With regard to current economic conditions that negatively affect the
state's nonprofit sector, HEFA is uniquely qualified to assist your
efforts to address the crisis. In your letter to me earlier this year,
you expressed your interest to "expand HEFA's portfolio." You asked
specifically that HEFA merge activities with those of the MDFA in order
to better assist the state's nonprofit institutions.
As you know, the purpose underlying HEFA's formation in 1968 was the
desire to focus a single agency specifically on the financing needs of
nonprofits in the health care and education sectors. By contrast,
MassDevelopment's predecessor, then known as the Massachusetts
Industrial Finance Agency (MIFA), was formed with a much broader
economic development mission to assist proprietary and for-profit
businesses that make up all other sectors of our economy.
In the intervening years, and in contrast to MassDevelopment, HEFA
developed a specialized mission to assist nonprofit, tax-exempt
institutions access the capital markets. MassDevelopment developed a
more far reaching mission to stimulate the economy. This distinction
also evolved in the organizational structures and practices of the large
financial institutions and private firms that engage in bond financings.
The separation of nonprofits from other businesses gives rise to a
constructive focus and expertise that enhances the overall efficiency of
the financing process.
In merging the practices of HEFA and the MDFA, HEFA established an
advisory committee to help make sure that any changes we propose do not
give rise to unforeseen and negative consequences in the marketplace. As
we proceed to define a merger of HEFA and the MDFA, we will do so in a
way that builds on the specific skills and areas of expertise that each
agency possesses and that the financial markets recognize.
Apart from these structural concerns, there are areas in which we have
been gathering data to anticipate the consequences of any proposed
change. One area, for example, is the fee structure by which the two
agencies derive revenue. It looks to be an area where we can expand our
capacity to assist nonprofit institutions without imposing an undue
burden on any one segment.
In this context and in other areas where we may propose to merge the
activities of the two agencies, we'll work to identify measurable
outcomes that indicate how any proposed change will affect our process
and its costs. We'll work also to identify measures that indicate the
extent to which proposed changes enhance the ability of nonprofit
institutions to obtain needed financing.