Foundation Leader: Philanthropy Must Turn More Attention to Housing Issues

A couple of weeks ago the head of one of the nation's leading funders reiterated it's long-held belief that housing is at the heart of nearly every key social issue funders face - an opinion we very much share at Funders Together. Here in it's entirety is the commentary from Jonathan Fanton, president of the John D. and Catherine T. MacArthur Foundation (you can also read it on the MacArthur site).

The American economy cannot recover without a turnaround in housing.

While the federal government considers what additional steps to take to help homeowners and the housing market, American philanthropy need not wait to play a role in solving the crisis and helping to spur a recovery. Grant makers must understand that even if housing is not a part of their direct mission, it affects just about every type of effort to aid American families and improve neighborhoods across the country.

Housing is not just a vital component of the economy, after all. New research shows that stable, affordable housing is central to education, health, employment, and economic development.

Foundations should act promptly to focus on housing issues because the vicious cycle of home foreclosure is likely to get worse before it gets better. As even more adjustable mortgage rates are reset this year, many additional families will not be able to meet the higher payments required to keep their homes.

Home foreclosure filings continue to increase rapidly. The Center for Responsible Lending projects nearly 2.5 million foreclosures nationally this year. In Chicago, where my philanthropy, the John D. and Catherine T. MacArthur Foundation, has its headquarters, foreclosures doubled in 2008; there are two or three foreclosures per block in some of the city's hardest-hit neighborhoods.

The damage the housing crisis is likely to cause could affect families for generations. Research shows that children with a stable place to live are healthier and perform better academically; employment rates for adults are higher when they have a steady residence; and communities with longtime residents have a greater share of citizens actively involved in civic affairs and experience less crime.

For instance, Robert Haveman, a University of Wisconsin researcher, and his colleagues found that frequent moves for a young child or an adolescent have "a strong negative and significant effect on achievement." Indeed, moving as a child has a greater negative impact on high-school graduation rates than does poverty or welfare dependency. Children whose housing is not stable also are at risk of deficient nutrition, as well as poor health.

It is not just homeowners and their families who are affected by the foreclosure crisis. As many as one-third of foreclosed properties are multifamily units, putting renters in jeopardy when building owners can no longer afford their mortgages. In some cases, renters have been evicted without legally required notice, losing security deposits, incurring moving expenses, and being forced to double up.

As families lose their homes, neighborhoods also suffer. Vacant houses quickly deteriorate, dragging down property values and encouraging crime and vandalism. The cost to local governments is considerable: up to $34,000 per house in police and fire protection, trash removal, unpaid water bills, court proceedings, and, in some cases, demolition. The cost to neighbors and the local housing market are equally serious: a drop of up to 1.1 percent in property value for every home within an eighth-of-a-mile radius.

Foundations are in a strong position to make a difference in resolving the housing crisis. While our resources are much more limited than those of federal and state governments, we can be more nimble and can act more quickly. We know the communities we serve well, including where local needs are greatest. In many cases, foundations have supported and helped to build resilient networks of organizations that are capable, experienced, and ready to expand their efforts to ensure stable and affordable housing.

MacArthur has almost a decade of experience supporting community and economic development in 16 of Chicago's promising, but low-income, neighborhoods. We are concerned that our investment and the hard work of our grantees may now be put at risk. But we also recognize that our experience — and that of the organizations we have supported over many years — is an asset, enabling us to make a real difference in these troubled times.

Responding to the growing lending crisis and the rise of foreclosures, MacArthur is investing $68-million in grants and low-interest loans in foreclosure prevention and mitigation efforts in Chicago neighborhoods. We expect our investment to attract more than $500-million in capital. Our goal is to help local organizations reach 10,000 Chicago households, provide counseling to 6,000 of these, and help prevent 2,700 foreclosures by 2010.

We recognize that only half or fewer homes in foreclosure can be rescued. Consequently, we are also investing in efforts to reclaim foreclosed properties and to bring them back quickly to productive reuse.

Homeownership is not for everyone. Today one-third of American households, 37 million, rent their homes — including new college graduates, older Americans, and young families saving to buy their first place. So we are also leading the local Preservation Compact, an effort to reduce the net loss of affordable rental housing in the Chicago area to zero.

