February 17, 2017

Section 4: Building the Capacity of Local Community-Based Organizations

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The Section 4 Capacity Building for Community Development and Affordable Housing (Section 4) program strengthens low-income communities across the nation by providing critical support to local nonprofit organizations that develop affordable housing, finance small businesses, revitalize commercial corridors, and help address local healthcare, childcare, education, and safety needs. Over the last 20 years, Enterprise has distributed more than $125 million in Section 4 funds to more than 1,250 community development organizations throughout the country.

To learn more about the impact of the program, see the Section 4 Fact Sheet and read Enterprise's new 2016 Section 4 report Foundation for Success that highlights the work that Enterprise and its partners do with Section 4 grants.

What You Can Do to Advocate for Section 4

Call or email your members of Congress today and ask them to support full funding for Section 4 for both Fiscal Years (FY) 2017 and 2018. This year a record 38 Senators signed on to the Dear Colleague letter sponsored by Sen. Donnelly (D-IN) requesting $35 million for the Section 4 program in FY 2018. In addition, 60 Representatives signed a Dear Colleague letter the House sponsored by Rep. Elizabeth Etsy (D-CT-5).  Your Members of Congress still need to hear from you about the importance of Section 4 to their districts and constituents. Continue to reach out to your Members' district and DC offices. Find the housing staffer contact for your members of Congress.

If you represent an organization, send a letter in support of Section 4 to your Representatives and Senators.

  •  Sample letter to House members (Word or PDF
  •  Sample letter to Senators (Word or PDF)
  • Additionally, send your members the national letter that 1,156 organizations signed requesting Congress to fund Section at $35 million in both FY 17 and 18.

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How Section 4 Works

HUD Section 4 is the only federal program that is exclusively focused on increasing the effectiveness of local community development organizations. Since Congress authorized the program in 1993, Section 4 has benefited more than 2,000 urban and rural communities in all 50 states and the District of Columbia.Section 4 is a unique, effective program that leverages significant private capital using minimal federal dollars. The program creates jobs, supports small businesses, builds homes, and strengthens communities.

Under the Section 4 program, funds are used to provide capacity building services and direct charitable grants to local nonprofit organizations. Program funds may be used to provide loans, grants, development assistance, predevelopment assistance, and other financial assistance to acquire, build, or preserve affordable homes for low-income families, and to support community and economic development activities that create jobs for low-income workers.

Section 4 funds may also be used to provide training, education, support, and advice to enhance the technical and administrative capabilities of nonprofit organizations.Section 4 funding is awarded annually through a competitive process among three national organizations: Enterprise Community Partners, Local Initiatives Support Corporation, and Habitat for Humanity International. These intermediaries then award Section 4 funds to local organizations via grants and loans to develop, enhance and strengthen their capacity to meet local affordable housing and community development needs and priorities. For more information, check out the Section 4 Fact Sheet.

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Why Section 4 Is Critical To Local Communities

CDCs and CHDOs play a central role in addressing the growing affordable housing crisis and driving economic development in low-income communities.

Yet, these organizations face numerous challenges. Cuts to federal and state affordable housing programs, increases in construction and project costs, and a tight budget environment have led to an overall drop in affordable housing production, and many organizations struggle to maintain the affordability of their existing housing stock.

Section 4 provides local organizations with the tools to overcome these unique challenges. By building their capacity, Section 4 helps nonprofit organizations develop core skills that strengthen their ability to implement HUD programs, raise capital for community development and affordable housing projects, coordinate on cross-programmatic, placed-based approaches, and facilitate knowledge sharing.

For example, Section 4 helps local organizations build new models of delivering housing assistance in order to leverage limited resources more effectively and increase their capacity to stabilize their portfolios. CDCs and CHDOs can receive the assistance they need to conduct a portfolio analysis and in-depth review of operating procedures, risk management systems, and financial systems, in addition to continuing their education on industry best practices, such as using local tax incentive programs that can help preserve affordable rental housing.

Apsaalooke Nation Crow Tribe_MT_Section 4 Case StudyEnterprise's Section 4 Activities

Enterprise works directly with local organizations to support and enhance their efforts to build and preserve affordable homes for low-income families.

Over the past five years (2012-2016), Enterprise has disbursed more than $58 million in Section 4 resources. This investment, in both urban and rural areas, has helped Enterprise:

  • Build the capacity of 559 partners in 41 states, plus Washington, D.C. and Puerto Rico, and 237 cities.
  • Generate more than $3.6 billion in direct real estate investments.
  • Build, renovate, or preserve more than 17,600 affordable homes.
  • Develop hundreds of thousands of square feet of neighborhood-serving facilities.
  • Deliver 670 expert-led, interactive, web-based seminars.

Enterprise’s Section 4 capacity-building services have leveraged $22 in public and private resources for every $1 of Section 4 funds. By law, every dollar of Section 4 funds must be leveraged by at least an additional $3 in public and private resources. Enterprise consistently exceeds these standards. In fact, since 2002, Enterprise has leveraged more than $20 for each dollar of Section 4 funding.

DHIC_NC_Section 4_2Section 4 Success Stories

Learn more about how Section 4 has helped local organizations build their capacity to better serve the affordable housing and community development needs in neighborhoods across the nation.

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