Sample Nonprofit Transactions
A. Nonprofit expansion
Organization has completed fundraising for new building, with pledges due over the next seven years. Issuing $1.25 million bond to bridge receipt of pledges and provide $500,000 of term debt to complete project. Bond is being directly purchased by existing investment manager. Estimated closing costs of $20,000.
B. Construction of new nonprofit facility
Organization proposes to build a new $12.5 million campus. Rather than use endowment funds, organization will finance the project using a variable rate "low floater" bond, which will allow them to borrow on an all-in basis for approximately 2.5 percent. Using existing bank.
C. Renovations and finance
Organization is spending $1.25 million to renovate an existing building. Rather than use endowment funds to complete the project, as the nonprofit has in the past, they will finance the renovation cost, plus refinance $1 million in existing debt, through a tax-exempt bond.
D. Equipment purchase
Organization annually buys over $500,000 in computers and related equipment. Rather than use vendor financing as the nonprofit has in the past, they will finance the equipment with a tax-exempt capital lease, reducing their interest expense by nearly one-half.