Our efforts to prevent foreclosures and mitigate their effects draw on and expand the work of organizations we have supported in these neighborhoods over the years. These groups are familiar with their communities and residents and can best reach those in need. For example, more than half of all borrowers facing foreclosure never contact their lender, though doing so, at any time, can increase the likelihood of avoiding foreclosure.

Neighborhood groups can get the word out — they know where, how, and when to reach troubled borrowers to educate them about the need to contact lenders. They are also in a good position to provide the housing counseling that borrowers need, enabling many to restructure or refinance their troubled mortgages. For many such groups, extending their reach and improving their capacity to respond is the most significant challenge. They simply need more employees and more money to expand their efforts in the face of tremendous need. Foundations can provide that additional assistance quickly.

Foundations can also be of direct help to local governments. In Chicago, MacArthur is working with the city government and local nonprofit groups to acquire and put back to productive use thousands of foreclosed properties, initially with money from the federal Neighborhood Stabilization Program.

MacArthur's investment in housing reflects our values. We know that housing matters to people and neighborhoods. We believe that, in difficult times, foundations should increase, not cut, grant making to help people in need.

American philanthropy has a long history of serving the needs of communities and helping to improve the local and national economy. In uncertain times, investments in housing benefit individuals, families, communities, and the overall economy.

As T.S. Eliot wrote, "Home is where one starts from."

Report from New Orleans: A national disgrace and local dreams

By Bill Pitkin, Poverty and Inequality

I spent a couple days in New Orleans recently learning about the recovery effort from Katrina. It was, in a word, stunning. I was stunned by the endurance of the devastation more than three years since the storms, as well as by the resilience and passion with which residents are rebuilding their great city. Katrina ended and destroyed thousands of lives and ruined thousands of homes and businesses. Moreover, it generated a national dialogue on poverty and race, the ugly issues we don’t like to discuss in polite company. I remember hearing from friends in developing countries who saw the coverage of Katrina in 2005 that they were shocked to see that such poverty existed in the U.S. Yes it did exist and let me tell you that it still does.

We toured several of the most affected neighborhoods, such as Gentilly, Lakeview, and the Lower Ninth Ward, where we saw just islands of homes in a sea of vacant lots and abandoned buildings. There is a lack of street life in these formerly dense neighborhoods, with buildings waiting for repair or demolition and a general sense of trepidation in the air. Looking even closer, there is despair. We entered abandoned buildings – old homes, vacant public school buildings, even a city-owned property – with homeless outreach workers and saw evidence of people sleeping in dark, smelly, rubble-filled spaces that barely offer a roof over their heads. In one room in a large public building, one person had set up a mattress (hauled up three flights of stairs) with a few worldly possessions, including a metal bar next to the mattress that we could only guess was for personal defense. We met and spoke to elderly disabled people living in the most precarious conditions, happy to have someone showing interest in them, but hoping for a more permanent solution.

Katrina has obviously exacerbated long-standing poverty and housing challenges in the city. According to the latest New Orleans Index, there are about 65,000 abandoned or blighted properties in New Orleans, fair market rents have increased by nearly 50%, and almost 14,000 people in the region are at risk of a severe housing crisis when their Disaster Housing Assistance Program vouchers are set to expire in March 2009. Perhaps most telling is that the homeless population in New Orleans has doubled from about 6,000 to 12,000 since Katrina (while the overall population is at just 70% of that before the storm).

Despite these challenges, there is evidence of hope. I asked Albert Ruesga, who recently moved to New Orleans to serve as CEO of the Greater New Orleans Foundation, about the most surprising thing about the city that he has noticed, and he pointed to the deep pride and sense of place that residents have. Coming from California , where everybody is originally from somewhere else, I was surprised to learn that the vast majority of New Orleans residents were born in Louisiana. We witnessed this local pride in the form of renovated homes by property owners fortunate to have insurance or other means to rebuild and beautify their homes (Mardi Gras was coming up, after all). Civic, philanthropic and nonprofit leaders are coordinating to make key investments in building affordable housing and a viable community development system. We saw first hand the smart, compassionate work of outreach workers from UNITY of Greater New Orleans, which is leading the charge to move chronically homeless people from the streets or abandoned buildings to permanent supportive housing. Public sector funds have unfortunately been slow to get on the ground; but
at least the city government is beginning to think more holistically about their work and interface with private and nonprofit efforts.

