Private sector has role in social safety net

A few months ago I was a participant in a discussion about community housing issues. Local officials, providers and administrators were present. Many issues were raised and discussed.

When we came around to talking about solutions, I suggested a much greater capital investment in affordable housing development and that the private sector could and should play a successful and meaningful role in this endeavor. The next speaker, while agreeing that more housing was needed, nevertheless rose to speak against my suggestion that we engage the private sector and cautioned against exploring such a “risky” relationship.

Fast-forward six weeks and I was in another meeting about community housing issues. The group was mainly providers, stakeholders and administrators. I added language to a goal statement suggesting that the creation of more affordable housing could be a private-market success story.

The language was quickly rejected by some who seemed aghast that the private sector would even be mentioned, but a few defended the notion, and it stayed, albeit, in a modified form.

By now everyone should know that all governmental funding received by nonprofits originates in the private sector. It is accumulated from local, state and federal fees and taxes. It is the thinking of some (well, me anyway) that the people who pay for the programming might like to have a voice in how it was spent; they may even want to participate.

This makes even more sense when we acknowledge that innovation largely comes from the private sector free market. It remains the government’s essential role to encourage and stimulate this market while maintaining a well-regulated environment to the benefit of all.

Nonprofits play an immensely important role in protecting our social safety net, but if there is another solution that both rewards the community from which the funding originates and creates a better outcome for the person served, shouldn’t we at least give it a look?

Here are two stories that I made up to illustrate my point:

One: Chris is 35, has a spouse and two children. Although working, Chris is poor and lives in subsidized rental housing. The household has no savings because all the money is spent each month on necessities and rent. Time flies.

Thirty years later, the spouse has passed away, the kids have grown up, Chris is retiring, and the rental is too large for one person. With no savings, Chris is relocated to a smaller subsidized unit to conclude a life lived in or near poverty.

Two: Chris is 35, has a spouse and two children. Although working, Chris is poor and has no savings, but there is a program which matches local private-sector builders with households trying to improve their lives and the lives of their children.

Chris signs up. Chris buys the house, utilizing HUD’s Section Eight Downpayment Assistance Program. The local builder is incentivized to build a small not-as-profitable unit through the offering of property tax deferrals by county government, and the local bank is able to offer an artificially low interest rate because County Affordable Housing/2060 funds have been used to buy it down. HUD HOME funds are provided to the builder for 20 percent of the material costs of construction.

Now Chris is a homeowner and a property taxpayer for $750 a month on a 30-year note. Time flies.

Thirty years later, the spouse has passed away, and the kids have grown up and moved out but with college educations paid for through an equity loan on the home.

Chris is retiring, and the house is too big for one person. Chris sells the house, pays off the equity loan, buys something smaller and nets $50,000. Chris, enjoying retirement, fusses around the yard and looks for things to do until the quiet is broken by the delighted sounds of grandchildren interrupting a life well-lived.

If my organization, Habitat for Humanity, can make this equation pencil out for the folks we serve at 30 percent to 50 percent of the Area Median Income ($48,000) then there is certainly a community-based solution for families from 50 percent to 80 percent of AMI that we can all support.

Remember, stable housing can help create stable families, ownership can create economic stability. Combined, they help create that one thing we all desire for ourselves and our families: the opportunity to be something more.