City Council Approves Nonprofit Loan Fund, Despite Some Opposition

Riverside’s city council voted on Tuesday to award a contract to the Inland Empire Community Foundation (IECF) to administer federal funds to nonprofits serving city needs and residents through a revolving loan fund.

The vote was 4-3, with Councilmembers Philip Falcone, Chuck Conder, and Sean Mill voting against the move. They expressed a preference for using the funds to improve city streets and other public work projects instead.

Under the city's Nonprofit Resilience Fund, qualified organizations would receive loans ranging from $150,000 to $200,000 to help temporarily cover program and staffing costs. These organizations would be required to repay the loans at fixed interest rates.

To establish the fund, $2.8 million of American Rescue Plan Act (ARPA) money will be allocated. According to city staff, the fund is intended to provide financial support to 501(c)3 organizations based in Riverside or serving city needs.

"There is no higher calling in service than to advocate for those who aren't able to advocate for themselves," Decker said to the council. "That's what we do."

In 2021, at the height of the coronavirus pandemic, City Manager Mike Futrell shared that Riverside received $73.5 million of recovery funds, with $2 million specifically set aside to support nonprofits. 

During focus group meetings last year, local nonprofits discussed the barriers with staff the barriers they face in securing private investment for service growth or building improvements. They also pointed out limited financing options, government payment delays and difficulties obtaining start up for innovative practices.

Many of those groups were present at Tuesday's meeting to speak in support of the nonprofit fund. Adam Karelin, executive and artistic director of the Riverside Art Academy, said that a revolving loan fund would provide financial relief for nonprofits that frequently offer free and low-cost services to residents.

"One of the challenges that you have heard about is that the majority of the foundations and government entities that fund us do so on a reimbursement basis, and that means that organizations like ours have to fund multiple months of payroll at a time before receiving those reimbursements," said Karelin. "This loan could make a huge impact in relieving that problem."

However, opposing council members raised concerns about the city losing control over taxpayer dollars and the lack of a competitive bidding process.

Councilmember Mill emphasized that he would have preferred an open bidding process for the contract to ensure transparency and avoid the appearance of favoritism, even though he acknowledged IECF's strong track record.

"From an optics standpoint, I would have liked to see who else could do this," said Mill. "I think it's important from an optics standpoint to go out to bid."

Meanwhile, Falcone argued that the issue at hand was the role of local government. He emphasized that the city's core responsibilities should focus on infrastructure and public services, not providing financial support to nonprofits.

"And the 4,000 doors I knocked on…not a single person told me what the city needs to be is a bank loaning out money or needs to work with a nonprofit to be a bank to loan out money," he said. "They said, 'get back to the core responsibility of local government, clean up the city, repave the roads, fix the parks, clean, trim the trees' all of those things."

The city is expected to meet the federal government's deadline to allocate ARPA funding by the end of the year, with a requirement to spend the funds by 2026.