Stimulus Legislation Opens More Capital to Non-Profits

Media Health Leaders reports on new opportunities emerging for non-profit hospitalsto fund projects they’d been holding off on due to the inability to accesscapital.  The Tax Reform Act of 1986,which limited the sale by non-profit hospitals of bank-qualified bonds to $10 million a year, waschanged in February when President Barack Obama signed the American Recoveryand Reinvestment Act of 2009 into law.  Thetemporary provision makes it possible for non-profit hospitals and other 501c(3)organizations to sell up to $30 million in tax-exempt bank-qualified bonds in asingle calendar year.

Thestimulus package not only increased the amount available to non-profits, itdecreased the obstacles and provided incentives for organizations to get involvedin the bond program.  There is no applicationfee and the financing can be done in as few as 60days, compared to regular tax-exempt bond financing, which takes 90 days ormore. 

Additionally,under the Build America Bonds program, there is an option to have the federalgovernment pay 35% of the interest on the bonds each year as a tax credit through the life ofthe bonds. 

Currently,the program is only open to new issue capital expenditure bonds issued beforeJanuary 1, 2011. 

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