Why does Harmon make loans, not grants?
We believe charitable projects should make economic sense. A charity’s ability to repay a capital loan helps validate a project’s economic worth. A charity willing to repay loans to build is putting its own, not just donor, money into a project, and tends to give careful thought to what it builds. What happens to repayments? They are added back to a revolving loan fund. As the Foundation adds new money more and larger project can be funded. Why charge interest? Some of our early borrowers sought money to invest in financial markets. Our rates are just high enough to discourage playing financial markets. How low is low? Rates are set by reference to short term Treasury rates with consideration to the loan’s length. They are much lower than any other likely source of borrowed funds. Can a charity fund a new program with a loan? Probably not. We do not loan for operating expense or to endowment. We loan for buildings, land, and physical items. We’ve loaned to purchase computer systems, sp