The problems facing New Orleans are great, but from the short time I was there, I saw evidence that its people are stepping up to the challenge. But, they need our help. In a future post, I will highlight some ideas on what you can do to help in the recovery effort in New Orleans.

Read "Report from New Orleans, Part II: What you can do to help" at the Poverty and Inequality Blog

Learn more about Funders Together's tour at the 2009 Grantmakers in Health Annual Conference on "Systems Change and Supportive Housing in New Orleans"

How do you define your role in the economic crisis?

Deciding whether funders need to shift from "grantmaking as usual" in the ongoing economic crisis is probably a foolish question - clearly, grantmaking as usual just won't cut it in the months and years ahead.

But figuring out exactly how you plan to shift your focus in the light of so many new (and not so new) pressing needs is easier said than done. Just a few of the questions grantmakers are asking themselves:

How do we reach out to local providers, policymakers and state agencies to best understand the rapidly shifting sands of our region's support networks?

What advice and guidance, if any, do we share with these groups?

How do we think about the messages we send - and the forums we use to convey these messages - to our local providers, policymakers, or the general public?

And, perhaps most importantly: Can we afford to sacrifice long-term goals for short-term emergency fixes?

One foundation that is thinking deeply about this issue is the New Hampshire Charitable Trust.

Last week, the Trust's president, Lew Feldstein, sent out a letter to its broad network discussing the hard choices it is now making in its approach to the crisis and why, for the most part, it has chosen to keep to the long view. Lew writes:

I once likened the Foundation to an earthworm.

Some winced at this decidedly un-heroic metaphor. They would have preferred a lion or a hawk, a mighty mountain, Hercules manning the barricades.

I get that – I too hear the trumpets, the fife and drums. All of my instincts in times like these are to rush to the walls. To position the Foundation as a great and mighty force resisting the ravages of recession. Helmeted, with a huge fire hose in one hand, bags of cash in the other. Throwing ourselves into the breech, filling the huge service holes caused by imminent state budget cuts and reductions in private giving to our agency colleagues. A philanthropic “Walter Mitty.”

But that’s not who we are.

Yes, the Foundation can marshal emergency help in crises. We did it with the 2003 closing of the Berlin mills, the 2006 floods in southwestern New Hampshire, “Stay Warm NH” just this winter. We will do so again.

And yes, the Foundation was among the first in the state to fund programs to address AIDS, child abuse, homelessness, and payday lending – in most cases well before there was public support. And will continue to do so.

And yes, the Foundation does provide significant annual support to hundreds of nonprofits that provide basic human services, and we remain the largest single source of scholarships in the state. And will continue.

But the highest and best use of the Foundation – and the broader charitable sector – is not to underwrite basic services. This is not our role even in good times, and we certainly don’t have the resources to take it on in hard times.

The nonprofit sector simply doesn’t have the firepower to meet the overwhelming needs emerging in this recession. That job must be led by government.

Think of it this way. Nonprofits and government are in the same business – helping to move citizens to a better life. But if government is a bus or a train, we are a motor scooter. They carry far more people and do the bulk of the work. But we can start and stop faster, and take the turns more sharply.

At the same time – and here is where the earthworm metaphor works – the Foundation’s job is to build the soil, to enrich the ground in which the state’s thousands of nonprofits work, to have the truly long view that asks, “What will the ground look like when we come out of this? Still fertile or scorched and sterile?”

So what does that mean for our work in this deepening recession?

It means we must …

• Sustain our grantmaking capacity as well as we can
• Focus investments in high performing change agents
• Make changes to better support the nonprofit sector as a whole
• Encourage donors to dig deeper than ever
• Strategically advocate long-term public policy solutions to systemic
  problems.

And that’s what we are doing.

(Read the rest of Lew's letter: The Foundation's Role in Troubling Times)

While there are no easy answers to the challenges our communities now face, and while there are no easy answers to the most appropriate role for funders, we think that Lew's sentiments may provide a good starting point.

