Nonprofit Finance Fund Awarded $50 Million in New Markets Tax Credits to Support Community Development in Low-Income Areas

Nonprofit Finance Fund (NFF) today announced that it has been awarded $50 Million in New Markets Tax Credits to support community development projects in low-income areas. NFF will use the allocation to help nonprofit organizations finance community facility projects.

With the New Markets Tax Credits, NFF will broker deals that offer benefits to both lenders and nonprofits. Each deal will combine debt lending with an equity-like investment. Over seven years, the equity investor will realize tax credits totaling 39% of the total financing (the debt portion as well as the equity portion.) At the end of this time period, the nonprofit organization will increase their equity in their facility, potentially millions of dollars in value.

This is the second round of New Markets Tax Credits that NFF has been awarded as part of a program established by Congress in 2000 and administered by the Community Development Financial Institution (CDFI) Fund. Projects made possible by NFF’s first round include new buildings for the National Consumer Law Center in Boston, and for PROCEED, a community services organization located in Elizabeth, New Jersey.

According to Teresa Soto-Vega, MPA, Executive Director of PROCEED, “By utilizing New Markets Tax Credits, PROCEED can operate in its new site without costly capital overhead expenses. Interest-only payments for seven years allow us to build up our cash flow, which we can reinvest into better programming and services to our customers. Gaining an equity position in the building will assist in the redevelopment of the neighborhood. It’s a win for everyone, especially the families that we serve.”

Since the program’s inception, $19.5 billion in New Markets Tax Credits have been authorized to help support revitalization efforts in low-income communities across the United States.

Founded in 1980, NFF provides loan financing, access to capital and direct advisory services that build the capacity and the financial health of nonprofits. NFF has provided over $175 million in loans and access to additional financing via grants, tax credits and capital in support of over $1 billion in projects for thousands of nonprofit clients nationwide.

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