The U.S. nonprofit sector held almost $14 trillion in assets in the second quarter of 2025, according to Federal Reserve data.

The sector generates roughly $4 trillion in revenue annually, according to ProPublica – and Dominic Kalms, founder of nonprofit loan marketplace B Generous, said lending to the sector is an opportunity that banks can’t afford to miss.

“The name nonprofit is a horrific name. It makes everything harder,” Kalms said during a presentation at the Independent Community Bankers of America’s ICBA Live event in San Diego this month. “’Nonprofit’ is simply a misnomer.”

The nonprofit sector consistently averages large net income surpluses annually, according to the Tax Foundation. The sector as a whole has had over $100 billion in net income surpluses every year for 30 years, and in 2024, the nonprofit sector had a $204 billion net income surplus, the Tax Foundation said.

It’s a common misconception – by both the public and bankers – that nonprofits are capitalized from donations, Kalms noted.

“Less than 8% of nonprofit revenue in the United States comes from donations. It's minuscule, and 81% comes from earned income, just like a traditional business,” Kalms said in a follow-up interview with Banking Dive.

Despite the sector’s net income surplus, just 3% of banks lend to nonprofits, according to Kalms, and only goes to the top 3% of nonprofits – leaving plenty of opportunity on the table, he said.

“Today, there's about a trillion dollars of nonprofit debt in the United States, meaning nonprofits have borrowed about a trillion dollars so far, and there's a trillion dollars of excess capacity just sitting there, meaning there's an opportunity to lend another trillion dollars,” Kalms said. “But nobody's taking the opportunity because people don't know about this vertical.”

Two years ago, B Generous launched at scale to connect nonprofits to lenders. It has since received 34,000 loan requests asking for some $1.2 billion; and it has connected nonprofits to $100 million in loans.

California Business Bank, based in Irvine, California, is one such bank.

CEO Tom Meyer said B Generous acts, in part, as a business development arm for the $122 million-asset lender.

“We don't have folks specifically looking at nonprofit lending, going on marketing and calling on those folks. This is a giant help that they're sourcing the deals for us, and it’s very much appreciated,” Meyer said.

The bank, he said, has to do its own due diligence, but B Generous’ pre-screening process does a “great job.” At the heart of that is the firm’s proprietary credit algorithm SmartScore, an AI-driven model designed for nonprofit underwriting.

SmartScore was built using data from nearly 2 million nonprofits and some 950 million nonprofit data points, Kalms said, and its 97% historical accuracy in predicting loan defaults far surpasses traditional commercial lending models.

On B Generous’ platform, banks and lenders only see deals that have gone through B Generous’ own credit review process. It’s free for lenders to work with B Generous, and partnering with the fintech doesn’t require that they agree to lend to a certain number of businesses, or any at all.

New York investment firm Grays Peak Capital is also a lender in B Generous’ marketplace, running its Impact Credit Fund, which bills itself as “the nation’s first and only private credit strategy dedicated exclusively to lending to nonprofits — delivering institutional underwriting, diversified social outcomes, and market-rate yields.”

“A lot of the nonprofits have marketable securities,” Grays Peak Capital founder Scott Stevens said when asked why nonprofits serve as viable lending customers. “They own real estate, so they have assets, and they do have a lot of income that's actually generated not from donations.”

Since launching in the second half of last year, the Impact Credit Fund has seen “a ton of demand,” Stevens said. People are looking for ways to do impact investing, he said, and “this is one where you can actually make a profit, but kind of quantify the social impact.”

Kalms started out in the nonprofit world with Global Philanthropy, a consulting firm focused on scaling celebrity nonprofits. His own intentions were sparked by a unique childhood that had him witness, at length, widespread poverty in rural China, contrasted against immense wealth in central London.

“The first original thought I ever had, at 8 or 9 [years old] was, ‘Whoa, the world is an unequal place.’” Kalms said.

“That stuck with me,” he said. “And I always said, ‘If I can ever do something to be on the solution side of that problem, I'd want to do something to make the world a better place.’”

Meyer said nonprofit lending, including through B Generous, can open doors to long-term relationships for small banks like his.

“For these nonprofits, if we do something good for them, we can build long-term relationships that are valuable to us,” he said. “Frankly, when you help [nonprofits], you might get access to additional lending opportunities in other sectors through some of the board members, [who are] centers of influence in the community.”