More and more, the projects that non profits must consider have significant price tags.  The “sticker shock” often presents a major problem for leadership.  If the funding for the project relies only on private support, then the goal of any campaign may be perceived as unattainable.  In these situations, some non profits can benefit from the inclusion of bonding into the funding equation.

Certain non profits, like the YMCA, have significant earned income potential.  This earned income revenue stream can be utilized to fulfill the payback requirements of issued bonds.  Consider the case of a YMCA looking to build a new, state-of-the-art, metro center with a price tag beyond the traditional local goals of philanthropy. Estimating the growth in membership and the resulting fees generated, leadership is in a position to evaluate the use of bonding in funding the construction.  Initial private support coupled with a bond issue allows the construction to move forward sooner, which in turn allows the YMCA to realize the earned income sooner.  All of this in turn, positions the non profit to address the bond repayment through earned income and future fund raising.