Indiana Advocates Successfully Defend State Neighborhood Assistance Program

Indiana advocates are celebrating the defeat of proposed changes to the comprehensive policy governing the state’s Neighborhood Assistance Program Tax Credit (NAP). Proposed by the Indiana Housing and Community Development Authority (IHCDA) Board of Directors, the changes would have damaged NAP recipients’ ability to serve communities with low incomes. The Indiana Association for Community Economic Development (IACED), an NLIHC State Coalition Partner, championed this effort on behalf of its members, generating more than 100 responses from community economic development organizations opposing the changes.Nonprofit organizations use the NAP, which IHCDA administers, as an incentive to leverage individual or business contributions to fund neighborhood-based programs and projects benefiting economically disadvantaged areas or persons. NAP-eligible activities include affordable housing services, counseling, child care, educational assistance, job training, and revitalization efforts. In July, the IHCDA Board of Directors placed a hold on a scheduled vote on recommendations for 2013-2014 NAP award recipients. Instead, it passed a resolution instructing staff to reevaluate the NAP allocation policy and award manual to ensure that it aligned with the department’s goals and priorities, and then present any revisions for approval. Advocates were disappointed with the content of the proposed changes and the extremely short period allowed for public comment on the changes.The proposed changes included limiting NAP credits to small and emerging organizations with total budget revenue of less than $5 million, and their administrative overhead and fundraising costs to less than 25%. IHCDA also proposed limiting the lobbying abilities of nonprofit recipients and requiring NAP recipients to be located only in economically disadvantaged areas (EDA) and serve only economically disadvantaged households (EDH). The revised policy limited the span of eligible activities for program recipients, as well.IACED quickly activated its membership, 73% of which are NAP eligible, and developed an organized and thorough response to the proposed changes. It developed and administered a survey that captured feedback from NAP-eligible organizations, most of which provide housing and counseling services and administer housing development programs. Nearly 150 organizations responded to the survey within two days. The responses were summarized in a letter sent to IHCDA that highlighted significant concerns. The timing and rationale of the proposed changes presented the greatest concern. It was recommended that the changes would take effect with the 2013-2014 allocation period, set to start in July, which meant that program applicants would have little to no time to mitigate the impact of policy changes on their budget and programs. In its letter, IACED urged the IHCDA board to approve the current year’s allocation as originally presented, and undertake a methodical examination of the current policy with NAP participants prior to making changes.IACED members were concerned with the $5 million budget cap because some of the most effective NAP recipients have budgets exceeding that amount and offer strategic and innovative services that donors support given their ability to execute the services. Advocates suggested that NAP credits should be based on the organization’s impact on the community, not the size of their budget.IACED recommended removing the proposed administrative overhead and fundraising limit given that there is no standard bundle of costs universally adopted to construct an overhead rate. Instead, it suggested that IHCDA require NAP recipients to explain their administrative rate calculation. It also reminded the department that prohibiting NAP recipients from lobbying is inconsistent with federal law, which allows nonprofits to engage in non-partisan lobbying and advocacy. Survey respondents thought the EDA and EDH requirements were too restrictive, especially considering IHCDA’s revised definition of an EDA, which is largely influenced by county statistics. Many NAP recipients operate in neighborhoods and other EDAs located in counties that are not considered disadvantaged as a whole. This requirement would have severely limited previously eligible applicants. IACED recommended a broad definition of EDA that accounts for local community circumstances and enables as many economically disadvantaged families as possible to benefit from NAP services. IACED requested that recreational facilities, child care and transportation services remain eligible for disadvantaged area activities. Further, it suggested that definitions for vulnerable families, such as “annual income,” “economically disadvantaged household” and “household,” make it difficult for recipients to serve the most vulnerable families due to transience and instability. For instance, service providers would not be able to use NAP funds to support case management, supportive services, or housing for persons living in doubled-up situations. Advocates suggested altering the definitions so that “household” may be defined as an individual, family, or group of individuals living as a household unit, not only as the same dwelling unit. The IHCDA board voted to move forward with administering the 2013-2014 allocation under the current guidelines, based on the record number of responses received from advocates and the concerns they raised. Also influencing its decision was an upcoming review by the Indiana Legislative Commission on State Tax and Fiscal Policy. IACED will testify before the commission and advocate a comprehensive review of the policy proposed in the comment letter.“The members and partners of IACED have experienced an important victory,” said Andy Fraizer, IACED executive director. “Never doubt the effectiveness of advocacy to make a difference in shaping good public policy. Hoosiers can celebrate the fact that policymakers looked at the facts and fixed the problem. Thank you to the IHCDA Board and staff for hearing the concerns of our members.” Read IACED's comment letter: http://bit.ly/19xbUIp For more information, contact Andy Fraizer, [email protected]