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Engaging nonprofit organizations in the development and implementation of local housing programs


Nonprofit organizations play a key role in delivering housing-related programs in cities, towns, and counties. In addition to providing important services for localities, nonprofits can help localities learn more about the housing needs of their clients and provide valuable feedback on a locality’s existing or proposed programs. Localities, in turn, can take steps to build the capacity and reach of its nonprofit partners to better achieve local housing policy objectives. 

This brief discusses the benefits of working with nonprofits and how to effectively engage them in the design and implementation of housing programs. Much of what is discussed in this brief also applies to engaging mission-driven, for-profit organizations working in a locality. For additional guidance on working with private sector organizations.

How and why do localities work with nonprofits?

Many localities frequently work with nonprofit organizations to deliver several types of housing-related programs to their residents and often think of them as valuable partners. In some cases, localities partner with nonprofits to more efficiently administer services than the locality could directly deliver, or because nonprofits have specialized skills or access to private or philanthropic capital needed to execute a complicated task, such as housing development. Nonprofits can also help inform effective program design, help localities access hard-to-reach-populations to provide assistance, and help extend the impacts of the localities’ funding by leveraging other funds. Common examples of housing-related programs typically outsourced to nonprofits include the delivery of housing rehabilitation services, development of affordable housing, provision of services to people experiencing homelessness, housing counseling and downpayment assistance, and the provision of rental assistance, among other activities.

Nonprofits often have deep knowledge of the needs and preferences of the potential end users of housing programs, which include lower-income residents or people with special needs. As they are “on-the-ground” working directly with beneficiaries and within government systems, nonprofit organizations can provide valuable input in the design of the locality’s housing and housing-related programs – which elements work and which do not, what is feasible to implement and what is not, and what changes could make program delivery more efficient.

Nonprofits can help the locality understand the specific needs of different populations. Many nonprofits are neighborhood- or community-based and have good understanding of the needs of specific groups, such as refugees, recent immigrants and other groups with strong cultural identities, people with disabilities, and people with limited English proficiency. Given these connections, nonprofits often have ideas about how a locality may design programs for hard-to-reach populations that may be less likely than others to seek assistance.

Working with nonprofits can also help localities stretch their funds further for greater impact by leveraging other funding resources. For example, a city may provide gap financing to an affordable housing developer on a project that has already secured the balance of needed funds. Or, a locality may supplement a nonprofit’s programmatic budget by granting funds to expand or enhance an existing program.

In addition to funding a nonprofit directly, localities can expand their impacts by coordinating activities with nonprofits in a target area. For example, if a nonprofit is working in a neighborhood to turn vacant lots into community gardens, the locality could conduct housing rehabilitation or redo the sidewalks in the same neighborhood to complement the nonprofit’s activities. Thus, both the nonprofit’s and the locality’s efforts would enhance each other’s improvements.

Engaging nonprofits in the development of local housing programs

One of the most important considerations in working with nonprofits in the development of housing programs is to engage them early in the planning process. If these organizations have the opportunity to provide input into the needs and solutions developed to address those needs, the locality will be better informed about any practical challenges that need to be overcome in order to implement the programs. Localities can engage nonprofits in different ways, including: 

  • Asking them to participate in planning meetings when the locality develops a comprehensive local housing strategy, such as meetings held prior to launching the planning effort or in the early stages of gathering information on community needs.
  • Inviting them to join an advisory committee to inform or oversee the development of a local housing strategy.
  • Inviting them to provide input into the development of a specific program or to provide feedback on how an existing program is operating and whether programmatic changes could help the program work better.
  • Arranging one-on-one interviews with the organizations’ leadership, inviting them to participate in focus groups, or requesting their participation in surveys.
  • Inviting them to help plan or participate in workshops and other meetings with the public.

Localities may want to engage their regular nonprofit partners as well as organizations they do not usually work with when developing housing programs, increasing the diversity of perspectives. In fact, when inviting nonprofits to participate in planning and program development efforts, localities may want to consider issuing a comprehensive and open invitation to any interested organization.

Also, localities may need to consider the possibility of conflicts of interest when inviting nonprofits to participate in developing local housing programs. Conflicts of interest may exist if the same organization participates in program design and then bids on the implementation contract. It is advisable that localities consult their legal counsel to ensure they do not violate procurement rules and avoid creating conflicts of interest.

One way localities can possibly avoid conflicts is by offering open invitations to all organizations and by making sure that any participating organization’s role is to provide input on a general level and not to participate in drafting program policies or RFPs. For example, a locality may ask a group of nonprofits for feedback on an existing housing counseling program, including what works well and what might need to be changed. The locality could then take that input, discuss internally among staff, and make any needed adjustments to the program design.

An alternative to inviting nonprofit organizations to participate in a structured planning process is for localities to regularly talk with their nonprofit partners and other local nonprofits. Localities can do this informally as part of general management and performance tracking as partners carry out activities, and through ad hoc discussions or invitations to public meetings with non-partner organizations. 

Regardless of how localities engage nonprofits in housing program development, it can be valuable for localities to create opportunities for nonprofit organizations to have ongoing involvement. Nonprofits can play an important role in program implementation by being part of a feedback loop that evaluates program performance, works to address issues as they arise, and identify lessons learned to inform new initiatives.

Engaging nonprofits in program implementation

When it comes time to implement programs, localities can work with nonprofit organizations in different ways. As mentioned above, localities can directly fund the organization to carry out housing program activities, such as housing development or service provision. They can also work with partner organizations to coordinate activities in a geographic target area by financially supporting a nonprofit’s activities or carrying out completely separate but complementary activities. 

