PA Budget Standoff: Trauma for Nonprofits and Attempts to Stop the Bleeding

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Fish-netting-caught

November 7, 2015; Pittsburgh Tribune-Review

The Pennsylvania state budget gridlock has persisted for more than five months, and for the state’s nonprofits, that means the proportion of their budgets that has been seriously delayed can be as high as 40 percent, depending on an organization’s degree of dependence on the state. What’s more, the history of the tenure of unpassed budgets in the state is not necessarily all that promising, with the longest delay lasting 336 days.

PA-Budget-Battles

Bridge to Independence Inc. in Braddock is owed around 35 percent of its annual budget. As a result, it was scraping bottom, facing having to cut back its sheltering, mental health, and drug abuse services. The nonprofit had gone to two banks for a bridge loan and was turned down, but in September, Bridgeway Capital approved a $100,000 loan for them.

The moment of receiving the phone call telling them they had gotten the loan was a release of tension. “I just choked up, and then my secretary choked up, and it just seemed to go down the line,” CEO Deana Nell, said. “The whole staff cried. If it hadn’t come through, I don’t know what we would have done.”

Bridgeway has 17 deals done or in the works with nonprofits, with the total lent now at $2 million. Their loans are extended to drug and alcohol resource rehabs, mental health counseling centers, domestic violence shelters, and programs serving children and families.

“The services that these nonprofits provide are vital and fall directly in line with our mission-based lending,” said Royce Woods, senior growth officer at Bridgeway Capital. “Unless we do this, or a miracle happens and the state budget gets passed tomorrow, these nonprofits are going to go broke and people will go out of work. And then the mentally ill, people recovering from drug and alcohol abuse and at-risk kids would not have these resources.”

Still, even for those organizations lucky enough to get a loan, the arrangement is an extra cost. Bridgeway’s loans, which are relatively cheap, start at a five percent fixed interest rate with a one percent origination fee. To cover the interest on these loans, the Forbes Funds (an arm of the Pittsburgh Foundation) has joined with Staunton Farm Foundation to set aside $50,000 to fund grants of up to $5,000 per organization, but only mental health or substance abuse treatments will be able to apply.—Ruth McCambridge

  • Deb Bartle

    Our nonprofit is normally fortunate enough to receive Commonwealth monies through contracts with PCCD (Pennsylvania Commission on Crime & Delinquency) and PCAR (Pennsylvania Coalition Against Rape). We run a 24-hour hotline, Erie County’s only rape crisis center, and serve all other crime victims, as well as providing court accompaniment, restitution assistance, and prevention education from preschool to adults.

    We’ve had nothing from the Commonwealth since June; have tapped our endowment, and emptied a line of credit. We’re now looking at layoffs and trying to figure out how we can continue to serve rape and crime victims with no money to pay expenses or salaries. Even assuming Harrisburg passes a budget tomorrow, we will owe significant interest that cannot be repaid with state or federal monies. Others are in the same boat or worse! What will happen to Pennsylvania’s nonprofits over the course of the next months?