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‘Tis the Season for Government Folly, Fa La La La La La La La L.A.!

Christmas comes but once a year, but there is no end to misguided federal efforts to solve the crisis of the day. Leaving aside the collapsing financial sector, doomed US car industry, etc., the crisis de jure is the housing meltdown.* Lost in the current hysteria is the $4 billion Neighborhood Stabilization Program (NSP) passed by Congress in July to address the boatloads of vacant and abandoned housing caused by the subprime lending mess.** “Housing-Crisis Grants Force Cities to Make Tough Choices,” a December 5, 2008 Wall Street Journal article by Michael M. Phillips and Bobby White, highlights some of the problems with NSP while also illustrating the folderol that always emerges when the feds try to solve a problem quickly.

NSP funds are awarded on a “formula” basis, which means that HUD used some sort of alchemy to divvy up the $4 billion, probably to CDBG-eligible cities and counties. Of course, when tons of jurisdictions dip their cup in into the same punch bowl, it’s not surprising that some only get a sip. And, unlike competitive programs in which applicants actually have to demonstrate real need and workable solutions, the cities and counties just have to prepare a so called “action plan” for the NSP. As Hamlet so eloquently said, “ay, there’s the rub“.

The WSJ article tells the tale of Avondale, AZ, which “got” $2.5 million in NSP funds. So far, so good. The city is thinking about using 25% of these funds to rehab two vacant townhouses, fill in an abandoned pool and build two units on the site. That only leaves about 2,600 other vacant, foreclosed or nearly foreclosed housing units in the city to take care of. If I’ve done my math right, at this rate Avondale only needs $1.625 billion to solve their problem. Better still, despite the obvious crisis, no jurisdictions have been able to spend their NSP money because they have to have an approved action plan to get the funds, and HUD recently announced that all the submitted action plans required “substantial amendments,” which were due December 1. Who knows when the action plans, which are sounding more like inaction plans, will be approved, since even HUD drones have to take time off for a little shopping and egg nog this time of year.

Avondale’s start and stop efforts are playing out all across America. I was talking to one of our clients in South Central Los Angeles on Friday about the WSJ article and the slow motion Danse Macabre going on with public and private efforts to address the housing problems in L.A. Our client has been going to endless meetings to discuss the NSP program and is still waiting around for the amended action plans to be approved. When the plans are finally approved, the City and County will have to run RFP processes to select nonprofits like his to spend the money and do the work. In the meantime, this agency, which is an experienced YouthBuild provider that has built and rehabilitated hundreds of houses over the years, is doing nothing.

One irony of the housing crisis is that HUD has a perfectly good program, Section 203(k), to recycle vacant HUD houses by letting nonprofits, like our South Central client, buy them for a nominal amount, rehab them, and resell them to low-income buyers. Since there are thousands of vacant and foreclosed houses in LA, one would think the 203(k) program would be booming. Not so according to our client, who told me that virtually no 203(k) houses are available in LA. To use the 203(k) program, HUD must own the vacant house, meaning that the house must have been originally financed through the Federal Housing Administration (FHA). Due to the huge housing price increases in L.A. during the boom years, as a practical matter FHA financing could not be used because its loan limits were too low. So subprime private sector loans, sold to Fannie Mae and Freddie Mac, were used to finance the transactions, with the vacant foreclosed houses ending up owned by a gaggle of private lenders and investors, not HUD. Despite the established infrastructure for the 203(k) program, it is not being used to recycle the tsunami of vacant houses in L.A. and other cities, leaving our client and thousands of other similar nonprofit housing rehab organizations sitting on the sidelines.

This sad tale of woe does not make me optimistic about the really big stimulus programs that will emerge from Congress shortly. While it will be Fat City for grant writers and lots of grants will be available for frisky nonprofit and public agencies, don’t expect the funds to fix many problems.

Now that I’ve depressed you sufficiently, how about joining me in a Mai Tai or three, as I’ve recently reacquired a taste for aged rum. A fine Mai Tai helps pass the time waiting for action plans to be approved.

* For an earlier post on the current housing fiasco, see Déjà vu All Over Again—Vacant Houses and What Not to Do About Them.

**After the financial industry $700 billion October bailout and up to $35 billion possible for the auto industry, doesn’t $4 billion seem like a trifle only six months later?

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Surfing the Grant Waves: How to Deal with Social and Funding Wind Shifts

In Mordecai Richler’s hilarious novel Barney’s Version, a discussion arises:

“We’ve got a problem this year. There’s been a decline in the number of anti-Semitic outrages.”
“Yeah. Isn’t that a shame,” I said.
“Don’t get me wrong. I’m against anti-Semitism. But every time some asshole daubs a swastika on a synagogue wall or knocks over a stone in one of our cemeteries, our guys get so nervous they phone me with pledges.”

