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Loan financing to hire an Executive Director – your experiences
Hello,
I am working with a colleague who is the executive director of her organization but after a few years is too busy to continue to do this on a volunteer basis. They would like to hire a full time Executive Director, but don’t have the funds. And grant funding is probably still a few years away for a number of reasons. Has anyone had any good/bad experiences or would recommend / not recommend trying to find loan financing to hire an executive director for a few years? It’s the usual chicken-or-egg problem that so many nonprofits face… thanks for any advice you can offer.
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2 Replies
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That’s a hard path to take. The risk for this option depends a lot on how well developed the plan is to start to generate revenue, either through contributed or earned income, and whether there is enough capacity and commitment to implement that plan. If the organization would be starting from scratch to try to build up more revenue, there’s a lot of pressure on the new executive director to raise money to pay the loan rather than to achieve the organization’s goals. Propel Nonprofits has a loan fund for nonprofits and our team would have a lot of questions with a request like this. It would be more likely to have a loan later in the organization’s life cycle to grow programs or to add to a development team that had some traction.
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Kate, thanks for offering this advice, I really appreciate it.