As part of their obligation to ensure the effective use of public funds, localities will want to monitor the performance of nonprofit partners during the program implementation period. One way of doing this is by requiring the partner to complete regular progress reports. These reports indicate program accomplishments during the report period and since the beginning of the program and are helpful in tracking progress and results of the program. Progress reports can also signal issues with implementation that should be corrected sooner rather than later. Two HUD tools designed for CDBG recipients, Evaluating Subrecipients to Optimize Performance and Using Reports to Assess Progress and Inform Planning, from the Maximizing Investments Toolkit, provide guidance to localities on how they can use progress reports and the overall management process to inform program design and improve program performance.

Considerations when selecting implementation partners

When selecting nonprofits to help implement programs, localities usually conduct an assessment of the organization’s capacity. This includes evaluating their administrative capacity, organizational structure and staffing, checks and balances, and financial management processes that demonstrate their ability to handle budgets comparable to the size of the program. Localities may also evaluate an organization’s past performance. Have they demonstrated that they are able to meet performance targets on time and on budget? What types of projects have they managed and what were their achievements? How has the organization handled past challenges; have they overcome them? Furthermore, localities may consider the organization’s credibility and reputation with the community. It is important to select organizations that have the respect and trust of the people they serve, especially when the locality seeks to break down barriers with hard-to-reach, or historically underserved, groups. 

Localities may find there are gaps in local organizational networks that provide services. Localities can work with local organizations to figure out how to fill gaps, either by expanding the services of an existing nonprofit or for-profit organization or working to create a new nonprofit to fill the gap if needed. Strong relationships between localities and local organizations will help provide a foundation and collaborative environment for such discussions.

Building the capacity of partner organizations during implementation

Not all nonprofit organizations will be skilled at delivering programs and managing public funds, and localities may need to work with nonprofits to build their capacity. Localities can offer training and technical assistance to its partners. This support may take different forms, such as periodic group training, development of guidebooks and manuals, and individualized assistance. 

In addition to offering training and technical assistance, localities can build nonprofit capacity by providing small grants to build staff infrastructure or offering pilot funding to help build their experience. One way to systematically build capacity is to provide steady increments of funding over time to allow organizations to set themselves up to meet the locality’s needs. Localities can also reach out to national intermediaries like Enterprise Community Partners, Local Initiatives Support Corporation, or NeighborWorks America to ask for their help building the capacity of local organizations.

Tracking the progress of partners during implementation

It is important for localities to work with their partner organizations to establish goals and metrics to track nonprofit program implementation and performance. Localities will need to set appropriate goals for their partners and may want to consider doing so in collaboration with the partners. It is important that the locality set clear expectations for their partners’ performance and to track their progress. Localities may want to set nonprofit partner’s goals so that they align and contribute to the locality’s overall program goals. For example, if a locality has an overall programmatic goal of creating or preserving 200 affordable housing units, a nonprofit partner may have a goal of creating 15 units toward the locality’s overall goal. 

Localities working with nonprofits as subrecipients of federal funds, such as CDBG and ESG, have an obligation to monitor the performance of their partners for program compliance as well as to ensure they achieve performance targets. Since they are ultimately on the hook for any noncompliance by their partners, localities often develop individualized monitoring plans for them and are in regular communication with them. These meetings are also opportunities for the locality to assess any technical assistance needs the partner may have and make arrangements to address them.

Eventually, conflicts or challenges will arise and some organizations will not perform as well as others. Localities may want to stay engaged with their partners and establish themselves as a resource. By setting up a cooperative and supportive environment from the beginning, localities will encourage partners to come forward with their issues early on when they are generally easier to solve. 


Below are two examples of localities working with nonprofit partners to develop housing programs. 

Loudoun County, VA typifies how a city, town or county would work with a nonprofit partner to deliver housing programming. The second example from Charlotte, NC is a large-scale effort involving multiple nonprofit and for-profit partners to address the city’s shortage of affordable housing.

Loudoun County, VA located to the northwest of Washington D.C. partnered with Volunteers of America to build a LEED Gold-rated, emergency homeless shelter to serve individuals and families experiencing homelessness who have difficulty sustaining housing in a generally wealthy area with few affordable housing options. In response to the stressed shelter system and location of existing shelters near a growing landfill, the county worked with Volunteers of America to consolidate five shelters into one, centrally-located and modern facility. Doing so enabled the county to expand and enhance its services. The project was funded by CDBG and local funds through the Department of Family Services and the facility is operated by Volunteers of America.

Charlotte, NC has joined forces with nonprofit and private-sector partners to invest in affordable housing in the city. Spurred by a report prepared by local advocates that identified patterns of segregation in the city, the city developed a collaborative plan to raise funds for new unit development. To date, the City has raised $50 million through general obligation bonds and for-profit financial institutions have contributed over $70 million. The Local Initiatives Support Coalition (LISC) will manage a $50 million loan fund. Through this effort, the city and its partners aim to: increase their capacity to serve households with incomes less than 60% of the area median income; serve residents vulnerable to displacement; and increase residents’ access to opportunity. 

Related resources

“Looking Downtown: How Nonprofits Can Partner with Local Governments,” Nonprofit Quarterly, May 13, 2020, Article from nonprofit perspective on how to work with local governments.

“Building Stronger Relationships between Governments and Nonprofits,” Living Cities, September 28, 2020, Article describing how nonprofits and governments can work to create stronger relationships with each other.

Evaluating Subrecipients to Optimize Performance from HUD’s Maximizing Investments Toolkit provides guidance on evaluating a potential partner’s capacity to deliver housing and other programs effectively.

Using Reports to Assess Progress and Inform Planning from HUD’s Maximizing Investments Toolkit provides guidance on using data collected through HUD-required reports to assess housing need and potential gaps in services.

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