Organizations, like people, go through seasons of change and growth. To effectively carry out a core mission they must adapt to shifting conditions and emerging needs and opportunities. And during these learning phases, an organization can benefit profoundly from some extra support.

For the hardworking local groups that create affordable housing and drive community development across the country, that extra assistance often comes from a key capacity-building program of the U.S. Department of Housing and Urban Development (HUD), commonly known as Section 4.

First authorized in 1993, HUD Section 4 money is awarded annually on a competitive basis to three national intermediaries—Enterprise Community Partners, Habitat for Humanity, and LISC—which in turn fund capacity-building grants to community development corporations (CDCs) and other local nonprofits.

Since 1994, LISC has distributed some $343 million in Section 4 funds, spreading the grants across a nationwide footprint through its 38 local offices and rural program serving 48 states. In an average year, LISC makes grants to more than 250 local organizations, often as part of a long-term working partnership that also includes technical assistance from LISC staff or consultants and other, program-related financing.

A Flexible Tool to Equip Community Builders

Section 4 doesn’t go directly into construction projects or service provision. Instead, it’s that hard-to-find money to pay for vital but generally low-profile activities that don’t tend to generate revenue. Section 4 facilitates organizational and community planning and organizing. It’s used to bring on new staff or hire consultants. It supports improvements to a CDC’s back-office capabilities so it can streamline operations or compete for funds from new sources.

Enjoying rare bipartisan support in Congress, Section 4 makes efficient use of federal resources. In keeping with program requirements, LISC matches Section 4 dollars on a three-to-one basis, and for each Section 4 dollar they receive, grantees aim to leverage ten dollars in other public and private investments.

The strategic grants typically come into play during inflection points for an organization, says Vanessa Ryan, LISC vice president of grants and contracts management. “You have new baby startups that need support just to grow and to stabilize,” she explains. “Then you have groups that have been around a really long time but might be going through a transition—housing or economic instability, say, or critical disruptions brought on by COVID. We’re giving those organizations grants so they can respond and sustain their work. The third category is when the organization is doing something to diversify their business line, broaden how they’re impacting the community. We can help them take the work to a new level.”

The specific capabilities that a CDC needs vary across time and by location. Section 4 can be applied flexibly to match those needs. So, for example, New York City groups may require specialized skills in preserving existing affordable units, says Ryan, while Detroit CDCs focus on renovation and infill developments. LISC has deployed Section 4 to buttress efforts in economic development, creative placemaking, and community health. In rural America, LISC Section 4 grants have helped groups gear up for wildfire and drought mitigation, for instance, and to network with like-minded organizations dispersed across large distances.

Read the full article about building capacity for organizations addressing homelessness at LISC.