Real estate company

Building a non-profit real estate company with real impact

The shortage of affordable housing has affected communities in urban and rural areas, large and small. According to a 2018 CityLab report, no state has enough housing for low-income renters. The crisis is particularly severe because around 9.7 million extremely low-income (ELI) tenants spend more than 30% of their income on rent; 8 million of these tenants are considered heavily cost-burdened, forced to pay more than half their wages.

But across the country, nonprofit community housing corporations have sprung up to rise to the challenge and curb the housing shortage and support underserved communities.

As America’s ailing housing sector calls for more organizations and assistance to meet the needs of rent-stricken communities, emerging entrepreneurs need a blueprint to build businesses with truly positive social impact. To create sustainable and effective nonprofits, leaders should consider using several community-focused measures:

Investing in social services

The Kresge Foundation reports that social housing as a platform for social services contributes to the stability of low-income families and gives them more opportunities for independence. For nonprofit developers, integrating social services into your business model is very helpful.

By integrating property management and social services for residents, nonprofits can help deter factors such as lease violation and promote resident-centered decision-making. One way to do this is to invest in human capital and expand employment programs for residents. For example, non-profit companies can provide resident training and employment within their own organizations, which not only helps support business growth and recruitment, but also paves the way for professional development. .

Transparent communication can enable service providers to identify personalized services or coaching that, if provided early enough, can prevent evictions and help them gain financial independence more quickly.

Ensuring community participation

Community engagement and support is crucial to building a sustainable nonprofit real estate business. Interacting and getting to know those who live in the community allows leaders to keep tabs on what the community – and your business – needs to succeed.

During the planning process, community feedback towards integrating housing as a cohesive part of the neighborhood and building more sustainable and affordable housing developments. Research from the Federal Reserve Bank of Dallas outlines how nonprofits should engage with and invest in the local communities where they seek to grow.

Nonprofit real estate organizations should focus on these key areas of community engagement:

  • Target community representatives to serve as an informed board
  • Ask community members to take leadership positions on your development team
  • Use surveys and community data to get feedback during the planning, development and finalization stages (and after)
  • Work with and support community organizations like chambers of commerce
  • Schedule regular community meetings to develop clear and creative strategies for communicating with community members

Speaking at the Affordable Housing Forum at the 2018 NACo Annual Conference, Hon. Deborah Kafoury, Chair of Multnomah County, Oregon, spoke about the importance of unity and community engagement when it comes to the affordable housing crisis, saying, “We need to tackle the systems that push our neighbors on our streets instead of just scrambling to help them once they’re there, and that must push us out of our comfort zones. But, when we are united at the grassroots level – even when we have to go head-to-head or hack “politics as usual” to get there – we can do so much more together than we could ever do alone. »

Nonprofits such as Neighbor Works and Project Access, which provide social programs with full-time staff in specialized site-built community centers, point to the need for quality housing that the workforce can have. , especially when they achieve goals with high benchmarks.

Establish public-private partnerships

According to the McKnight Foundation, collaboration is key to funding affordable housing and its services. Some non-profit developers often partner to produce affordable housing to help bring resources and expertise to the development process. Location-based partnerships with a geographic focus on particular cities, for example, are common, according to Jim Grauley, senior vice president of the Bank of America Community Development Corporation.

But partnerships are most successful when each party brings a unique capability to the project, such as a mixed-use project experience where the nonprofit organization offers expertise and the for-profit partner offers commercial real estate experience. As the market and government fail to help affordable housing succeed, a partnership with the private sector offers solutions focused on preservation, rehabilitation and quality affordable housing, especially when combined with strong social and community programs.

The Urban Land Institute has established broad principles for establishing successful public-private partnerships. Between them, both parties need to build trust, align their mission and goals, align their cultures, and figure out how to work together to organize projects. During the development stages, develop a strategy to manage day-to-day operations and decision-making responsibilities. It is also essential to finalize each partner’s equity share of the project, structure your agreements by determining an equitable distribution of benefits, designate and determine the duration and exit strategy before entering into a partnership.

Thinking about the future in a sustainable way

High-quality development creates valuable returns for the community, as well as your nonprofit. Developing affordable housing is an investment and high quality units last for the long haul. The high quality construction offers many advantages. In the short term, property management makes units more durable and attractive. Rental property promotes these long-term prospects because often property management offices affiliated with development companies manage these developments.

Additionally, investing in sustainability resources and practices is crucial when considering how you will develop this affordable housing. Preservation and rehabilitation strategies increase the longevity, safety and beautification of the community and properties while maintaining affordable rents. Green initiatives, in particular, promote health, well-being and a responsible environmental footprint that improves efficiency and reduces long-term construction costs. In the 120-acre Highpoint mixed-income projects in Seattle, for example, the final cost of using green elements was estimated at $1.5 million, just 3% of the $43 million budget for Phase 1 rental units. They produced benefits such as reduced utility expenses (estimated at 20% less, or a savings of $371 per year for a three-bedroom unit) and a healthier environment for the tenants.

Director of Initiatives at Enterprise Community Partners, Krista Eggers, says, “People on low incomes are the ones who need it the most. She continues, “If your income is very low and you live in housing that has low utility bills and is healthier, ‘you are going to benefit to a greater degree…than if you have a lot of income. available “.

Urban Land Institute research on sustainable and affordable housing indicates that green affordable housing is naturally energy efficient and significantly reduces the amount of electricity and natural gas consumed by its residents. It costs less to operate, so owners can afford to pay more for green units. Incidentally, sustainable construction also paves the way for social programs such as green educational resources for residents. When you add value and purpose to communities, you do the same to your nonprofit business.

Everything you do is an investment in the community that can strengthen and maintain your nonprofit’s reputation. Whether you’re building community relationships, sourcing sustainable materials, or developing public-private sector investments, it’s important to keep the focus on the double bottom line. When your nonprofit organization maintains the importance of a people-centered approach to your work, it can streamline the path for future projects and the well-being of communities in need.


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