Status and Prospects of the Nonprofit Housing Sector, 1995

The nonprofit housing sector makes a meaningful contribution to the revitalization of distressed and underserved areas. A new report published by HUD's Office of Policy Development and Research, Status and Prospects of the Nonprofit Housing Sector, examines its evolution and considers its role in achieving future affordable housing and community development objectives.

The study found a lack of comprehensive and consistent data on the nonprofit sector. The industry is highly decentralized: there is no national register of nonprofit corporations and little systematic data on nonprofit activities and performance -- even the definition of a housing-related nonprofit organization remains elastic. According to the largest survey of the nonprofit sector, conducted every 3 years by the National Congress for Community Economic Development, approximately 1,800 community development corporations (CDCs) provided housing in 1991, but only a small number of them were high-volume housing producers, usually operating in larger cities with access to a diversity of funding sources, mostly in the Northeast, Middle Atlantic, and Pacific regions.

Data were not available to accurately describe the total number of housing units produced by nonprofits, but it is estimated that 17 percent (36,200 units) of all federally assisted units were produced by nonprofits in 1990. On average, 30,000 units were produced each year by CDCs between 1989 and 1991. Nonprofit production peaked in the 1970s, when Federal funding for housing was at its zenith; the share of federally assisted housing units built by nonprofits was only slightly higher in 1990 than in the period between 1960 and 1990.

The report notes that many housing nonprofits have moved beyond a narrow focus on housing production to offer a more comprehensive range of services. Because of their community perspective, housing nonprofits are viewed by many involved in serving low-income populations as being uniquely able to effectively manage or arrange social services for their clients. In 1991 approximately 40 percent of CDCs produced housing, organized community residents, performed at least one nondevelopment housing activity, and provided one or more social services; while only 9 percent restricted their activities solely to housing production. However, the report points out that little data exists on the actual performance of nonprofits in coordinating or delivering nondevelopment services.

Several barriers exist to nonprofit capacity in housing development. Federal support, on which many nonprofits depend, is shaky. Nonetheless, strong funding for such mainstays of nonprofit financing as HOME and Community Development Block Grant Programs, seems to signal a continuity of commitment to community-based housing initiatives. The number of nonfederal funding sources -- such as foundations and community development loan funds -- is growing, but the aggregation of multiple funding sources is often challenging for small organizations with limited staff capacity. Furthermore, compiling a variety of funding sources can drive up project costs and distort project choices, although the preferences provided by some funding sources can give nonprofits a competitive advantage over for-profit developers. Funding uncertainties and revenue shortfalls make it difficult for nonprofits to develop and maintain skilled professional employees: staff capacities tend to be limited, training opportunities few, and turnover high because of low salaries and limited job opportunities and stability.

Nonetheless, the report finds that the professionalism and potential of the nonprofit sector clearly expanded during the 1980s, although they remain unevenly distributed. This increase in capacity has been aided substantially by the appearance of national and local intermediary and support organizations that encourage new local partnerships, provide technical assistance, and marshal private capital.

Status and Prospects of the Nonprofit Housing Sector synthesizes a wealth of information on this poorly understood component of the Nation's community-based housing and development system.

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