Who Lends to DC Nonprofits for Buildings and Facilities?

In Washington DC, a nonprofit that needs to buy, build or repair a building usually draws on several lenders at once: District funds such as the Housing Production Trust Fund, the DC Housing Finance Agency and its bond-backed loans, a dedicated public fund for charter school facilities, and mission lenders certified as community development financial institutions. Which door opens first depends on what the building is for: rental housing, a school, or a facility such as a clinic or a childcare center.

This guide names those sources, what each one finances under its own published rules, and the order in which a nonprofit, a tenant association or a small developer in the DC metro area typically approaches them.

Who lends to nonprofits for buildings in the District?

No single lender carries a DC nonprofit building project alone. Public money takes the deepest affordability risk, bond financing and banks supply the large construction and permanent loans, and community lenders write the early, unusual or small loans that conventional credit declines. The table below summarizes the main sources and what their program pages say they finance.

What can the Housing Production Trust Fund pay for?

The Housing Production Trust Fund is the District's main tool to produce and preserve affordable housing. It receives 15 percent of the revenue from deed recordation and transfer taxes plus money from the general fund, and, according to DHCD, Mayor Muriel Bowser has committed at least $100 million a year to the fund during her administration. Its uses reach well beyond a single construction loan: predevelopment loans for nonprofit housing developers, financing for site acquisition, construction loan guarantees, collateral or operating capital, bridge loans and gap financing, loans for housing for low income elderly residents with special needs, and loans or grants for on-site child development facilities. It also pays for outreach, counseling and technical assistance, including for tenant groups exercising their purchase rights.

The money comes with targeting rules. According to DHCD's Housing Production Trust Fund page, at least 50 percent of spending serves households below 30 percent of area median income, at least another 40 percent serves households between 30 and 50 percent, and the remainder can serve households up to 80 percent. DHCD's Development Finance Division generally solicits projects through a notice of funding availability, and both nonprofit and for-profit developers may apply, with priority given to nonprofits. How the fund sits beside inclusionary zoning and tenant purchase rights is mapped in the tour of DC affordable housing programs.

How does DCHFA finance construction of rental buildings?

The DC Housing Finance Agency, established in 1979, is the District's housing bond issuer. Its Multifamily Mortgage Revenue Bond program lends for the acquisition, construction and permanent financing of affordable rental housing, cooperatives, elderly housing, assisted living and transitional housing, and it is open to nonprofit, for-profit and 501(c)(3) developers. The loans are funded by the sale of tax-exempt private activity bonds, and a project approved for this financing is eligible for 4 percent Low Income Housing Tax Credits, which can be syndicated to raise part of the equity. In return, the building must meet one of two federal set-asides: at least 20 percent of units for households at or below 50 percent of area median income, or at least 40 percent of units at or below 60 percent.

For smaller and earlier needs, the agency's McKinney Act Loan Program offers short-term bridge loans, typically two years, priced at the two-year Treasury rate plus 100 basis points and capped at $1 million for any borrower and its related entities at one time. The loans can cover predevelopment and soft costs, acquisition, construction or rehabilitation; they require units set aside for households at or below 50 percent of area median income and place a ten-year restricted use covenant on the property. For a nonprofit seeking a construction loan in the District of Columbia for rental housing, these two programs are the public side of the answer; a bank or a CDFI can supply the rest.

Where do charter schools borrow for facilities?

Public charter schools in DC have a dedicated public lender. The Office of Public Charter School Financing and Support, inside the Office of the State Superintendent of Education, runs two revolving funds for facilities: a Direct Loan fund and a Credit Enhancement fund. Charter schools, or nonprofits authorized to borrow on their behalf, can apply for a direct loan of up to $2 million or a credit enhancement of up to $1 million, the second acting as a guarantee that helps a school obtain financing from another lender. Eligible work covers acquiring, constructing, renovating or maintaining buildings. The funds are authorized by the District of Columbia Appropriations Act of 2003, and the current rules are posted on OSSE's charter school facilities financing page.

