Breaking New Ground for Capital Campaigns

Groundbreaking for The Mezzanine at Freedom Drive (Photo Courtesy Jon Strayhorn-MAC330)

Groundbreaking for The Mezzanine at Freedom Drive (Photo Courtesy Jon Strayhorn-MAC330)

Congregational capital campaigns are usually a fundraising tool for building or improving on-site infrastructure. In its 2018 capital campaign, Covenant Presbyterian Church chose to create a more welcoming campus and to build an on-site child care center.  But the centerpiece for this campaign -- called For a Whole Community -- is financing affordable housing three miles away from the church.

choosing affordable housing 

Through a comprehensive discernment process for the capital campaign, church leaders determined that an important component of supporting Covenant’s mission — to bravely work toward a whole and just world — would be to help address Charlotte’s critical affordable housing shortage. 

Their decision coincided with recommendations by Charlotte’s Opportunity Task Force which called for an intentional focus on affordable housing and early childhood development, necessary for improving the city’s ranking as 50th out of 50 American cities in economic mobility.

choosing to lend, not donate

The clergy and lay leadership at Covenant Presbyterian wrestled with the mechanics of how to use their capital campaign funds most effectively. They considered making a charitable donation to affordable housing as others had done, albeit on a grander scale. 

But they chose to make a $2 million loan, at minimal interest with the intention of getting the principal back in 20 years, creating the opportunity to invest in another affordable housing project. Importantly, Covenant worked with the developer to model a loan arrangement that worked within the complex structure of tax credit investments and could be easily replicated by other congregations. Covenant is quiet about just how low the interest rate is, stressing that each congregation should choose its own rate of financial return based on its congregational mission and needs.  

The obligations of becoming a lender are considerable. While Covenant’s capital campaign pledges are paid over the three years ending in 2020, the full $2 million is due to the project early in the second year. A lay leader of the church attends regular monthly meetings to monitor budget, scheduling, construction progress and the general stewardship of church funds.

The income from the loan is designated for student financial aid at the church’s new child development center (CDC), another campaign commitment. While the church is creating a $1 million scholarship endowment specifically for the CDC, the loan income provides additional funding to meet the goal of providing financial aid for one quarter of its students.  

choosing a project and a partner

To identify a viable affordable housing project, Covenant issued requests for proposals to developers, specifying its desire to invest in a site within an eight-mile radius from the church and calling for a mixed-income community with incomes ranging at minimum from 30% to 80% of area median income (AMI). 

Coincidentally, The Housing Partnership -- Charlotte’s largest nonprofit developer -- was assembling a deal for this type of mixed-income development only three miles from Covenant, and looking for community partners to help make the project feasible. Covenant’s RFP came at an opportune time and galvanized The Housing Partnership’s other financial partners to choose to also commit to the project.  

The location of the project, named The Mezzanine at Freedom Drive, was compelling, as the area is quickly changing and has received other community investments, such as the adjacent Freedom Charter School and a nearby Novant Health Center, opening soon. The development is 185 units, a meaningful size from the church’s perspective, and in a sustainable neighborhood with access to schools, health care and public transportation.

Covenant also appreciated the holistic approach of The Housing Partnership to its developments. The Housing Partnership considers its impact on the surrounding community and invites neighboring homeowners and renters onto its properties for programs, such as digital inclusion and tax relief clinics. Amenities such as community gardens, parks and playgrounds are core to its philosophy.

choosing deep subsidies

Most affordable housing developers utilizing tax credit financing focus on building units for families making 60% AMI (income of about $40,000/year for a family of 3 in Charlotte). The Housing Partnership works to include at least some units for 30%-50% AMI in their projects whenever possible, which can be a challenge as this type of income targeting requires a deep subsidy to build. 

Covenant was determined to use their investment to provide the deeper targeting. The combination of the church’s low-interest loan — along with a below-market rate loan from the City of Charlotte and the donation of land from the land owner — allowed The Housing Partnership to set aside 70% of the units for those making below 80% AMI, including 10% of the units for families making 30% AMI and another 10% for families making 50% AMI.

These deep subsidies were a critical element of accomplishing Covenant’s mission. Congregants were also reassured to learn that as the subsidized families improved their earnings, they would not lose their housing.  The Housing Partnership uses a floating model to maintain the AMI mix, looking for the next tenant who signs a lease to balance income changes among its existing tenants. The Housing Partnership’s property manager handles thousands of affordable housing units, conducting income certifications and annual “re-certs” to ensure that the deep subsidies are sustained throughout the life of the property.

choosing to support the campaign

Covenant’s congregation of about 2,500 members pledged generously to ensure the success of the capital campaign and the projects it supports. Early in the campaign, church members Jessica and Ben Mallicote spoke to the congregation to share their family’s perspective on participating.

