A few months ago the McKnight Foundation made a striking announcement: The Minnesota foundation awarded a grant of $23-million to the Family Housing Fund to build 5,000 units of low-cost housing in the Twin Cities over the next four years.
The award is the largest grant to a single organization in the history of McKnight. More striking, it stands out as one of the only major foundation responses to the nation’s worst crisis in affordable housing in recent years.
And it appears that that crisis will be getting worse. When Congress reconvenes in September, the House of Representatives will vote on a spending bill that cuts funds for public housing and other programs of the federal Department of Housing and Urban Development by almost $1-billion. What’s more, Congress’ $792-billion tax-cut bill, if it becomes law, arguably will have an even greater impact, as the tax cuts are predicated on deep cuts to housing projects and other social services over the next 10 years.
While a few foundations recently have made major grants to support housing projects, nearly all have focused exclusively on homeownership. At the same time, most have backed away from supporting housing strategies that promote rental housing for the lowest-income families and elderly people, for whom homeownership is an unrealistic goal.
Yet changes are occurring on the housing scene that dictate that grant makers should rethink their strategies.
First, while incomes at the low end of the wage-earning scale continue to stagnate, the booming economy of the 1990s has caused residential rents and home prices to skyrocket, and the existing stock of low-cost housing is being eroded at an alarming rate. According to HUD, the number of units that rent below $300 a month declined by 900,000 units, or 13 per cent, from 1996 to 1998.
Second, a report released by HUD titled “Waiting in Vain: An Update on America’s Rental Housing Crisis” found that waiting lists for public housing and housing-voucher programs have increased by 10 to 25 per cent since 1996, and the amount of time that families must wait on the lists has increased by 50 per cent in the largest cities.
Third, Congress and HUD have made substantial structural changes to housing programs that are government subsidized -- and this year are considering making further changes -- that will directly affect the number of subsidized-housing units available. As decision making has moved from the federal to the state and local levels, numerous federal protections for residents of publicly supported housing have been eliminated, leading to the demolition, or conversion to market values, of thousands of low-cost homes. Many of the three million residents of those units are fighting hard for a seat at the table when crucial decisions are being made about the fate of their homes.
Yet no major foundation has put significant funds into helping residents of public and subsidized housing organize to effectively participate in those decisions. In fact, foundations have generally pulled away from supporting groups that engage in housing advocacy and organizing.
Foundations that have typically financed research on the effect of the “devolution” in authority from the federal to the local level have an obligation to also finance community responses to it. People with low incomes must be supported in their efforts to participate directly in the decisions that affect their lives.
The bottom line is that the fate of hundreds of thousands of low-cost units is now at stake. Costly homeownership programs and housing created through other mechanisms, such as the Low-Income Housing Tax Credit, simply cannot meet the needs of our poorest families. Public or subsidized housing is the only resource that is truly affordable to households with incomes below about $15,000 a year.
To combat this crisis, foundations should invest heavily in local grassroots groups that organize residents, and should support national and state policy and technical-assistance organizations that provide assistance to resident groups. Grant makers that are already involved in the housing arena should also educate their grantees about these sweeping changes in housing policy, and connect grantees with residents and advocates who are working on these issues locally and nationally. Foundations can also educate policy makers about the effect that these changes have on grantees and their communities.
At a time when Congress is poised to slash funds for housing and other programs that benefit working poor and middle-class families in order to finance close to a trillion dollars in tax cuts for the highest-income taxpayers, foundations cannot afford to sit idly by as thousands of poor people become newly homeless.
Lisa Ranghelli is a policy specialist at the Center for Community Change, in Washington.