On March 4th, Funders Together will host an Audio Conference for its national network of funders to discuss the topic of "Responding to Crisis." If you're a funder and would like to participate, please sign up here. Others are invited to provide their comments and suggestions - rest assured, we are interested to know what you think.

Taking Apart the $819 billion Stimulus Package

While the exact numbers have changed since it was initially created, this recent graphic from the Washington Post provides a fascinating look at the distribution and timing of the 2009 Economic Stimulus Package.

Click on the image below to view a larger version of the graphic.

Funding Principles Slide Show

Learn more about Funders Together's mission, goals and approaches, including a brief presentation of our Funding Principles for Ending Homelessness. (To view a full screen version of this slideshow, click on the button in the lower right-hand side of the image below).

Homelessness is a Solvable Problem

"So, does anyone else wonder how many more years the Melville Charitable Trust will be looking for a solution to Homelessness? Every night I hear on NPR that it is funding "All Things Considered" and working on finding solutions to homelessness? So, how is it going for them on this quest for the Holy Grail? Have they found a solution yet? Homelessness has increased every year for the past 20 in Cleveland, so the solutions have not made it to the Midwest..."

"...I have to wonder that all the money spent on staff, advertising, shelters, permanent supportive housing projects, National Alliance, and NPR would have helped more people by just providing a family a housing voucher for one year. They could have paid for an entire year of housing for 1,000 people in Cuyahoga County over the 10 years if they had just given away $6.5 million dollars to us. That would have doubled our Shelter Plus Care program and increased our Voucher program by over 7% with $6.5 million."

(Read full post).

-- Brian, clevelandhomeless,

We recently came across this critique on the blog for the Coalition for the Homeless in Cleveland. Melville staff member Aimee Hendrigan offered the following clarification of the Trust's overall strategy.

What do you think, either about the critique or Aimee's response? Please add your comment below.
_________________________________________________________

Hello Brian,

As a staff member of the Melville Charitable Trust, I read your comments with interest. Allow me to jump in and offer my two cents.

I think we agree that homelessness is a solvable problem. The Trust focuses on the creation of supportive housing as a key solution, one that can be used throughout the country. The Trust has spent over fifteen years funding supportive housing solutions in Connecticut (the Melville family’s home state). This focused investment in the state has contributed to significant results (thousands of units of housing) and a strong group of leaders who advocate for real solutions to homelessness, including funding for ongoing services (a very big challenge as you acknowledge).

We would be the first to say that this type of change does not happen quickly. It can be frustrating, but for us it is worth the consistent investment. You can visit one of our key grantee partner’s sites to learn more about the advocacy we support: http://www.ctpartnershiphousing.com/.

When you suggest that we might have better used our funding to pay for an entire year of housing for 1,000 people, that’s where we seriously disagree. Philanthropy cannot and should not be the direct funding solution to the nation’s housing crisis. It is not sustainable; frankly, we would run out of money – and pretty quickly.

To be most effective in addressing major social issues such as homelessness, foundations can work to leverage their funds. The Melville Trust does this on a national level when we support the National Alliance to End Homelessness, the National Low Income Housing Coalition, and the Center for Budget Policy and Priorities, among others. Their legislative advocacy has a tremendous impact on the federal and state allocation of funding for housing and homelessness priorities throughout the country (if interested, you can find a list of all of our grantees from the past five years on our website http://www.melvilletrust.org/).

We also work to facilitate relationships with other funders, again with the aim of leveraging funds as well as sharing ideas. The Trust is a founding member of Funders Together, http://www.funderstogether.org/, a national network of funders dedicated to ending homelessness.

Our ongoing support of NPR underwrites their tremendous contribution to airing stories about housing and poverty – important reporting you don’t hear in many other places. It is our hope that our tagline might offer encouragement/inspiration for those working in the field or impacted by homelessness, as well as awareness for others who think homelessness is an unfortunate constant in our society.

I appreciate the forum to respond and would be happy to discuss any of these issues further through the blog or otherwise.

Sincerely,

Aimee Hendrigan
Senior Program Officer, Melville Charitable Trust