Designing Operation and Finances

Budgeting For the Center

Once center programs have been designed, determine funding and other resources. To develop a sustainable center and programs, you should:

	Identify and review potential sources of funding.
	Create budgets for the center's startup and first 3 years of operation. Implement goals, activities, and outcomes for a fundraising plan for the center.

Section 10 of the "Technical Assistance Resource Guides and Educational Toolkit: TARGET" provides detailed information about creating a budget. Appendix J of TARGET includes resources that center staff can use to develop a budget.

Funding Options

Neighborhood Networks centers rely primarily on local support. The Initiative encourages partnership development, business opportunities, and other income-generating activities. To help support and sustain a center, funding can be obtained in various ways, including:

	HUD funding. HUD funding may be obtained from one or more of the following:   Residual receipts account. Residual receipts accounts are found in properties owned by nonprofit and limited dividend owners. Funds from the residual receipts account may be used to fund a center to the extent that HUD determines that these funds are not required to maintain the habitability of units or to meet other building needs.   Owner's equity. The owner of a limited-distribution property can increase the amount of the initial equity investment (and, in turn, the yield on distribution) by investing nonrepayable funds in the center. A rent increase, however, will not be approved to provide for additional yield. Other HUD funding options include:   Funds borrowed from the Reserve for Replacement Account. Funds from the Reserve for Replacement Account may be used to fund a center as long as HUD determines that these funds are not required to meet anticipated repair and replacement needs. If this source of funding is used, a scheduled repayment plan that illustrates how the Reserve for Replacement Account will be replenished must be submitted.   Rent increase. The owner of a property where rents are set under the budgeted rent increase process may request an increase to cover center costs. These increases may be approved at HUD's discretion. For properties with Multifamily Assisted Housing Reform and Affordability Act (MAHRA) contracts, there may be limitations on HUD's ability to raise rents.   Requesting a special rent adjustment. Properties with rents that are set using the annual adjustment factor may request a special adjustment rent increase to cover costs of a Neighborhood Networks center. These increases may be approved at HUD's discretion and are subject to the guidance in the Multifamily Asset Management and Project Servicing Handbook, 4350.1, Chapter 34.   Excess income. For properties that generate excess income, HUD Notice 01-07 authorizes the retention of excess income to help develop a Neighborhood Networks center.
	Private and corporate contributions. Private contributors include individual donors, some of whom may wish to remain anonymous. Corporations and community foundations often will provide funding for operating and program/project support. Corporate contributions include contributions made by the charitable foundations of corporations. Community foundations receive money from the public and award grants to organizations within their communities.
	User fees. Charging a reasonable user fee is another way to generate additional funding. Fees can include:   Membership fees. Memberships can be offered at individual and family rates. Residents could be offered the option of paying the membership fee on an annual basis or on a per-visit basis. The fees should be reasonable and affordable, equivalent to local bus fare or subway fare. For example, a center in New York charges adults $30, families (up to five people) $35, and seniors and children $15 for a six-month membership at the center.   Class fees. A center can charge an attendance fee for classes it offers. In addition, if neighborhood institutions use the center to conduct classes for their own members, they can be charged a fee for the use of the center.   Public access fees. Visitors can be asked to make a contribution to the center. However, no one should be denied access because they have not made a contribution. Note: Some state/local governments may have special licensing requirements for organizations charging public access fees.
	Business development. A variety of income generating business activities can be conducted at a center. Business development may include outsourcing, small business support, self-employment, and entrepreneurship. If the center plays a role in training individuals to become successful in business or if the center is used for certain business activities, it might be appropriate to develop a system for sharing profits in lieu of payment.
	Fundraising events. Fundraising is an excellent source of funding for a center. It also generates community support. Creativity is key to a successful fundraiser. Types of fundraising events might include:   Annual events. Start a tradition with an annual bike trip or walk-a-thon for which people collect pledges.   Develop a fundraising activity as a part of your center's Neighborhood Networks Week observance. Neighborhood Networks Week is held each year to observe the achievements, talents, leadership, and skills of families living in HUD FHA insured and -assisted housing. This weeklong event includes national Web casts and local activities at individual centers.   Auctions. Invite residents and local businesses to donate items or services.   Co sponsored events. Co sponsor an event with other organizations or seek sponsorship from Neighborhood Networks partners.   Other organizations' events, festivals, or fairs. Set up a booth or table to solicit donations and distribution information at events held by partner organizations.
	In-kind contributions. In-kind contributions are donations given in lieu of money. Most in-kind contributions must be solicited and often require a formal request. In-kind contributions may include:   Computer hardware and software.   Space.   Volunteer supervisors and teachers.   Clerical assistance.   Accounting services.