Silent But Expensive: An Anti-Poverty Program’s Mysterious Achievements

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Ethan Barton Editor in Chief
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An obscure Department of Housing and Urban Development (HUD) program grants millions of dollars every year to only three eligible organizations, but a government official won’t say how the money actually combats poverty.

More than $429 million has been granted through Section 4 of the HUD Demonstration Act of 1993 to help local organizations – called community development corporations – combat poverty through “capacity building” – a vague phrase that essentially means building their size and expertise, according to a HUD document.

“Capacity building develops core skills that strengthen the ability of local community based organizations to implement HUD programs, raise capital for community development and affordable housing, coordinate on cross-programmatic place-based approaches and facilitate knowledge sharing,” the agency’s 2015 request for funding says.

The funds pass through one of three eligible groups, known as intermediaries, which then either redistribute Section 4 funds to local groups or provides them with direct assistance through trained staff. Those three groups defined by law are Enterprise Community Partners, Habitat for Humanity International and Local Initiatives Support Corporation.

According to HUD’s 2015 funding request, $20 million will “result in: approximately 5,000 housing units newly constructed renovated, or preserved; 600 training opportunities; and an estimate of more than $200 million in total development costs channeled to low-income communities in more than 250 communities nationwide.”

But HUD officials won’t say how indirectly backing local groups after funds pass through an intermediary will achieve those claims, and the intermediaries can still receive grant dollars without providing evidence of successful urban renewal.

“Ethan, if you’re truly interested in understand this, I’d suggest you read the Notice of Funding Availability that details the sorts of eligible activities these capacity-building grants support,” HUD spokesman Brian Sullivan said in an email. He provided that link to The Daily Caller News Foundation several times before.

That was Sullivan’s only response to a series of questions asking specifically about Section 4’s outcomes. He did not respond to follow-up messages, and a Monday email to Sullivan resulted in a bounce-back saying he was out of the office until Oct. 26.

While the link Sullivan provided details eligible use of the funds, such as training local groups’ personnel, it does not show any Section 4 achievements nor how achievements are measured or evaluated by HUD.

For example, Sullivan refused to answer how HUD determines how a community’s urban renewal successes relate to a local group’s training funded by Section 4.

The intermediaries also perform work locally and assist groups outside Section 4. Yet, Sullivan would not tell TheDCNF how the intermediaries or HUD distinguish what role capacity building had in any successes in a community.

Sullivan wouldn’t say why just three groups are eligible for Section 4 funds or how Congress selected them.

Sullivan also ignored requests or declined to comment on previous TheDCNF news stories about how Enterprise – which failed in a major urban renewal project in Freddie Gray’s neighborhood – spent around 40 percent of its revenue on lavish salaries for its large number of executives.

Additionally, although the intermediaries are statutorily eligible for Section 4 funding, they still must submit applications to HUD to compete against each other.

Each application is ranked by a 105-point system. An intermediary won’t be awarded funds if they don’t receive at least 75 points.

Points are awarded based on five factors, such as the effectiveness of their work plans and their ability to provide three privately sourced dollars for every Section 4 dollar contributed – a staple of the program.

But the application doesn’t require intermediaries to provide evidence of past urban renewal successes. In fact, Section 4 applications don’t even need to include how impoverished communities and families will be helped.

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