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CH Approaches to providing affordable housing for non-profit workers

San Francisco Scanning Center with stimulus support

The Great Recession started in 2008 and everyone suffered– the Internet Archive hired 146 out-of-work parents, leveraging an Obama stimulus welfare-to-work program to scan books  for the visually impaired.   I had employees polled as to how they were doing financially, and the answer was… Bad.

This was the kicker:  30-60% of their income went to rent.  Yikes, and turns out to be typical across the country.  So I set out to find a way to fix this, at least for non-profit workers. I read Graeber’s book Debt (fabulous, must read book), and started on experiments.

Over the last 10 years, I have personally tried 6 approaches, and seen another, here are the short versions:

Foundation House for non-profit workers in San Francisco

1. Foundation Housing:  this is permanently affordable employee apartments– about $900-$1000 a month which is about 1/2-1/3 of market based rent in San Francisco. The way we did this is to have it be permanently debt-free (no mortgage), and have the fee to live in an apartment covering all other costs. Since this is like faculty housing or a monastery, people leave the housing as they leave the non-profit sector. We bought an apartment building (as a form of endowment) in San Francisco with 11 units, trying it out.  Three out of 11 apartments now have non-profit workers.  It is working pretty well, but not saving the Archive much money but giving security to people.  On the other hand, one employee said they felt a bit trapped because they can not afford to move out and stay in San Francisco.  Most employees don’t want to move in because they already have apartments they are happy with, so it is not serving a huge need.  But still, I think we should do more of these. It can be done with a careful investment strategy so it does not cost much to buy the buildings. News report.

2. Silent loan: lent someone enough money so they could make a down payment, and I changed no interest.  There was no paperwork, and was in their bank account for years before they found their house.  So it helped them out, and they are thankful but it is not scalable.

3. 20% mortgage helper: I am on the board of a non-profit that has done this program where $1m was set aside to help people with getting a mortgage on a house within biking range of the office– the 20% help is 0 interest while they work there, but then it goes up to market rate when they leave the non-profit. When they leave, they are expected to pay it back by refinancing.  It has worked out well as housing prices have gone up.  Unknown when things go down. When it started there was great enthusiasm as it allowed many to buy in San Francisco and feel supported.  Recently there has been grumbles about it, not sure why.

Internet Credit Union before it was closed by NCUA

4. Made a credit union to make a bank “that doesn’t suck.”  (that was our original unofficial motto) and to help finance sustainable housing. Well, we worked at it for 5 years, one and a half years to get the initial charter through the system, and then the regulators spent three and half years crushing us out of existenceThey really really do not want new credit unions or new ideas in the banking area.  The National Credit Union Association should be shut down– the US credit union industry blossomed and grew before the NCUA was started in 1972. NYtimes report.

5. Build a building next to the Internet Archive.  We have the empty lot to do it in and we hired an architect but it came out to cost so much we postponed.

6. Co-owning a house– this is different from a loan, it is more like a share of ownership and sharing the risk and reward. Up to half of the appraised value, in cash, is given to the owner so they continue to afford to be in the area. When they eventually sell, then that proportion of the proceeds is returned. This has been tried with a couple of close friends and they used it to pay off their mortgage, so they own their half outright. This is working well so far, but have not had any sell their house yet. This is more secure for the resident owner than a mortgage in the case of the value of the house declining, or if they lose the ability to pay the loan, in this co-owning case they do not have a mortgage so they do not get foreclosed on and have to leave their house. But there is financial risk to me in doing this approach.

7. Remote work.  The Internet Archive actively recruits outside of the bay area and encourages people to not relocate. Many San Francisco employees have now moved away but kept their jobs.  This has worked more often than not.  We have been hiring remote workers for the last 3 years and now a majority of people are not in the Bay Area.  And with the covid pandemic, we are going “remote first” so we are all remote, and the exception is the ones that are in San Francisco.  We have been adapting to remote management, which is not easy.

Of all the approaches, the one working the best is #7: Remote Work.  Get good at it, and we won’t have the housing stresses of San Francisco.

I expect others are trying different approaches– please share them– we need to find ways to keep non-profit workers happy, productive and financially secure.

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