The document discusses the relationship between nonprofits and the foreclosure market. It outlines the Neighborhood Stabilization Program and First Look Program which provide funding for nonprofits to purchase and redevelop foreclosed homes. It also discusses guidelines for nonprofits considering joint ventures with for-profits, including ensuring the venture aligns with the nonprofit's mission and does not prioritize profit over charitable goals.

1. The Foreclosure Market
and
The Nonprofit
Beth Bergman
Managing Partner at BERGMAN and ALLDERDICE

2. • Discussion Outline:
• Neighborhood Stabilization Program
– Eligible uses
– First Look Program
• The Marriage between a Nonprofit and a
For-Profit
– Guideline for the Nonprofit
– Guidelines for Joint Venture
1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM |
213.736.5101

3. The Neighborhood Stabilization Program
(NSP) was established in 2008 to stabilize
communities that have suffered from
foreclosures and abandonment through
the purchase and redevelopment of
foreclosed and abandoned homes and
residential properties.
1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM |
213.736.5101

4. Eligible Uses
Activities which include, but are not limited to:
•Establish financing mechanisms for purchase and
redevelopment of foreclosed homes and residential properties;
•Purchase and rehabilitate homes and residential properties
abandoned or foreclosed;
•Establish land banks for foreclosed homes;
•Demolish blighted structures;
•Redevelop demolished or vacant properties
1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM |
213.736.5101

5. The First Look Program
The First Look Program was established in 2010 as a
partnership between HUD and the National Community
Stabilization Trust to collaborate with Fannie Mae,
Freddie Mac and others to provide nonprofits a first
crack at purchasing bank owned properties for the
purpose of acquiring, renovating and selling them to
low-income buyers.
1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM |
213.736.5101

6. The Marriage of a
Nonprofit & For-Profit
1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM |
213.736.5101

7. Guidelines for the Nonprofit
1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM |
213.736.5101

8. • Is the project in alignment with the
nonprofit’s mission?
• Does the nonprofit have experience in
affordable housing?
• What are the nonprofit’s assets and
capabilities in this area?
1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM |
213.736.5101

9. • Is the project in alignment with the
activities listed in the nonprofit’s 1023?
• Has the board approved the joint venture?
• What benefits would the nonprofit receive
from aligning with a for-profit?
1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM |
213.736.5101

10. Guidelines for the
Joint Venture
1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM |
213.736.5101

11. • Have you clearly identified the charitable
purpose of the venture?
• Does that purpose further the nonprofit’s
charitable mission?
• Does the venture avoid “private benefit”?
1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM |
213.736.5101

12. • Does the nonprofit control the venture in
such a way that its charitable purposes
are not subordinated to the for-profit’s
motivation to maximize profit?
• Are you aware of the “commerciality
doctrine”?
• Do you have a plan to limit UBIT?
1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM |
213.736.5101

13. The Foreclosure Market
and
The Nonprofit
Beth Bergman
Managing Partner at BERGMAN and ALLDERDICE