Nonprofit Corporations: Borrowing with Tax-Exempt Bonds

The Orrick Public Finance Green Book Series

Nonprofit corporations have borrowed money using tax-exempt bonds for many years.

Recently, however, the tax-exempt bond market has experienced a substantial expansion in the types of nonprofits using such financing. Previously dominated by hospitals and universities, now virtually every type of eligible nonprofit corporation is borrowing on a tax-exempt basis, spurred by increasing demand for facilities, sector competition, better understanding of the benefits of tax-exempt financing and greater market acceptance of nonprofit corporation credits. For example, see the list in Chapter 3, “Eligible Nonprofit Corporations.” Not only large, established institutions with substantial financial resources need apply, but also relatively small, even start-up, nonprofits without established credit may be financeable.

The purpose of this pamphlet is to provide nonprofits that might not have previously considered or fully understood tax-exempt financing with relevant information about their eligibility for, the benefits of, and the procedures associated with such financing.