Our nation is facing the greatest housing affordability challenge in generations. With a shortage of seven million affordable homes for the lowest-income families, cratering supply is leading to escalating housing costs, dampening economic prospects for people in urban, rural, Tribal, and suburban communities in every state and territory.
Critical to building and preserving more affordable homes are nonprofit and mission-driven housing providers. Today, those organizations are confronting challenges that could exacerbate the shortage of affordable homes for millions of people—driving up costs for homebuyers, homeowners, and renters alike.
How did we get here?
In the postwar era, as government leaders crafted policies to encourage homeownership, policy makers decentralized the production of affordable homes and apartments, relying on a network of community development organizations, nonprofits, and for-profit but mission-driven housing providers to bring together federal resources, private dollars, and local knowledge to build and preserve affordable homes. Our organization, Enterprise Community Partners, was purpose-built more than four decades ago to provide those community organizations with capital, knowledge, advocacy, and know-how to undergird the affordable housing system.
This system has had success in ensuring housing solutions are community-driven and community-led. But it has always been precarious, relying on a combination of government funding and razor-thin operating margins. Now, in the wake of the pandemic and inflationary pressures, these housing providers can hardly stay afloat.
Current estimates are that nearly five million households are behind on rent, adding up to a total rent debt of $9 billion. This lowers property revenue, even as material, labor, and insurance costs rise—a combination that’s making building and operating affordable housing extremely difficult, or even infeasible. As expenses climb, providers have less money to make repairs, invest in improvements, or put toward resident services. Worst-case scenario, these cost pressures can lead to the bankruptcy of housing providers. And when the affordable homes they operate disappear, they are seldom replaced.
How will shifts in government funding affect affordable housing?
Now add to these pressures questions about long-standing government funding. In February 2025, our organization received from the U.S. Department of Housing and Urban Development a termination notice of a little-known but vital grant program called Section 4 that allows small housing providers to stay afloat and create more affordable homes. While the administration has since restored those funds and recommitted to the program, such unpredictability poses challenges for partner organizations.
That’s because the financing of new or preserved affordable homes is something like a Jenga tower. Section 4 (or other small government funds like the Green and Resilient Retrofit Program) may have just covered a pre-development environmental study or someone’s salary at a mission-driven housing provider. But when you pull out one financing tile, you have to make up for that money in some other way, either through loans, additional debt, or other cost savings. With already narrow margins, that can destabilize entire projects.
“At a time when we’re in arguably the worst housing crisis in our country’s history, we cannot afford to lose any sources of funding,” one of our partners in Portland, Maine told us. “We just can’t afford to do this to our communities.”
Where is affordable housing headed?
Despite these challenges, mission-driven housing providers are eager to meet the moment by advancing housing preservation and production and supporting hard-working families.
First, we’re seeing technological and construction innovations that are helping bring down costs for renters, homeowners, and housing providers. Modest investments in solar panels, for instance, are cutting some residents’ utility bills by half—and lowering overall operating costs. For our part, through our Housing Affordability Breakthrough Challenge, we’re identifying local groups pioneering modular construction, new financing models, and other ways to support affordable housing.
Second, we’re seeing housing providers band together to advocate for themselves and the people they serve at the local level. After unified advocacy efforts, Seattle and Washington, DC reallocated several million dollars from their development budgets to help keep affordable housing providers afloat, while longer-term solutions like emergency rental assistance and eviction reform make their way through the system.
Third, we’re seeing new ways of leveraging philanthropic support that do more than just fill gaps—but allow affordable housing providers to build capacity. We’ve convened funders to support networks of mission-driven housing providers, reducing administrative costs and putting those organizations on a path to sustainability through technical assistance and training programs, capacity-building funds, and other mechanisms.
These small nonprofit and for-profit but mission-driven housing providers are an often-overlooked part of our housing system–but their long-term survival is critical to closing the gap and solving our nation’s housing affordability crisis. Ensuring their success is key to guaranteeing that millions of families can thrive.
Photo credit: Warwick Green courtesy of Enterprise Community Partners
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