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NONPROFIT FINANCIAL CAPACITY REVIEW <br />TARGET KEY PERFORMANCE INDICATOR FOCUS <br />1. QUICK RATIO <br />Current Liabilities <br />2. DEBT RATIO <br />Total Debt <br />Unrestricted Net Assets <br />3. EXPENSE EFFICIENCY RATIO <br />Program Expenses <br />Total Expenses <br />4. OPERATING RESERVES RATIO <br />Operating reserves <br />Total Expenses <br />3 <br />2x and higher The organization's financial capability to quickly liquidate assets to meet short -term financial obligations. <br />Not more than 15% The organization's available and unrestricted assets to meet its short -term and long -term debt obligations. <br />Not less than 80% The organization's efficiency in fulfilling its mission through dedicated funds for program expenses. <br />Target range of 16% to 25% The organization's capability to fund expenses with reserves due to a lack or loss of operating revenues. <br />The below chart indicates that Inter -Faith Council has the financial capacity to repay a $100,000 <br />County loan based on the four Financial KPI measurements. For purposes of the proposed loan <br />eligibility criteria, a nonprofit organization that meets all four of the KPIs would successfully meet <br />the County Nonprofit Financial Capacity Review. <br />IFC NONPROFIT FINANCIAL CAPACITY REVIEW <br />LL130:11 C4WAaI a1daIVirt1Z14411 ill 1idtr to] ;;&l <br />1. QUICK RATIO <br />Cash, investments, and AR 2xtimes and higher 7.9 <br />Current Liabilities <br />2. DEBT RATIO <br />Total Debt Not more than 15% 7% <br />Unrestricted Net Assets <br />3. EXPENSE EFFICIENCY RATIO <br />Program Expenses Not less than 80% 81% <br />Total Expenses <br />4. OPERATING RESERVES RATIO <br />Operating reserves Target range of 16% to 25% 30% <br />Total Expenses <br />Source: June 30, 2017 Inter -Faith Council Audited Financial Statements <br />FINANCIAL IMPACT: The proposed Inter -Faith Council loan of $100,000 would be funded <br />from the Social Justice Fund. The Social Justice Fund balance is currently $328,199. <br />If the Board approved the proposed policy and criteria for subsequent loans, then the <br />Community Loan Fund is the staff recommended funding source and would be funded up to <br />$500,000. <br />SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to <br />this agenda item: <br />• GOAL: ENSURE ECONOMIC SELF - SUFFICIENCY <br />The creation and preservation of infrastructure, policies, programs and funding necessary <br />for residents to provide shelter, food, clothing and medical care for themselves and their <br />dependents. <br />