Event:2020/04/30 Fundraising

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30 April 2020 - 2-3pm

Attendees

  • Mary Ann, Jane, Robb, Jenny, Mai, Jesse

Agenda

via Jesse: My suggestion is that we delay thinking about the balloon payment for the moment - it is separate than the ask for loan relief.

For the loan relief, here is a rough menu of options from the most minimal to the greatest asks. I haven't heard from Jenny about numbers yet. We can probably discuss those at the finance committee meeting.

1. Ask the lender to waive principal payments for a certain number of months. The total monthly payment is currently $5,677.89 and I think interest is $4,468.75 so that cuts the payment by just $1,209. Such an agreement would increase the amount due on the maturity date, but the amount would not be greater than the original loan amount.

2. Ask the lender to waive principal payments and some agreed portion of the monthly interest for a certain number of months. The total amount would be related to the amount of rent that Omni is currently losing. The un-paid portion of the interest payments due would be added to the principal of the loan and be due at the maturity date. This would make the total amount due on the maturity date greater than the original loan amount depending on the amount of interest deferred. Given that the maturity date is soon (and probably before a vaccine is developed and therefore before Omni can be used normally again) I think it is reasonable to make the amount due at the maturity date, rather than sooner. (Under the eviction moratorium, deferred rent is due in just a few months.)

3. Ask the lender to agree to waive the entire payment for a certain number of months. The interest payments due would be added to the principal of the loan and be due at the maturity date. This would significantly increase the amount of the loan over the original amount loaned, depending on the number of months agreed.

4. Ask the lender to agree to waive the entire payment or some portion of the entire payment for a certain number of months, with the amount or some portion of the amount NOT added to the loan balance, by temporarily cutting the interest due on the loan. This would amount to the lender donating money to Omni to help it get through the pandemic, but I do not think the lender would be entitled to take a tax deduction. (Would need to research but I recall no.)

For example, the current interest rate is 5.5%. The inflation rate is roughly 2 %. The lender could agree to temporarily cut the interest on the loan to 2% for an agreed number of months, and not require payments towards the principal, which would cut the total monthly payment to $1,625.

Regarding the number of months agreed, I would set a number such as 6 months, and include language permitting Omni to pay more than agreed at any time. The lender could always agree to a longer period later depending on the pandemic.

The lender might want to include language automatically resuming payments if pandemic restrictions are removed by the County or State, but I do not think it is likely that Omni could resume operations as normal even if restrictions are removed since most people will continue to be scared about gathering in crowds in enclosed spaces until a vaccine is developed. An automatic clause might increase your payments back up to their present level sooner than you can afford.

Let me know if you need more info before the meeting. Let me know how I can join the meeting.

A final note on the balloon payment.

I am skeptical that Omni is likely to get a loan from a traditional bank with or without an audit because lending rules are designed around traditional business and non-profit business models that wont include Omni's operations. It could be worth applying so you don't have to speculate about what a bank would want. If normal banks are not an option, Omni will need to investigate other finances options which will be complex and time consuming. December 2021 is "soon" in financing terms, so starting the work to refinance now isn't too soon in my opinion.

Notes

Mortgage Negotiation

  • Doesn't say rent is never due, just delays it
  • Adding money due down the line
  • Mary Ann:
    • Decide amongst us what we are asking for. Have fallback plans and an ultimate ask.
    • Position 1: Defer all payments for 6 months
   * Cut interest - part of interest is to protect loan from devaluing - 5.5
  • Jesse: The interest rate is 5.5% which is above the inflation rate. The least position is we won't be making a paying for a few months but the interest will accrue and we will pay that back
  • Jenny: Based on previous conversation with the lender, what do you think their position is?
    • Jesse: I don't have any feeling about that. The pandemic is such a left-field event that we don't know what they'd say, it's been a few years since we've talked to them. The people who have money, who are donating money, many recognize that inequality is worsening. It's alright to ask for things, they may say no but that won't burn any bridges. Asking for a bigger thing — I based the note I sent on email based on a promissory note. I have many clients who are facing similar situations. I would approach each lender differently. I think there's an overall sense of social solidarity, people are trying to cut each other a break where they can. So we probably won't do any worse with this lender compared to us. We need to think about it from their position as well, it's going to be part of the negotiation.
  • MaryAnn: What do you think is the best scenario in the long run?
    • Jesse: Deferment does add to your principle. The maturity date has crept up on us — a year and a half away. Omni's situation is difficult and unique. The loaner would look at us with a quizzical expression.
    • Jenny: We've been intermittently developing a relationship with Beneficial State Bank. About a year ago, they seemed to be enthusiastic about a re-finance loan.
    • Jesse: The main thing is, the interest deferment will just increase by the main thing. The value of the property is the main thing banks will look at. Omni is in a good position, unless the pandemic really damages prices. I'd suggest asking them to cut the interest rate for a while. The question I have is do you want to have no payment or lesser payment? Clear that you don't want to have no payment for as long as possible. They could agree to cut the interest rate month by month. You don't have to be dealing with this every month. It's likely that when the money comes back again, the arrangement would come to an end.
  • Jenny: We are finally balanced with our accounting. I'm thinking about sending monthly profit and loss statements — to you and the lender. Making comparative reports as well.
    • Jesse: That's a good offer. It just depends on what everyone agrees to. If you already are blackboading that you're down $6000 and the mortgage is $600, there's good argument for cutting interest. What is cut, what restores it, etc. What day do you actually pay?
    • Jenny: Omni pays on the 8th of the month

