2019:Q1 Neighborly Software Insights: Future Funding

As expected, the President’s 2020 budget request eliminated all federal funding for CDBG and HOME programs. The intent is to shift a significant amount of the housing and community development financial burden from the federal level to the state and local level. However, state and local governments are facing budget pressures from a variety of other programs. For example, in Florida, the State Legislature cut the State Housing Initiatives Partnership (SHIP) by more than 50% in 2018-19 to pay for other priorities, including school gun violence and the opioid epidemic.

While the President’s budget cuts have very little chance of being enacted, it does send a clear message to Housing & Community Development organizations: Beware if you solely rely on your federal and state elected leaders for your organization’s financial survival.

Below are three strategies you can implement to safeguard the financial future of your organization.

1. Increase Program Income.

Program income is the gift that keeps on giving. It enables your limited funding to be recycled multiple times back into your community. As such, many of our clients are only using forgivable loans/grants for their most vulnerable populations (<30% AMI). The remainder of their funding is being provided via deferred loans (<50% AMI) or zero/low interest amortizing loans (>80% AMI). Also gaining in popularity is community land trusts where jurisdictions are sharing in the appreciation of affordable homes when sold.

2. Diversify Funding Sources.

One of our clients has 25, yes 25, different funding sources for their CPD projects. They proactively seek private grants, local business partnerships and city/county funding resources. The time to start engaging your community, including businesses, local officials and private grant providers is now, not when you are faced with future budget cuts. As the old saying goes, the best time to ask for money is when you don’t need it.

3. Reduce Administrative Costs

Every dollar that is spent on overhead, including paper, printing, and administrative costs is one less dollar that makes it to your community. All of our clients have embraced a future with minimal paper, fewer manual processes and lower delivery costs. As a result, they are not only directing more money into their communities, but also are positioning themselves to maintain, and often improve, services in a period of declining budgets.

We would love to hear from you - what is your organization doing to safeguard its financial future? Please email us at info@neighborlysoftware.com