REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
April 29, 2025
FROM
DIANE RUNDLES, Assistant Executive Officer, County Administrative Office
SUBJECT
Title
Agreement with the Inland Empire Community Foundation for Revolving Loan Fund
End
RECOMMENDATION(S)
Recommendation
Approve Agreement with the Inland Empire Community Foundation, including a non-standard term, for the establishment of a revolving loan fund, for the period of April 29, 2025, until the Inland Empire Community Foundation no longer holds assets in the revolving loan fund in an amount not to exceed $3,000,000.
(Presenter: Diane Rundles, Assistant Executive Officer, 387-4717)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Promote the Countywide Vision.
Ensure Development of a Well-Planned, Balanced, and Sustainable County.
Provide for the Safety, Health and Social Service Needs of County Residents.
Pursue County Goals and Objectives by Working with Other Agencies and Stakeholders.
FINANCIAL IMPACT
Approval of this item will result in the use of additional Discretionary General Funding (Net County Cost). A request for additional Discretionary General Funding is included as the 2024-25 Mid-Year Budget Report Supplemental.
The total one-time allocation of $3,000,000 will be used to fund the following:
|
Description |
Amount |
|
Fund Capitalization |
2,500,000 |
|
Loan Fund Start-Up Costs |
100,000 |
|
Operational Costs for Program Year One |
200,000 |
|
Operational Cost for Program Year Two |
200,000 |
|
Total Investment |
$3,000,000 |
The Fund Capitalization portion of $2,500,000 will be invested in a liquid investment pool to capture interest earnings and allow the revolving loan fund (Fund) to cover operating costs after year two. The County is not responsible for operating costs after year two.
BACKGROUND INFORMATION
Approval of this item will allow for a one-time $3,000,000 allocation to the Inland Empire Community Foundation (IECF) to establish the Fund which will be managed by a third-party Loan Manager to support San Bernardino County (County) non-profit organizations.
Established in 1941, IECF stands as the oldest community foundation in the Inland Empire, dedicated to serving Riverside and San Bernardino Counties and their cities. With a mission of strengthening the Inland Empire through philanthropy, IECF stewards $137 million in assets, collaborates with donors of all sizes to channel grants and scholarships to those most in need, and works closely with nonprofits to improve their access to resources. The foundation places a strong emphasis on using data to unveil disparities and to drive its grantmaking, programs, and partnerships.
The primary goal of this Fund is to provide a source of flexible financing to support County non-profits providing services to vulnerable populations, such as (but not limited to) seniors, children ages 0-5, foster children/youth, the unhoused, and those living in low-income communities, to:
1) Expand their service reach in the County and the capacity to serve County residents;
2) More quickly access larger sources of funding for facility improvements and innovation, including potential federal and state funding;
3) Provide flexible financing that would be repaid so that there would be a continuous source of capital for future non-profit needs; and
4) Attract other sources of capital to leverage the County’s initial investment into a financially sustainable funding vehicle for nonprofits, particularly to address persistent capital gaps in low-income communities.
The Fund would be situated at IECF. IECF will be responsible for providing Investment Committee management and convening, contract management, financial management, auditing, investment management, financial and program reporting, marketing, and fundraising for additional investment dollars.
The Investment Committee is composed of no more than five total members, with representatives from the County, the community, and people with commercial, community development, or impact financing experience. At least two members of the Investment Committee shall be County representatives, appointed by the County’s Chief Executive Officer or County Contract Administrator. The Chief Executive Officer or County Contract Administrator will approve the initial Investment Committee, and any changes thereafter to the committee, in writing. The Investment Committee will be the decision-making body for approving loans.
Funding allocations will be prioritized based on capacity building that serves in the best interest of the County’s initiatives and strategies to improve provider networks meeting the needs of the County’s most vulnerable populations. Nonprofit organizations will be selected based on their ability to repay loans, which is critical to ensure the fund’s continuation. In addition, IECF is expected to administer the program in accordance with underwriting and lending practices consistent with nonprofit revolving loan programs and based on sound judgment to protect the County and recipient interests. Generally accepted lending practices must be applied to loan processing, documentation, loan approval, servicing, administrative procedures, collateral protection, collections, and recovery actions, as well as compliance with local laws and filing requirements. Targeted funding allocations will be smaller to midsize loans to allow as many organizations as possible to access the funds and allow smaller organizations to grow.
The Fund will be managed by a qualified team from an external partner with a track record of managing, underwriting, structuring, and monitoring similar types of financing opportunities for nonprofit organizations. In addition to the County’s ability to periodically audit financial and other records, IECF is expected to provide a monthly narrative financial report to the County, including a comprehensive explanation of the revolving loan fund’s financial performance beyond quantitative data presented in financial statements. IECF will invest the funds in a liquid investment pool to capture interest earnings and allow the Fund to cover IECF’s operating costs after year two. Principal will be repaid to the Fund and used to generate new loans. If IECF does not make those returns, it will seek private funding to cover costs, which include loan management and convening, contract management, financial management and reporting, marketing, and fundraising for additional investment dollars. IECF will provide technical assistance to both applicants and successful borrowers to ensure positive results. The County reserves the right to terminate the contract for their convenience, with or without cause. If the contract is terminated, IECF will return to the County any unexpended funds, including those for operations, any amount of the fund that has not been loaned, any interest/revenue/funds generated by the investment of the funds, and assign outstanding loans and guarantees to the County.
While the parties successfully negotiated certain terms, the agreement from IECF (Agreement) includes a non-standard term as follows:
The term of the Agreement is indefinite.
• County Policy 11-04 does not permit indefinite terms or automatically renewing contracts unless approved by the Board of Supervisors.
• Potential Impact: There is no end term to the Agreement. Instead, the Agreement remains in effect until there is a material breach of the Agreement by IECF, until the Agreement is terminated by either party, or IECF no longer holds any assets in the Fund.
The County Administrative Office recommends approval of the Agreement, including the non-standard term. This investment aligns with the County’s goals to provide for public health and safety and address the needs of its most vulnerable populations.
PROCUREMENT
Not applicable.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Julie Surber, Principal Assistant County Counsel, 387-5455) on April 23, 2025; Finance (Erika Rodarte, 387-4919, Administrative Analysts) on April 2, 2025; and County Finance and Administration (Robert Saldana, Deputy Executive Officer, 387-5423) on April 14, 2025.