This post is one in a series of Featured Listening Posts highlighting Listening Post Project participants employing innovative strategies and techniques to address the key challenges we have analyzed in recent Listening Post Soundings.
Founded in 1945, PVM provides a variety of living options and services in 23 communities across Michigan, including continuing care retirement communities, subsidized senior housing, and market-rate senior housing. PVM also sponsors community outreach and health ministry programs including parish nursing, home health care and personal services. Over 2,500 individuals reside in PVM affiliated Villages, while another 1,000 community members are served through various programs. With assets over $200 million, an annual budget over $50 million, 650 employees, and over 500 volunteers, PVM serves individuals of all financial means in urban (intercity), suburban, rural and resort communities.
The Listening Post Project selected Presbyterian Villages of Michigan (PVM) as a Featured Listening Post because of the innovative ways in which it has accessed investment capital in recent years. To learn more about PVM, and its involvement with the Listening Post Project, we spoke with Roger Myers, President and CEO of PVM.
The Listening Post Investment Capital Sounding found that most nonprofits are experiencing significant challenges accessing investment capital. How has PVM overcome these challenges to obtain the investment capital it needs? What can other nonprofits learn from PVM’s experiences and approach?
Overcoming the challenges associated with obtaining investment capital has been addressed by PVM with principally four strategies: 1) improving operations and key financial ratios, 2) compliant and transparent reporting, 3) deploying a diverse set of financing relationships and arrangements, and 4) expanding its community relations and philanthropic outreach. Other nonprofits can adapt these strategies to fit their particular circumstances.
Obtaining investment capital starts with the organization’s improvement of its operating financial performance. This improvement generates necessary cash to build cash liquidity, meet debt obligations, limit reliance on short term lines of credit, invest in routine capital improvements, and sustain value-added programs.
Compliant reporting addresses the accuracy and timeliness of reporting critical to meeting regulatory, investor, and lender requirements. It also assists in obtaining follow up capital investments and lending from these same sources. Further, reporting transparency provides an open framework for dialogue between PVM and its capital investors and lenders. This framework allows PVM to utilize its investors and lenders as sounding boards for PVM initiatives and credit profile improvement.
Accessing investment capital is strengthened by deploying a diverse set of financing relationships and arrangements. Financing sources from time to time have their own investing and lending constraints. Therefore, being knowledgeable about and having a diverse set of financing relationships and arrangements will allow broader access to investment capital. Diverse arrangements also allow an organization the flexibility to take on investor or lender capital based on the impact on its key financial ratios.
Finally, expanding an organization’s community relations and philanthropic efforts expands the base of individuals, corporations, and foundations engaged in the organization’s mission and vision. This strategy can assist not only in leveraging access to capital from other sources, but also in successfully sustaining the initiative.
Can you elaborate on the many ways in which PVM has obtained investment capital?
PVM has successfully accessed investment capital from many sources. At the federal level, we rely on the U.S. Department of Housing and Urban Development’s (HUD’s) Section 202 Program, HOPE VI Program, HOME Funds, and Targeted Federal Earmarks for Community Enhancements and Housing Development. At the state level, we work with the Michigan State Housing Development Authority (MSHDA), and The Michigan State Hospital Finance Authority. Several county and municipality sources provide capital, such as Community Development Block Grants and Downtown Development Authority Funding. We also work with the Great Lakes Capital Fund, Sun America Affordable Housing Partners, and the National Equity Fund (all of which serve as Low Income Housing Tax Credit Investors). Several commercial banks provide horizontal (infrastructure) and vertical (building) construction loans and refinancing of existing commercial debt. Finally, we access investment capital through foundations and corporations as well as individual donors.
How do you think funders could work with the nonprofit sector to increase opportunities for funding?
Funders could a) become more knowledgeable about the specific programs and services provided by nonprofits through the eyes and experiences of those individuals who are being served; b) provide technical assistance on a wide variety of topics (i.e., collaboration formation); c) broker collaborations to deliver a more comprehensive array of programs and services; d) reduce administrative barriers and restrictions to funding so funds are more directly assigned to targeted markets; e) offer incentive based funding that offers rewards for delivered outcomes, f) provide low cost loans and guarantees; and g) work to bring other funders to specific initiatives.
Has your organization experienced any major changes over the past few years? What are its future goals?
PVM has experienced numerous major changes over the past few years including an executive staff restructuring to centralize various functions and to increase our focus on operational performance and the consolidation of executive leadership responsibilities to assure closer integration and coordination between the organization’s financial/economic capacity and development/programmatic initiatives. Our strategic goals for 2009-2011 are to improve customer satisfaction; develop community-based services; maintain, enhance, and expand facilities; and strengthen financial capacity and access to capital. PVM will continue to grow by serving more seniors and more communities in Michigan.
What is the most rewarding part of your job/being part of the organization, and what is the most challenging part of your job? PVM derives the greatest satisfaction in knowing that through the efforts of countless servant leaders and stakeholders, in every minute, of every hour, of every day, 365 days a year, we are making a meaningful positive difference in the lives of seniors and communities across the state of Michigan. PVM’s growing and diverse constituencies present challenges to weigh competing options and alternatives. Of course, the overall demographic trends of an aging population will continue to place heightened demands on PVM and its leadership.
How do you think the country’s current fiscal situation will affect the nonprofit sector? How is it affecting your organization?
The most pressing issue currently facing PVM and peer nonprofits is clearly the unstable, uncertain, and unprecedented condition of the overall economy. PVM has been negatively impacted by reduced access to capital, significant disruption in the real estate market (lower values, slow pace of sales), reimbursement constraints based on governmental deficits and competing priorities, and negative returns on investments. There is also increased competition for philanthropic resources.
What do you find to be most valuable about participating in the Listening Post Project, and what topics would you like to see covered in future Soundings?
I find that PVM’s participation with the Listening Post Project enables it to contribute to the broader nonprofit field across multiple sectors. We have used project reports as part of our continuous environmental scanning efforts. We find that the survey results help us think both strategically and operationally, continually challenge our views and conclusions reached on various issues, and provide input and perspectives from a broader cross-section of national non-profits.
I propose three Sounding topics: 1) the economic impact of the aging of the nation; 2) the future funding of long-term care expenses; and 3) how to gain greater visibility and recognition of the aging field among foundations and corporations.