Note: Rasmuson Foundation was honored this week with a Secretary’s Award for Public-Philanthropic Partnerships, recognition from the U.S. Department of Housing and Urban Development and the Council on Foundations. Pictured above is Foundation senior program officer Chris Perez, Foundation Board member Lile Gibbons, HUD Secretary Ben Carson, Mark Romick of Alaska Housing Finance Corp., Board member Jay Gibbons, and Gene Cochrane, interim CEO of the Council on Foundations. Here’s the story on how we got there.
For a decade Rasmuson Foundation has worked alongside Alaska Housing Finance Corp. to address vital housing needs for specific groups: working families, rural professionals, seniors and those at the very edge of society. This work is unusual. These two organizations know of no other partnership in the country in which a private foundation and a public corporation jointly plan and fund specific housing projects.
The power of the partnership was underscored in 2015 as a housing crisis loomed. The State of Alaska was – and still is – experiencing a budget crisis due to declining oil production and lower oil prices. Lawmakers have been in a budget-cutting mode and in 2015 marked the state’s rural professional housing program for elimination.
This program, which had already taken a significant hit, develops housing for teachers, health care workers and public safety officers in remote villages that often are home to just 100 to 300 residents. Most of these villages are off the road system, accessible only by small plane, snowmachine or boat.
In rural Alaska, homes are crowded with families living within families. Ten or more people may share one small place. With that reality, there typically are no rentals available for teachers, health aides and village public safety officers. Rural housing developments also are too small and Bush Alaska villages too remote for tax credit financing, private financing or other funding beyond Native American block grants.
In that climate, Rasmuson Foundation stepped in with a challenge grant, shifting terms of what it had already pledged to keep the state as a funder. The Foundation agreed to put up $1.95 million — if the state put money into the Alaska Housing Finance Corp. rural housing program. This strong advocacy bent the political will from program elimination to program support. Anna MacKinnon, co-chairwoman of the Alaska Senate Finance Committee, cited the Rasmuson Foundation support in a key committee meeting in 2016. Since then, the state Legislature has provided $8 million in matching grants against that $1.95 million award. In an era in which the state has zeroed out almost all discretionary funding, the Foundation’s challenge saved what is officially known as the Teacher, Health Professional and Public Safety Housing Program.
The very next year, Rasmuson Foundation built on the success of the housing grant for rural professionals. It once again challenged the state, this time to restore a senior housing program that had been shut down.
“Over the past decade, the Rasmuson Foundation’s partnership with Alaska Housing Finance Corporation has done more than simply invest dollars in developments: it has single-handedly saved two essential development programs from elimination,” said Bryan Butcher, executive director of AHFC.
For senior housing, Rasmuson Foundation put in $1.75 million, matched by the state over two years with $2.75 million.
The framework was in place but how to make it last? Rasmuson Foundation guided a shift in the housing funding model from construction grants to one that combines grants and a revolving loan fund. Revenue generated goes back into the pool to fund future developments. This is an approach for sustainability.
The partnership itself is innovative. Other foundations may offer grants to an intermediary that then works with a housing corporation. In Alaska, the Foundation is at the table helping to guide projects. That gives the Foundation confidence to put money directly into projects. In addition, the Foundation is using its program-related investment portfolio to issue low-interest loans paired with AHFC traditional loans and commercial debt. That buys down construction costs and helps projects pencil out. This isn’t standard financing but stretches the dollars of the project owner.
When the initial three years of funding for rural professional housing ran out, Rasmuson Foundation put in $1 million more. That generated an additional $1,750,000 from the Alaska Legislature this legislative session for the rural effort. Lawmakers also designated $1 million more for the once-dead senior housing program.
The entire concept can be mirrored anywhere yet in the past foundations have shied away from partnering with state agencies. One lesson is that foundations should not fear working directly with government but rather can embrace this strategy to open doors. Show political leaders they can keep vital programs with foundation support. Shape project financing in new ways. Give foundations confidence to participate, with a seat at the table.
Click here for the 2018 Rasmuson Foundation.poster.
Click here for the press release on Rasmuson Foundation.