign County Mental Health Board and donors, but "there's only so much they can do. We're not the only ones in this situation," she added.

Dixon hopes the fund can grow over time and continue to help nonprofits "for years to come. This gives us a whole different way to help the not-for-profits."

Other allocations

The Community Foundation of East Central Illinois also distributed $71,051 to 10 organizations in 2010 on behalf of the Marajen Stevick Foundation. The allocations included:

– $10,000 to the Champaign County Forest Preserve District for a "natural" playground in the Homer Forest Preserve. The money will go toward an accessible water feature that will allow children to dam up the stream, divert its path and play with the water without being in the water.

– $10,000 to the Champaign Public Library to continue a collaborative project with the Champaign school district initially funded by the Stevick Foundation last year. The grant will allow expansion of the reading and writing program for third, fourth and fifth graders at Garden Hills School.

– $10,000 to the Education Justice Program at the University of Illinois. The money will be used to provide English as a Second Language training to students at the Danville Correctional facility to help them earn their GED.

– $10,000 Education for Employment, a summer construction program for youth. A collaboration between the school districts and local trade unions, the program gives students classroom training and practical construction experience while they learn about job opportunities in the trades.

– $6,551 to the Hoopeston Multi-Agency's Teen Reach program. State funding for Teen Reach has been significantly reduced, and the grant will allow the agency to provide services in northern Vermilion County.

– $5,000 to the Motherlands Culture Club for a neighborhood community garden. The money will pay for equipment, a storage shed and other materials for the gardeners.

– $5,000 to the Mental Health Center of Champaign County to create gardens at eight residential facilities in Champaign County.

– $5,000 to Family Service of Champaign County for its Meals on Wheels program. The grant will pay for lightweight insulated bags to keep food warm and mapping software for the volunteers who deliver the meals.

– $5,000 to the UI College of Education's Youth Literature Festival, held every other year, which attracts thousands of young readers.

– $4,500 to the Champaign school district for the "Career Cruising" program, which guides students as they plan class schedules and future careers. This year's grant will allow continuation of the program for middle school students and cover the cost of the teacher stipend. The school district will cover the stipend in future years.