Deferred payments added at the end or just cut the interest for awhile

  • Mai: many actions tomorrow - rent & ,mortgage strikes, will also pressure the banks
    • the fact that we'll be asking formally and working with them would foster trust, hopefully
  • Jesse: Sending them concrete numbers will help alot
  • Mai: Should the duration be for 6 months or something like the duration of shelter in place?
    • Jesse: Better to have a set number. The shelter in place could be in effect for another year and a half.
    • MaryAnn: Not just the shelter in place would effect people gathering, people won't gather anyway over personal health concern. Do we want to include any language around what we'd do if we got a large grant or emergency funding and how much would go to them?
    • Robb: Language around something changing would be including
    • Jesse: Either 6 months or income would change enough for us to be able to pay.
    • Jenny: Any income that isn't designated for any fiscally sponsored project. There would be shared budget % in terms of the member collectives. My action item for Jesse to be able to get off the call soon is to send a profit+loss report to him by 6pm tonight.
  • Jesse: Would be more confusing for me to send a proposal to you before I give it to the lender or just go ahead and send it?
    • Robb: What about language around receiving mutual aid work. Say for $5000, that would go to the program not to mortgage. How can that be manneauvered?
    • Jesse: There's a cut to $ we're receiving, when we get $ back we will pay mortgage. The lender will probably going to be realistic. Another landlord I'm working with is asking for portion of $. We should have language that shows that we're not just trying to get over with things.

Possible Emergency Funds

  • MaryAnn: Discussion with Jose about the SF Bay Community Funds. They received funding to distribute it, but they didn't have connections with groups so they got in touch with Jose's nonprofit. The group he works for was selected by the Silicon Valley Foundation to work with them for Alameda County. The people he works for asked Jose for recommendations if he knew of any organizations that need emergency grant. They don't have the money yet (it will be a TON). His superiors are setting uo the eligibility requirements. He will let us know as soon as they're ready. We need to look at their process, requirements, what we'd need to do to apply. Jose knew nothing about what the spreadsheet said, about orgs losing money from lack of event rentals. I emailed him this morning about whether the info we received was accurate. Sent him a general picture of the situation. Is this for all Bay Area counties or not. It's not unreasonable to think that's what they're doing, to include all the counties in the Bay Area.
    • Haven't yet called the East Bay Community Foundation. A lot of my plate right now, will call them tomorrow.
  • Jane: Looked into the SF Foundation and United Way. They both have Covid-19 relief funds. There are certain things I need. SF Foundation has between $5-$10K. We fit into everything they're looking for: homelessness support, food distribution. They will prioiritze their funding in those areas.
    • United Way ending in 2 weeks - up to $10K there, COVID19 Bay Area Relief Fund
      • Critical infrastructure - maybe kitchen?
      • Form is a surveymonkey so Jane copied
      • Deadline is May 15
    • SFF - definitely qualify, up to $10K
      • Link Flux account to accounts@omnicommons.org
      • Deadline couldn't be found, maybe rolling

Potential fundraising buckets

Supplies

  • Nix hand soap
  • Salsuds
  • TP down to one box
  • Too many hand towels?
  • further discussion at finance-specific meeting next week

Next Meeting

Action Items

  • Jenny: Send profit+loss report to Jesse to show to lender
    • also update donor spreadsheet
  • Mary Ann EBCF
  • Jane - create Fluxx account for accounts@omnicommons.org - share password (four random words, no spaces, lowercase)
  • Add Jane gmail account - Jenny - DONE
  • Ping Matt - Jenny
  • Property tax checkin - Robb (jenny to forward info)
  • Jenny - Send notes - include links to: kitchen budget; newsletter doc (for updating call for support and linking to possible crowdfunding campaign); omni website github; DONE
  • Jenny - poll to Finance WG re: new meeting day/time
  • Mai - create Steward list for Sudo Mesh(?)
  • Jenny - Send updated SI-100 (new officer signoff needed), RRF-1, send New Member Collective handbook to Sudo Mesh once Stewards mailing list is created

LINKS

Last Mtg's Action Items

  • Robb intiate an email / budget w/ FNB & CR & NORJC
  • Mai create a skeleton doc of language we can use in our grant applications
  • Jenny: Donor list into Mailchimp - update: may need to upgrade account for this - donor list uploaded into Fundraising GDrive
    • announce login created for Fundraising WG to view financial reports in QB - in passpack, ask for access if you dont have it and need it
      • Share Mailchimp login w/ Mary Ann - see above
  • Update OmniCommons.org - https://github.com/omnicommons/omnicommons.org
    • New banner at the top
    • Update donate page
    • add/create a Mutual Aid Fund
    • link to Chat / VideoChat - https://omnicommons.slack.com / https://omnicommons.live
    • emphasize virtual events (eg; LibLens classes, Waffles & Zapatismo, maybe outreach to regular renters and see what they're up to and if they'd like to list things on our calendar?)
    • I think Matt had a plan for a wholescale redesign, so maybe focus on written content first - Jenny ping Matt re: website

DONE:

  • Jenny upload up-to-date reports
    • Q1 2019 vs Q1 2020 reports
  • Jenny to add Mai to Omni website github and Omni fundraising drive/folder
    • Jenny re-share Fundraising Drive/folder after uploading reports - done
  • Jenny add all to fundraising list
  • Jenny to email Jesse & cc Mary Anne
  • Mary Ann to have a convo w/ Jesse
  • Jenny tee-up Grants spreadsheet to better organize deadlines, updated / new opportunities, etc