Alongside the public funds, Building Hope, a 501(c)(3) nonprofit based in Washington DC, says it provides loans, financing and financial guidance to help schools buy land and build or expand facilities, and that its team oversees site selection, design and construction for schools. Because the OSSE credit enhancement exists to help a school borrow from someone else, a charter school facility deal can pair a private or CDFI loan with that guarantee underneath it.

Which community lenders work in the District?

Certified community development financial institutions are the lenders most likely to say yes to a small nonprofit, an unusual building or a project at an early stage. Four lenders whose published work covers the District show the range.

City First Bank opened in Washington DC in November 1998 and, by its own account, became the first bank in the nation's capital certified as a CDFI, in 1999. In 2021 it merged with Broadway Federal Bank, a CDFI based in Los Angeles, under the City First name; it describes customized financing for community-based nonprofits and affordable housing developers. LISC DC, the local office of the Local Initiatives Support Corporation, lists housing, community facilities and economic development among its focus areas in the DC region and Prince George's County. The Enterprise Community Loan Fund, a national nonprofit CDFI, lends for acquisition, predevelopment, construction and bridge needs, and finances affordable homes, health clinics, grocery stores and schools. The Low Income Investment Fund, a nonprofit CDFI with a regional office in Washington DC, works on affordable housing, early care and education, and community facilities.

These are examples, not a ranking or a complete list. The CDFI Fund publishes a downloadable list of currently certified CDFIs, which is the reliable starting point for finding lenders in the District, Maryland or Virginia rather than relying on a search result. What separates these lenders from a conventional bank, and why their terms differ, is explained in what a CDFI is.

Where do New Markets Tax Credits fit?

Larger facility projects sometimes add a layer that is not a loan at all. The New Markets Tax Credit program, run by the CDFI Fund, gives investors a federal tax credit for equity investments made through certified intermediaries called Community Development Entities. The credit totals 39 percent of the original investment and is claimed over seven years, and the entity places the capital in projects and businesses located in low-income communities. Because every transaction involves investors, an intermediary and the project itself, the structure carries legal and accounting costs that a small renovation may not justify. The mechanics are summarized on the CDFI Fund's New Markets Tax Credit page.

What should a tenant association or small nonprofit prepare?

Lenders in the District ask for broadly the same file. A borrower needs evidence of site control or a purchase contract, a development budget with a sources-and-uses table, an operating projection that shows where repayment will come from, the organization's financial statements, and the names of the people who will manage construction and then the finished building. For a tenant association buying its building under the Tenant Opportunity to Purchase Act, the first step is often to find a nonprofit sponsor or a technical assistance provider; the trust fund itself pays for counseling and technical assistance to tenant groups exercising those rights. The full catalogue of loan stages, from predevelopment to mini-perm, is set out in the guide to community development loans.

The order of approach matters as much as the file. A sensible sequence starts with the most patient money for the earliest risk: a CDFI predevelopment loan or a McKinney Act bridge loan while plans and site control are secured; then a trust fund or OSSE application, whose award signals to other lenders that public money is committed; then the construction lender, which may be a bank, a CDFI or a DCHFA bond loan for rental housing; and finally the permanent financing that repays the earlier layers. Each layer's term has to outlast the wait for the next one, which is why experienced borrowers talk to every source early rather than one at a time.

Frequently asked questions

Can a nonprofit outside housing borrow from DC public funds?

In specific cases, yes. Public charter schools have the OSSE Direct Loan and Credit Enhancement funds, and the Housing Production Trust Fund can lend or grant for child development facilities located on site in housing. Clinics, arts venues and other community facilities can turn to CDFIs, banks and, for larger projects, New Markets Tax Credit structures.

What is the largest loan the OSSE charter school fund makes?

OSSE's published limits are up to $2 million for a direct loan and up to $1 million for a credit enhancement, open to public charter schools or to nonprofits authorized to borrow on their behalf.

How can I find CDFI lenders in Maryland or Virginia that also lend in DC?

Start from the CDFI Fund's list of currently certified CDFIs, then check on each lender's own site whether its service area includes the District and whether it finances your type of building. LISC DC, for example, states that its work covers the DC region and Prince George's County in Maryland.