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Nonprofit financier lauded for bolstering sector

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By Ret Boney

In college, Clara Miller majored in studio art, with a minor in English, just in case she didn’t make it as an artist.

Today, the founder and head of the Nonprofit Finance Fund is being honored not for her etchings, but for her two decades of commitment to the needs of the nonprofit sector.

The Women’s Housing and Economic Development Corporation in the Bronx presented Miller with its nonprofit leadership award for her writing and thinking about issues affecting nonprofits and their work, says the group’s president, Nancy Biberman.

“She is the only one who looks across the spectrum of nonprofit businesses and understands why so many of us are struggling,” Biberman says.

Miller’s Nonprofit Finance Fund is a national community development financial institution that provides nonprofits with loans, capital investment and grants, along with advice for smart financial management and growth.

At WHEDCO, which receives federal funding for some of its programs, the fund has provided working-capital lines of credit the group uses to finance its government programs until the federal dollars come in.

Since its inception in 1980, the fund has leveraged more than $500 million in investment into nonprofits, and expects to have loans outstanding totaling more than $50 million by year-end.

Miller describes the fund as an investment bank for nonprofits, which she says generally lack the financial resources businesses have to grow.

For the Greyston Foundation’s bakery, which employs people who are “difficult to employ” in a low-income Yonkers neighborhood, that meant extending lines of credit to build and run a new facility to service a contract with Haagen Dazs.

Clara Miller

Job: President and CEO, Nonprofit Finance Fund, New York City

Education: B.A., studio art, minor in English, University of New Hampshire; M.A., regional planning, Cornell University College of Architecture, Art and Planning; completed Columbia’s University’s Institute for Nonprofit Management

Born: Hanover, N.H., 1949

Appointments: Named by President Clinton to Community Development Advisory Board, U.S. Dept. of Treasury; served as chair

Family: Two daughters, ages 25 and 17

Hobbies: Gardening, drawing, cooking

Favorite dish to cook: Risotto

Inspiration: Grandmother, Anne Meservey; and “the body of nonprofit managers, directors and people providing services. They have kept me in the sector.”

That in turn allowed the nonprofit to grow and employ more people.

In addition to loans or grants, the fund provides freestanding analysis and advice on financial growth plans and cash flow, including how to structure debt, capital, revenue and working capital.

“Aside from being very intentional about knowledge-building in the field and improving the business climate for the sector, we want to fill in the missing link, which is getting growth capital that is structured properly,” she says. “How do you build an enterprise so that it has an improvement of service, that gives them the ability to focus so it can go to a new level?”

Miller joined the nonprofit world by way of the New York Community Trust after earning a master’s in regional planning.

From a teaching family, Miller says she has always felt the pull toward public service.

“I knew I wasn’t going to be a front-line social worker – I didn’t get the calling,” says Miller. “So being generally helpful to a whole cohort of organizations was really interesting to me.”

She started the fund to lend advice and money to nonprofits for energy conservation projects, with loan repayment coming from the groups’ improved cash flow.

In the process, she learned about the environment in which nonprofits exist, and discovered many of them had larger issues.

“We could see how few incentives for good management there really were in the way we set up the finance systems for the organizations that do this work,” she says.

Over time, the fund expanded its toolbox and refined its theories on creating financially stable nonprofits, first by financing preventative maintenance of their buildings, and later providing capital for facilities, an approach she soon realized wasn’t the whole answer.

“It’s not just about capital investment,” says Miller. “It’s about program growth. You expand a program and you instantly become less profitable.”

Miller believes nonprofit leaders react rationally to the market in which they exist, one in which they can’t finance growth and overhead by charging customers more, but are dependent on governments or foundations that want to fund programs, not the administrative costs it takes to run or expand them.

“It’s a question of understanding the difference between our world and the for-profit world,” Miller says. “If we understand them, we can make use of a lot of techniques, but it’s not a perfect fit.”

The fund’s Building for the Future program, launched in 1998, is one way of getting at that.

It creates incentives for good management choices by providing matching grant dollars for nonprofits that put money into a fund for preventive maintenance and replacement of equipment, money they draw down as needed.

Next on the fund’s agenda is helping nonprofits grow by structuring deals with groups of private investors, much like investment banks gather private equity investment for companies in the private sector.

Miller says she will be testing the new approach in 2006, and if successful, plans to roll it out as the fund’s latest effort to build up the sector she values.

“It’s a very distinctive, and from my viewpoint, powerful sector,” Miller says of nonprofits. “We often forget how much our lives have been touched by nonprofits and how important they are in the fabric of our society.”

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