Housing non-profits and the economic downturn

by Justin Lucas on Mar 1, 2011

The collapse of the housing market has forced non-profits to reconcile the opposing forces of increased need with increased competition for resources. The Blackbaud Index of Charitable Giving reported a 2.1% decrease in giving to human services organizations for the three months ending December 2010 compared to the same period in 2009.

However, at least two affordable housing organizations have maintained or expanded through the crisis. Habitat for Humanity International is widely recognized as a leader in the field. It has seen its contributions remain relatively flat during a time when many similar organizations faced major challenges, a fact that Habitat contributes to its past successes.

“Habitat’s track record of performance has mostly shielded it from the valleys of the economy,” said Derrick Morris, Capital Campaigns Manager at HFHI. “With fewer dollars to go around, donors are more intent on making their donations count.” Habitat’s reputation has also helped it gain financial support from the federal government’s Neighborhood Stabilization Program (NSP), funds that have largely gone to help more families in urban areas.

“We have seen a greater need in urban areas which hasn’t been an area of strength for us. NSP has allowed us to undertake bigger block projects to revitalize entire neighborhoods,” said Morris. “With any sort of government funding we have to make sure that the conditions of the grant allow us to maintain the integrity of programmatic impacts.”

A newer organization has found success by utilizing fundraising strategies more typical of for-profits. Builders of Hope was founded in 2006 by Nancy Murray, a former ad executive, to bring innovation to the field. Finding the donor pool skeptical of newcomers, Murray approached a segment largely ignored by non-profits: investors.

“One of our most reliable funding sources is giving circles”, said Murray. “We take a loan out from individuals to fund our projects and they in turn receive interest on the loan. Everybody wins from the investor to the homeowners.” The organization has paired this novel approach with an environmental focus by rehabbing existing homes with mostly donated materials.

“The average home produces about 35,000 pounds of debris when it is demolished,” explained Murray. “When we renovate, we keep about 70% of the house intact and rebuild with materials that would have otherwise gone into a landfill. You would be surprised at what some people throw out.” This process is how Builders of Hope has managed to keep its costs low for its homeowners and investors. None of its 220 homes have been sold for over $200,000.

While the housing crash and continued economic instability promise to pose on-going challenges for the non-profit sector, Habitat and Builders of Hope give the industry reason to believe that progress can still be made under difficult conditions.

About the author: Justin Lucas is currently serving as an AmeriCorps member with Our Towns Habitat for Humanity in Cornelius, North Carolina. Prior to moving to North Carolina, he worked for Habitat for Humanity of Northern Fox Valley where he started A Brush with Kindness, an exterior home repair program for low-income families in the northwest suburbs of Chicago. As an active participant in the non-profit community, Justin brings first-hand knowledge of the issues currently facing families in need of affordable housing.

Leave a Comment

Previous post:

Next post: