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3 <br /> NONPROFIT FINANCIAL CAPACITY REVIEW <br /> TARGET KEY PERFORMANCE INDICATOR FOCUS <br /> 1.QUICK RATIO <br /> Cash,investments,and AR 2x and higher The organization's financial capability to quickly liquidate assets to meet short-term financial obligations. <br /> Current Liabilities <br /> 2.DEBT RATIO <br /> Total Debt Not more than 15% The organization's available and unrestricted assets to meet its short-term and long-term debt obligations. <br /> Unrestricted Net Assets <br /> 3.EXPENSE EFFICIENCY RATIO <br /> Program Expenses Not less than 80% The organization's efficiency in fulfilling its mission through dedicated funds for program expenses. <br /> Total Expenses <br /> 4.OPERATING RESERVES RATIO <br /> Operating reserves 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 /> Total Expenses <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 /> TARGET KEY PERFORMANCE INDICATORS <br /> 1.QUICK RATIO <br /> Cash,investments,and AR 2x times 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. If the <br /> Board approves a proposed policy and criteria for subsequent loans, then the Community Loan <br /> Fund is the staff recommended funding source and would be funded up to $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 /> RECOMMENDATION(S): The Manager recommends that the Board discuss a proposed policy <br /> and criteria for providing loans to nonprofits for capital projects and provide direction to staff. <br />