Field Notes From a New Loan Officer

I joined Propel Nonprofits as a lender just over two years ago. Being a “loan officer and financial specialist” was never part of my five-year plan. In fact, I never even imagined myself in this type of role. In college, I got degrees in journalism and philosophy and then worked in the nonprofit journalism world for just over a decade. I had been an executive director and program director but was never the finance person. In fact, I probably tried to keep financial matters at an arm’s distance. I was a word person. I wrote the newsletters, annual reports and tweets. Journalists tend to distance themselves from math-related matters.

So, when I found myself walking through the doors of Propel Nonprofits on my first day as a nonprofit finance person in November 2017, I did so humbly and with the understanding that I had a lot to learn.

And learn a lot is just what I’ve done. Every day I learn something new because our office is filled with brilliant people who are always willing to take a moment to explain something or strategize with you. They say I’m “trained in” now, and so reflecting back on the last 24 months, I wanted to share some of the “field notes” I’ve taken along the way.

Debt is not a bad thing.

What multinational corporation does not have access to a line of credit? How many people can buy a house without taking out a mortgage? One of the first things I learned at Propel was how debt can be a powerful tool for nonprofits, too. There are very few nonprofit-specific loan funds in the country, but at Propel, we see debt – when taken on strategically – as a great tool for moving an organization closer to its goals. It can help create equity for the nonprofit that in turn helps them to have ownership over their decisions. Seasonality in cash flow is a huge challenge for many nonprofits, and a bridge loan or line of credit can be a great tool. Buying a building or designing and constructing a new space is a dream that many organizations have, and loans can be a great tool to help you get there. Debt will not always hurt an organization, and sometimes it is the ingredient needed to reach organizational goals.

There is no one size fits all best practice for all nonprofits.

How many days’ cash on hand should we have? How big should our surplus be? How many lines of revenue should we have?

Nonprofits come in all different sizes, from small volunteer-led organizations with five-figure budgets to multimillion-dollar operations with a full department devoted to finance. Should we have a surplus? Yes! How much? At least one dollar! How big should our reserve fund be? It depends on your goals and ability to generate the unrestricted surpluses needed to build a reserve.

I get really excited to talk about cash flow and funding depreciation.

Words I never thought would come out of my mouth. True. But, wow, these concepts can be so helpful to nonprofit leaders! One of the reasons I loved journalism so much is that there was a daily challenge to take complex topics and issues and extrapolate and explain them so people can really understand. I get to do this with nonprofit finance now! Some of my favorite days are when I get to train groups of nonprofit leaders on the Fundamentals of Nonprofit Finance or budgeting or nonprofit business models or the value of knowing how many days cash on hand you have (using tools like Propel’s amazing cash flow projection template).

Finance is a powerful language to be learned (and well-suited for someone trained in journalism!).

Take it from this words-person-turned-finance-pro, I’ve learned that anyone can learn the language of nonprofit finance. The nonprofit field is filled with folks with liberal arts degrees, practicing artists, and creative entrepreneurs of all backgrounds. I remember when I began work underwriting my first loan, I walked into Janet Ogden-Brackett’s office and said, “Oh! I get it now. Underwriting is sort of like investigative reporting. You gather a lot of information, conduct some interviews, analyze some data, and then write the story of why an organization needs capital.” Got it. This wasn’t going to be so far out of my comfort zone as I thought. I’m inspired along the way by all the other informal degree holders of nonprofit finance.

Our nonprofit community is amazing, and it’s a joy and honor to work with them every day.

Minnesota is home to many, many, many nonprofits, and they are out there, doing important work in communities across the state. Nonprofit leaders are passionate, smart, resilient, scrappy, so hard working, thoughtful… I could go on. I love the opportunity to be a trusted partner in their (YOUR!) work.

Photo: Sarah Jackson is in the center pictured with other Propel Nonprofits’ lending team members and Propel the Hedgehog