Conduit Bond Issuer
Issuing bonds is difficult, especially for a small nonprofit organization. For what is oftentimes a one-time event, the institutional energy consumed in figuring out how to offer the bonds, and account for and satisfy ongoing compliance issues has significant expense and drains significant time from the non-profit’s management team, volunteer board and staff. Further, typical tax exempt bonds do not provide any benefit for a non-profit’s development activities … they are simply debt that must be fully repaid.
With its years of experience in issuing taxable bonds, Cornerstone can effectively “rent” this bond issuing and maintenance capability to other non-profit organizations by serving as the “conduit” bond issuer. For its conduit bond services, Cornerstone receives a bond issuance fee (at initial closing) and ongoing annual facility fee. In addition, Cornerstone has developed a unique type of “donor friendly” bond that can provide significant help to the non-profit’s development activities by serving as inventory for Charitable Trusts and other structured giving vehicles for use in your non-profit’s financial eco-system.
Why Borrowers Love Taxable Bonds
Banks love them! Allows non-profits ability to work with their local bank on financing deal.
No use of proceeds limitations. Tax-exempt bonds have secular strings attached everywhere!
Allows donors to invest directly in a cause they support.
Allows flexibility to retire bank debt more quickly and place that debt into donor-friendly hands with the goal that the debt is ultimately forgiven.
Provides “evergreen” financing. No need to refinance with “off the shelf” issuance capability under a non-profit specific master indenture.
The bonds are specifically structured to work within the 10 Ways to Give, fundraising and development platform.
CCF Finance, LLC
Following its own success in the taxable bond business and seeing a need across the country for new and innovative ways for the non-profit world to think about the financial ecosystem, Cornerstone invested a great deal of time and resources into creating and fine-tuning its conduit bond business. Toward that end, it formed a single member limited liability company, CCF Finance LLC, which can “rent out” its bond issuing capabilities to other non-profits by providing turnkey conduit financing. Its board meets regularly to consider potential non-profit conduit relationships, quickly assessing whether a transaction is ripe, and if so, can provide non-profits the money they need within 90 days. These conduit financings are captured on Cornerstone’s audited statements, and relieve the borrowing non-profits of the often complex accounting details associated with such transactions. Cornerstone’s conduit structure is a win-win-win for the non-profit, its lender, and its donors.