Nonprofit Talk: Helping community-based nonprofits avoid displacement during the pandemic

Betsy MacLean is the co-executive Director of Hester Street. Photo courtesy of Hester Street

By Betsy MacLean, as told to the Eagle

Betsy MacLean is the co-executive director of Hester Street, an urban planning, design and community development nonprofit that supports community-led change through participatory planning & policy-making. The organization just released a report, “Essential and At-Risk: The Power of Community-Based Organizations and the Danger of Displacement,” which documents the critical role community-based nonprofits play in their neighborhoods, and the risk they currently face of being displaced by rising rents and gentrification. 

 What is a community-based organization, and why are they so important?  

Community-based organizations (CBOs) are nonprofits rooted in the neighborhoods they serve, addressing the urgent needs of their communities. A cornerstone of NYC neighborhoods for more than a century, CBOs provide much-needed programs and services, local jobs, connections to resources, vital places for community organizing, gathering and connection. They support the most vulnerable populations at the same time that they build power and preserve a sense of belonging, safety and community.  

What are the biggest financial challenges CBOs face? 

Fifteen of NYC’s 55 neighborhoods are gentrifying, with neighborhoods like Williamsburg seeing 80% rent increases. Across the city, almost 80% of the groups we spoke to for our report expressed concern about the effect of the high cost of rent on their long-term financial sustainability. Lease terms are short and there is no commercial rent stabilization. 

We’ve worked with dozens of CBOs, assessing their readiness to take on a capital project. What we’ve found is that, with a bit of funding from the City, many groups pay enough in rent to support a long-term mortgage on their current community space.  

What kinds of programs does the city have to help stabilize CBOs and reduce costs through ownership?

The only option is NYC Capital Grants Program. The program was designed to support the acquisition and construction of properties being used to serve NYC. The program makes it possible for CBOs to provide services to the city’s most vulnerable populations in stable sites in the neighborhoods they serve. In 2020, the city allocated $615 million to the program.  

When CBOs own their buildings, they prosper – operating costs go down and more funds are available for programs and services; CBOs don’t have to worry about being forced out if the landlord raises the rent or sells their building. When asked what owning their building means to them, one CBO told us simply, “everything.” 

What are some of the challenges nonprofits face in getting this money?  

CapGrants funding is extremely difficult for nonprofits to access. Our report found that 63% of CBOs who applied for funding experienced significant challenges in the application phase and 44% during implementation. Because of the difficulty, few CBOs even apply for the funding. 

Delays between the time funds are awarded and when they are received are extensive: a nonprofit can expect to wait at least 12 months to receive funds. For two recent projects, the delay has stretched longer than three years. In the meantime, CBOs must take on loans to cover those funds. The loans add tens or hundreds of thousands of dollars to projects that cannot afford the added expense. 

How can we make it easier for nonprofits to secure this money? 

The city can remedy many of these issues easily. They can make necessary pre-development expenses eligible for reimbursement. They can speed up the contract review process and eliminate the reimbursement requirement, allowing nonprofits to access the funds immediately upon contract registration. And, on the most basic level, the City should provide a clear list of requirements, a dedicated line of communication, and a timeline to which they are held accountable.  

What do you think the future holds for these nonprofits, given the pandemic?  

COVID-19 has exacerbated the severe strain on Black, Brown and low-income New Yorkers that has long been in the making. And as those communities seek help, they overwhelmingly turn to the CBOs in their neighborhoods for everything from direct cash and food assistance to remote learning resources and life-saving information. 

When disasters strike, CBOs are there when people need them the most. That’s why it’s more crucial than ever for the City to fully activate this innovative funding program to help CBOs stay in their neighborhoods, so they can continue to serve their communities, now and long into the future. 

Learn more about Hester Street at www.hesterstreet.org.