Riverside City Council Could Reconsider Nonprofit Resilience Fund, Amid Alleged Concerns Over Redirecting Funds

A proposal to create a revolving loan fund in Riverside to support nonprofit organizations is back on the city council’s agenda for October 22. The council will consider voting on a contract with the Inland Empire Community Foundation (IECF) to administer the ‘Non Profit Resilience Fund’ using American Rescue Plan Act (ARPA) dollars. 

Under the initiative, qualified organizations would receive from $150,000 to $200,000 in loans to help temporarily address program and staffing costs. Those organizations would eventually pay those loans back on fixed interest rates.

But there’s concern among several nonprofit organizations, including IECF, that the council is opting to redirect those dollars for road improvements instead. Local organizations hope city leaders vote to support the contract.

“We've definitely heard rumors that at least three council members wanted to pull the item from the consent agenda to re-evaluate it,” said Damien O’Farrell, president and CEO of Parkview Legacy Foundation. “To redirect it now is very disappointing, and it's concerning to me for a number of reasons.”

Last month, City Manager Mike Futrell pulled the item from the consent calendar, citing the need for additional work, which means the item is again open for debate. He told the Raincross Gazette last week that the discussion will focus on the fund’s structure and administrative details. 

Councilman Sean Mill said in a statement that he’s committed to taking another look at all actions taken by the previous city council and go in a different direction, if warranted.  

“I have taken no position on the item in question, but you can be sure that I will support putting taxpayer dollars towards initiatives that will be in the best interests of Riverside residents and not those of special interest insiders,” said Mill. 

Meanwhile, Councilman Philip Falcone said all relevant information for the item is included in the agenda with supporting reports, with councilmembers getting the opportunity to discuss it during the meeting.

Back in March, after an hour of public comment and discussion over the proposal, the Council allocated $2.8 million of American Rescue Plan Act (ARPA) funds to establish the Resilience Fund. According to city staff, the fund aims to provide financial support to 501(c)3 organizations based in Riverside or serving city needs. 

Cities like Riverside are required by the federal government to allocate ARPA funding by the end of the year and spend them by 2026 or return it back. 

In focus group meetings last year, some local nonprofit businesses -- including IECF, Parkview Legacy Foundation and groups like Inland United Way -- shared they often face barriers securing private investment to grow services or make building improvements. Others highlighted challenges with limited financing options, payment delays from government contractors and securing seed funding for innovative business practices.

“I've seen nonprofit board members chip in just to provide that cash flow,” said O’Farrell. “It's not because nonprofits haven't planned well or haven't done their job. It's just that paying sources are behind in getting them their reimbursements for the work that they've done. And you know, again, this threatens viability and the sustainability of nonprofits in a lot of cases.”

Other cities have used federal and state funds to create revolving loan programs during and after the pandemic. San Diego County’s COVID-19 Nonprofit Loan Program provided $5.2 million in loans to dozens of organizations to sustain their operations and service programs, with groups repaying the funds with minimal losses. 

Riverside’s proposed fund will offer a unique financing model tailored for nonprofits often turned away by traditional banks for loans due to perceived risks, explains Michelle Decker, CEO of IECF. She believes the pandemic and nonprofits’ responses to resident needs strengthened their partnerships to continue serving Riverside effectively, making them a trustworthy investment. 

“They didn't get smaller, they didn't shrink, they didn't fall apart,” said Decker. “They actually developed strong partnerships with state and local and even federal governments.”

O’Farrell agrees: “It leverages one time dollars for long term exponential use and value. It’s the right choice to provide equity and in terms of support for the entire business community.”

The discussion is set to take place during the evening portion of the council meeting that starts at 6:15 pm.