A northern Michigan nonprofit is getting a multi-million dollar boost – and with the coronavirus pandemic it comes at a much needed time. The loan program will help Goodwill of Northern Michigan. It’s a community investment for Rotary Charities of Traverse City, which calls it “Impact Investing.”
Becky Ewing is the Executive Director with Rotary Charities. She says, “This project shows you what the power of partnership can bring.” Rotary Charities is making a direct loan to Goodwill, along with an investment partner – Northern Trust based in Chicago. “The entire pool is a $3 million low-interest, a .25% interest for 5 years. And it really helped Goodwill. Northern Trust came in with that $2.75 million, then our board committed that $250,000 to make up that three million dollar loan. So our money got leveraged a ton.”
Why choose Goodwill? Rotary says they’re a critical organization in the region, hurt in a critical way by the coronavirus. Dan Buron is the Goodwill CEO in Traverse City. “All of our stores were shut down. Our whole operation was shut down. So I knew we were going to be in a tough spot.” That’s largely because, he says, the stores typically bring in $30,000 a week in revenue.
Goodwill also provides emergency shelter, Street Outreach, and the Food Rescue Program. The way Ewing sees it, “They are a critical organization in our region. They provide housing, not just food but healthy food through Food Rescue. We knew at this time when people are hurting the most, if Goodwill went away, a whole sector of the most vulnerable people would not be served. People will be homeless, people will go without food.”
Buron says the low-interest loan is “really an opportunity to make sure we could continue to do that. And also preserve the long-term financial capability of the organization.” Goodwill will use the money to support programming, but also to pay off mortgages at most of their retail stores in the region. “Dollar-wise it’s quite significant. We have nine stores, and so we have loans on a number of those stores. This will free up about $500,000 in cash each year for us to be able to put towards the community and the organization.”
That’s more than $40,000 a month that’s been going towards payments on those properties – cash that’s now freed up with this new loan. “It allowed us to recapitalize our mortgages. So we’re able to pay those off. This gives us a lot more certainty that we can feel confident to continue to do our mission.”
About 70% of the revenue for Goodwill comes from their retail stores. Over the past three months they’ve really been tightening their belts because of the loss of revenue due to the coronavirus. But now this $3 million grant will give them some breathing room and help them make plans for years to come. Buron says, “This gives us a level of certainty, and, ‘O.K., we can get this figured out.’ We can get our retail donated goods back on track, figure out what that looks like in a COVID-19 environment. And then pay this money back.”
And Buron says that means Rotary will then have that money back to help other nonprofits in the community. “This allows them to make an investment in Goodwill in the short-term. And that money in turn, they’ll get back. We’ll pay it back and they’ll have that money to turn around and invest in another organization. We feel very humbled by it. And really appreciate their trust in our organization. We’re just very thankful for the opportunity to serve.”
Buron says they’ll use the loan right away, and it will ease the long-term burden. He says that’s important, because the coronavirus isn’t just a short-term problem. “This is a long term challenge. We see this as a three-to-five year recovery process.”
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