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Non-profit sector: loans will not solve ‘dire’ financial problems

The 2021 Throne Speech: David Burt, the Premier (File photograph by Akil Simmons)

An association of charity leaders said that loans were not the answer for under-pressure third sector organisations.

The Non-profit Alliance of Bermuda’s awareness working group added that better information collection and sharing could improve performance in the field.

The group was speaking after the Government announced plans to work with the island’s lenders “to provide financial, loan and mortgage assistance to communities of faith and third-sector entities”.

But the NAB working group said that “loans are not the solution non-profits are looking for, except perhaps for unique needs or projects”.

It added: “Loans must be paid back, which results in future funding being diverted away from running programmes and services.

“This is even more challenging if funding must be directed towards debt servicing, which donors are not likely to fund.”

The statement added: “Non-profits do benefit from flexible, multiyear grants that support their ability to financially plan and manage their sustainability.

“It could also be hugely valuable for the entire third sector, including non-profits, donors and the Government, to have better data on the third sector landscape.”

The statement said: “The Registrar currently regulates non-profits and captures important data on how the sector is functioning.

“There is great opportunity for non-profits and the Registrar to collaborate around how to improve the data collection and information sharing functions so that we can all better understand the state of the sector and use that data to seek opportunities for sector-wide improvement.”

The group backed Major Rob Kerr, The Salvation Army’s divisional commander for Bermuda, who said last week that assistance to provide loans or mortgages to the third sector would not be “too helpful” to his organisation.

Rena Lalgie, the Governor, who delivered the Throne Speech on behalf of the Government last Friday, said “third sector charitable organisations have filled the void in the lives of the people and, along with frontline healthcare workers, have provided relief to many”.

She added: “This mission has been carried out with love and genuine care and concern, masking the fact that these organisations are in dire financial straits themselves.”

The Non-profit Alliance is a group of non-profit leaders committed to working together to improve the impact of non-profit organisations and promote their value.

Its NAB awareness working group said: “Bermuda non-profits have been at the forefront of the pandemic, helping, supporting and uplifting the community when people needed it the most.

“The Government further noted the strain on the sector which is an accurate reflection on the current state of the non-profit sector.

“In some cases, non-profits are facing significant financial strain which should be concerning for Bermuda.

“Our non-profits provide essential services that contribute to Bermuda’s basic social safety net and which build community wellbeing.

“They provide services that, in some cases, should be the responsibility of the Government and which, in other countries, are funded through Government contracts and fees for service.”

The statement added: “Currently, the Government provides less funding to non-profits than in other countries such as the UK, the US and Canada.

“In the USA, approximately 30 per cent of revenues in the non-profit sector come from Government funded grants, contracts or fees for service.

“In the UK, Government contracts and grants add up to almost 40 per cent of the sector’s revenue.

“In Canada, the Government accounts for 20 per cent of the sector’s revenue sources.

“In Bermuda, Wavecrest’s 2020 data showed only eight per cent of revenues came from Government sources.”

The group said: “All in all, Bermuda’s non-profit are supported less by the Government than in other countries, so it is welcome news that the Government is interested in further supporting the financial sustainability of the sector.”

David Burt, the Premier, said on Monday that he would work with the Bermuda Economic Development Corporation’s board to see how it could support the island’s religious organisations and third sector.

He added: “Some churches and charities are struggling.

“The same people who the pandemic has impacted are the core of these institutions, and those donors who have historically supported them have reduced capacity to do so.

“During curfews and shelter-in-place, many congregations drew strength from broadcasts and other new forms of outreach.

“The dedication of these sectors must be respected and sustained.

“Working together, we can help them navigate these times and, like other entities in receipt of assistance, emerge stronger.”

The Government did not respond to a request for further comment.

* To read in full the comments made by the awareness working group of the Non-profit Alliance of Bermuda, click on the PDF under “Related Media”. For more information about the Non-profit Alliance, visit www.iacbermuda.org/nab.

* To read the State of the Non-profit Sector 2020 report by Wavecrest, an advisory group, click on the PDF under “Related Media”.

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Published November 16, 2021 at 7:48 am (Updated November 16, 2021 at 7:48 am)

Non-profit sector: loans will not solve ‘dire’ financial problems

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