Why Ogen Lends to Non-Profit Organizations
Non-profit organizations, which carry out a critical social and educational role in Israel, are heavily dependent on government and private funding. This poses cash-flow challenges, as revenues can fluctuate dramatically on a monthly basis.
Small and mid-size NGOs are routinely unable to obtain bank credit on any terms, because they cannot provide sufficient guarantees or collateral to secure the loan. The commercial banking system simply isn’t structured to accommodate the credit needs of the non-profit sector.
According to comprehensive survey data gathered in 2018 from 688 non-profit organizations in Israel:
- Credit difficulties affect NGOs of all sizes and revenues
- Credit difficulties affect the NGO sector in all fields; welfare, education, culture, health, civil society etc.
- NGOs receives major donations boosts at the end of each tax year, creating cash flow difficulties during the year
- Government funding, when available, carries huge delays between approval and payment, creating major cash-flow challenges
- Large and established NGOs which do manage to secure bank finance often need to cut down on their programs in order to afford the high-interest rates to repay their loans
The credit shortage affects not just the impact and effectiveness of Israel’s NGO sector, but the growth and stability of a core segment of the Israeli economy, employing 66,000 people.
How We Lend to Non-Profit Organizations
Bridge loan, secured against signed letters of intent from government and private funders, enabling non-profits to continue their important work until pledges are fulfilled.
Borrowers will benefit from a support model developed jointly by Ogen together with the Rashi Foundation, one of the largest philanthropic foundations in Israel, and Social Finance Israel, the sector’s most innovative financial think-tank.