A recent article in Shelterforce – Growing a Stronger Nonprofit Housing Sector – highlighted “a class of high-capacity nonprofit developers has emerged that make particularly compelling partners to the public sector in addressing critical affordable housing and community development needs at this time.“
This new high-capacity nonprofit model starts with a social enterprise ethos. These organizations mix a deep commitment to mission with sound business practices, strong management and organizational capacity, public-private partnerships, and large-scale impact.
At a time of enormous pressure on federal affordable housing resources, there are some things policy makers could do to increase the effectiveness of their nonprofit housing enterprise partners, and also to make better use of the capacity that those enterprises bring to the table.
They recommend several policy changes to ensure the development of high-capacity non-profits.
Encourage Flexible Portfolio Management. Policy makers could increase the ability of nonprofit housing providers to achieve better outcomes for residents and communities by allowing and encouraging portfolio level management strategies. Under the current affordable housing system, property owners are forced to manage their properties separately, each with its own financing, subsidy contracts, reporting requirements, and compliance systems. Portfolio-level flexibility would allow an owner to raise private capital with lower transaction costs and create operating efficiencies by combining these activities for multiple properties.
Identify Strong Preservation Partners. As the current owners of aging single-asset portfolios look for new owners and new sources of capital, a high-capacity nonprofit is the ideal purchaser. A strong nonprofit organization can partner effectively with the current owners to recapitalize that housing and bring new management capacity. As the HUD-assisted stock reaches the end of its assistance contracts and LIHTC properties mature into the 15th year of their compliance periods, the country will want to ensure that these properties are preserved as affordable housing.
Strengthen Balance Sheets to Leverage Capital. Policy should encourage stronger nonprofit balance sheets as they increasingly play important affordable housing preservation and stewardship roles. Homes for America was able to expand and increase its impact in the communities it serves following a program related investment from a foundation.