On June 7th, at Reclaim-Possibility, a 22-bed home in South Los Angeles, owner Kalain Hadley had to inform his 10 employees that they might not be paid because the reimbursement checks from his funding agency, Amity Foundation, had not arrived on time. This delay in payment is a common struggle for many nonprofit providers with government contracts, as invoices take 60 to 90 days to be processed and paid.
The funding lag has become a significant issue for the multibillion-dollar homelessness system, affecting both small providers like Reclaim-Possibility and larger organizations. To address this problem, the Los Angeles County Board of Supervisors approved quarterly cash advances from Measure H homeless sales tax proceeds to the Los Angeles Homeless Services Authority. However, this solution does not benefit providers like Hadley, whose reimbursements come through the criminal justice system.
In response to this funding gap issue, the Future Communities Institute is proposing an alternative plan to provide financial support to small providers when they need it the most. This project aims to create a working capital fund that would offer no-interest loans to providers like Hadley to cover expenses until reimbursements are received. The goal is to raise funds from government and philanthropic donors to establish a fund of about $650,000 to support small providers in the homeless services sector.
Similar initiatives, such as the fund created by the Conrad N. Hilton Foundation, have already been implemented to assist nonprofit organizations. The Nonprofit Finance Fund manages this program, providing loans with no interest to organizations with budgets ranging from $2 million to $50 million. However, the process for accessing these loans can be lengthy, and the Future Communities Institute aims to provide a more streamlined and efficient process to ensure that funds reach providers within three days.
For Hadley, who spent 25 years in prison before turning his life around and starting his own business, the need for immediate financial support is crucial. Despite facing financial challenges and resorting to predatory lenders to stay afloat, Hadley remains determined to support his employees and continue his work in providing housing for men transitioning out of prison.
The proposed working capital fund offers a glimmer of hope for providers like Hadley, who are struggling to make ends meet due to funding delays. By providing timely financial assistance, these providers can continue their essential work in supporting individuals experiencing homelessness and reentry from the criminal justice system. The initiative by the Future Communities Institute represents a step towards addressing the funding shortage for homeless services and ensuring that providers receive the support they need to carry out their vital mission.