01 Executive Summary
The COVID-19 pandemic changed our world in unprecedented ways. There was no exception for our region’s homelessness services and affordable housing providers. Before the pandemic, these nonprofits were already under stress to meet a litany of housing needs, from emergency shelters to first-time homebuyer assistance. But throughout 2020, providers were tested unlike ever before due to virus risks, chaotic operations, and highly modified program delivery. All of this occurred amidst a national amplification of racial injustice following the murder of George Floyd by Minneapolis police last summer.
Nevertheless, based on multiple rounds of conversations with the CEOs and directors of these organizations since April 2020, it is clear they rose to the challenge. Richmond’s nonprofit housing organizations have worked tirelessly but have also made major shifts in their operations over the past year in carrying out their mission to help people find safe, affordable homes. However, as the scale of needs continues to grow, providers will need commensurate levels of support—of all different kinds—to carry out their work.
Below are our major takeaways from Phase 2 of this work.
Addressing the needs of persons experiencing homelessness remains the most complex and profound impact of the pandemic.
COVID-19 disrupted the service approach to emergency shelter and necessitated a massive shift from traditional service delivery to a non-congregate shelter setting. This new reliance on the use of hotels has complicated the provision of services and has reduced the utilization of shelter beds. Though there has also been a significant increase in financial resources, providers anticipate this funding to decline in the coming year in light of the rise in conditions that contribute to homelessness.
Unprecedented levels of temporary support helped most providers avoid layoffs, but staff still need support.
Housing organizations avoided disaster using Payroll Protection Program funds and other emergency dollars to retain or immediately rehire nearly all workers. Further influxes of public and private grants, along with program resumptions, meant that many providers maintained or actually increased their total workforce.
However, leaders regularly stated that further tangible benefits—including bonuses, mental health support, and time off—are required to help workers overcome burnout, feel valued, and effectively carry out their important responsibilities into the future.
Although concern about staff reductions and meeting immediate needs has waned, uncertainty over future funding remains high.
Over the course of the past year, concerns about organizational financial status have improved but there remain worries about the unpredictability of the economy and its impact on giving over the coming years. Though 59% of organizations did not have to make any budget cuts and 71% did not have to reduce staff over the past year, any reduction across the sector is significant given the increasing demands of providing shelter and housing and related services to low-income residents in the region. Uncertainty about future funding remains high: 59% of organizations were moderately to extremely concerned about future funding.
Rental housing development flourishes, though cost increases and provision of services are challenging.
COVID-19 brought into laser focus the connection between housing and health. Public and private resources, local government commitments to address the shortage of affordable units, and a new wave of public support have all increased over the past year. This has enabled rental housing development and operations to avoid major disruptions during the pandemic. However, increased housing development costs due to construction material shortages, have and will continue to threaten the financial viability of new construction.
Affordable housing providers faced challenges with the need to adapt to virtual protocols, such as implementing online leasing and rent payments. However, these technical innovations are expected to provide greater operational efficiencies when fully implemented.
Though there was some variation, fears of significantly lower rent collections in assisted housing did not bear out. The massive commitment of federal dollars for emergency rental assistance and eviction prevention helped to ensure stable operations and kept people safely housed.
Homeownership programs face cost increases and other pandemic-induced barriers to homebuyer readiness.
Home construction and apartment development have been the activities least affected by COVID-19 though there has been a significant cost increase in building materials—lumber has increased in cost by 170% over the past year and disruptions in supply chains for other goods have resulted in higher costs. Homebuilding programs that relied on a substantial volunteer component have been forced to shift to using more subcontractors. Overall, the cost of an affordable home has risen by approximately $15,000.
Providers are exploring options to reduce building size/footprints and increase energy efficiency to cut both initial and operating costs. One organization has ventured into manufactured housing to provide housing at a sales price well below $100,000.
Providers are concerned that lower-income buyers will not only be priced out of the market but have been less able to access homebuyer education, counseling, and credit repair in the virtual environment.
Philanthropic institutions have the opportunity to strengthen these providers so they can fully meet the necessary challenges ahead.
We consistently heard from providers that the regional philanthropic community was a major asset during the worst of 2020. To carry this momentum forward, foundations can play a crucial role in supporting housing nonprofits in innovative ways to address evolving needs in 2021 and beyond. Solutions should focus on both organizational resiliency and program support.
To help support provider capacity, we recommend strategies to:
- Help with long-term transitions to new in-person and virtual protocols,
- Increase total staff capacity to take advantage of new public dollars and rising needs,
- Develop contingency funds for unrestricted support during future emergencies,
- Train staff on new skills needed to help clients in a post-pandemic world, and
- Increase funding flexibility for organizations, especially those challenged by large reimbursement-based federal grants.
To help providers fulfill their missions in the community, we recommend strategies to:
- Support low-income first-time homebuyers facing a historically competitive market,
- Assist homeowners with financial hardships as mortgage forbearances expire,
- Explore creative ways to help households with weatherization and repair needs,
- Mitigate material and labor cost increases via design and building innovations,
- Address the specific needs of special populations in affordable rental housing,
- Expand advocacy and education efforts for reducing local land use barriers, and
- Make urgent investments in homelessness prevention, supportive housing, and deeply affordable housing to help our neighbors with the greatest needs.