In some ways, the worse things are, the better they are for nonprofits, because funding is likely to follow the broad contours of social issues. For example, before the Columbine shooting, the vast majority of money for at-risk youth and after school programs targeted inner cities. A few years later, money began appearing for suburban and rural schools, the thinking being that now all teenagers were at risk simply by virtue of being teenagers. A case in point is the 21st Century Community Learning Centers program, which emerged around the time of Columbine; we’ve written at least a dozen or so funded grants, mostly in non-inner city areas. In fact, one funded 21st CCLC grant we wrote served Aspen, CO—an area not usually seen as a hotbed of social needs.

It’s not even clear that the conventional wisdom of the rationale behind the programs, which attacked the conventional wisdom of what was supposedly behind the shootings, was correct, as argues here. But for grant writing purposes, that’s less important than noticing the direction of the grant winds. If you were a suburban school district trying to fund, say, an art programs, and you read the Federal Register, you might’ve noticed new funding or shifts in emphasis. You could’ve combined your art program with nominal academic support, thus widening your program focus enough to make a plausible applicant for the 21st CCLC program and thus getting the money to carry out your central purpose: art.

This isn’t to say that you should fraudulently misrepresent what you do, because you shouldn’t, or that it’s necessary to change your program’s purpose haphazardly; you want to notice the wind but not necessarily be driven by it. Nonetheless, smart nonprofits find ways of getting the grant funds they need by shackling one idea to another, more fundable idea, particularly if “fundable” means a live RFP is on the street. Sometimes clients have ideas for programs they want to run that can be made vastly more fundable with relatively minor tweaks. We often suggest and execute those tweaks.

It’s not uncommon for nonprofits to shift their focus with time, funding, and opportunities. This will correlate to some extent with the general media landscape. To use another trend, homeless programs were more prevalent in the late 80s and early 90s. Today, an organization that once worked solely on homeless issues might expand its area of expertise to related areas, like affordable housing, prisoner reentry, or foster care emancipation. The latter problem has gained some traction in recent years as various levels of government have come to realize that few 17-year-olds are ready to be self-supporting the moment they turn 18, resulting in in crime, drug use, and prostitution as common outcomes among this population, as depicted in Charles Bock’s novel Beautiful Children.

Finally, organizations that pursue grants in other areas should remember that administrative funds from one area might end up subsidizing another; this commonly happens with service contracts, such as substance abuse treatment and foster care and can also occur with grants. In the near future, Isaac is going to describe how and why to acquire a Federally Approved Cost Allocation Plan and resulting Indirect Cost Rate, which is a great way to secure general purpose administrative funds to support multi-program operations. By pursuing grants related to your nominal field of expertise, you can in effect diversify and avoid major problems if there’s a decline in your version of the number of anti-Semitic outrages. Don’t put all your investments in a single stock, and don’t invest all your grant writing and service energy in a single cause, lest you discover that specialization has led you to an evolutionary dead end.

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The Last Word on Grant Writing Credentials: Awards Are Only as Good as the Organization Giving Them

On a software blog, I found this post concerning an author who’d given himself an award:

‘You know, there were two strange things about that award, …Firstly, after I awarded it to myself, I felt oddly elated, as if some august academic body had suddenly realised my true worth as an author and had strained every sinew to ensure that my talent was acknowledged.’


‘… and what was the other strange thing?’

‘You are the first person ever to have asked me precisely what award it was that I’d won. Everybody else has just taken it for granted.’

‘I work in IT. It makes one cautious of trusting qualifications and awards.’

Consider this in light of Credentials for Grant Writers—If I Only Had A Brain and its follow-up, both of which discuss how certifications, credentials, and the like are only as good as the knowledge they represent and the organization issuing them. With many credentials, bogus language cloaks what’s really happening—for another example of the same phenomenon, check out this post from Joel Spolsky.

Anyway, the point Isaac made regarding the degrees that matter is a good one: the B.A., M.A., and Ph.D. matter, but even then only to a limited extent. People of varying talents earn those degrees, which are in turn only as rigorous as the classes taken. Not so long ago I was an undergrad, and almost all of us had mental hierarchies of teachers and classes, and anyone who wanted to avoid harder teachers/classes could. It’s simply not very difficult to get a degree in many majors, especially in the liberal arts. Of course, there are many good people who graduate with liberal arts degrees, but many is not the same at as all. We’ve all probably met incompetent college graduates, and I’ve met head-in-the-clouds Ph.D.s. There is no alphabet soup behind a person’s name that really guarantees that person’s skill.

You only have what Mr. Spolsky would call “weak indicators.” Given how imperfect college degrees are as indicators of skill, and how much effort goes into them, you shouldn’t be surprised that so many other “credentials” are even worse. Tautologically, only skill can show skill, and the best indication of a person’s skill is that person’s track record. Want to discover if you or someone you know can write a proposal? Give them an RFP, a deadline, a computer, Internet access, as much coffee as they want and see if they produce a proposal. If so, they’re a grant writer, and you can give them another. If not, use your best Donald Trump voice to say “You’re fired!”, send them to the Department of Education (as Isaac suggested), and go on to the next resume or consultant in your pile. Eventually you’ll probably find a grant writer.