To Jessica, the capital campaign was “…not an obligation we have to meet; it’s an opportunity we get to participate in. Of course, we all have household budgets, but this campaign is a chance to share God’s abundance, rather than worry about our scarcity.” 

“God is creating holy ground,” she added, “and we – all of us – get to share in that creation.” 

Ben spoke about his vision of how this capital campaign would change the lives of others, imagining how “someday, a mother will bring her grown son to the courtyard of the apartment complex on Freedom Drive to show him their first apartment. She’ll say to him ‘You were too young then to remember it, but the night before we moved into this place was the last night we ever slept in our car. We’ve had a decent place to live ever since. We’ve had a home. And this is where it started for us.’” 

choosing other ways to contribute

What if Covenant Presbyterian’s $2 million loan is not a path for your congregation?  Forest Hill Church is a mega-church that supports many local initiatives and organizations. The congregation with its six Charlotte campuses was also inspired by Charlotte’s Opportunity Task Force report to contribute to affordable housing in a unique way.

Forest Hill chose to partner with Charlotte Family Housing (CFH), an agency moving families from homelessness to housing through empowerment. The church’s partnership involved a significant two-year donation, large enough to fund a social worker at the agency. A single CFH social worker is responsible for 15-20 families, usually for a two-year period. The social services that CFH provides address the barriers that led the client to become homeless and help connect the client to resources to increase their income. 

Forest Hill Church also provides volunteers through Hope Teams at this agency. These volunteers work in teams that are paired with CFH clients, committing to a multi-year relationship that provides emotional support, accountability and social capital.

“If we wanted to see upward mobility happen in this city,” said Caylene Brown, Director of Local Outreach at Forest Hill. “Affordable housing was one of those issues that had to be faced.”

draft your plan 

The following sets of questions are designed to get your congregation started on the journey to break new ground for your capital campaign, if you do not have land of your own available:

The Place

o       Is there a neighborhood that your congregation is connected with through its volunteer work or geographic proximity?

o       Is there a community at risk of displacement because of development (gentrification)?

o      What criteria will you use to select a development for investment?

The People

o       Are you targeting affordable housing renters who need special services or those who simply need housing that fits within their budget?  Is your property management plan creating a safe and quality place that will be maintained properly in the future for the residents?

o       Consider the mission relevance to your congregation of low-income seniors, those recently released from prison, LGBTQ young adults, moms with multiple evictions, refugees, people with disabilities, or a specific income level group – all people with barriers to affordable and stable housing. If you have a desire to serve any special groups, communicate with your developer early to incorporate solutions into the overall development plan.  

o       Is there a process to connect tenants to services to enable them to increase their income over time? 

o       What kind of ongoing engagement does your congregation want to have with the residents?

The Partners

o       Are there congregants with professional backgrounds in finance, development, or real estate law who would be willing to offer their expertise pro bono to start the search process?  Would they be willing to step aside if a conflict of interest arose?

o       Do the prospective development, property manager, and community partners support your values? Have they demonstrated a strong track record assembling and executing these complex investments? Are there regular communication channels to ensure everyone remains aligned through the development process?

o       Who would appropriately manage volunteers from your congregation eager to participate? 

The Plan

o       What resources can you commit to the effort?

o       Is the funding a gift or a loan? If you expect repayment, where does your funding stand in line relative to other funders such as banks or government lenders?

o       What role does the congregation have in the planning process? 

o       Who will serve as the owner’s rep with the developer? How will they report back to the congregation?

o       What is your vision for success? How are you sharing these goals with your developer and community partners?


Judy Seldin-Cohen is a volunteer organizer on housing issues at the Stan Greenspon Center for Peace and Social Justice at Queens University of Charlotte, and she serves as the board chair for A Way Home, a $20 million public-private housing endowment.   She is also the co-author of the recently published book Recharging Judaism: How Civic Engagement Is Good for Synagogues, Jews, & America. 

Joe Taylor is Managing partner at Centerlane Capital, a real estate private equity firm.  He is a member of Covenant Presbyterian serving as volunteer chair of its Affordable Housing Implementation Committee and recently joined the Session as a ruling elder. He also serves on the board of Crisis Assistance Ministry.

This post is part of a series on Faith in Housing. Covenant Presbyterian Church represents an example of a “Below-Market Loan” -- an  off-site  option for congregations with  signature  funding accessible for affordable housing.

This post is part of a series on Faith in Housing. Covenant Presbyterian Church represents an example of a “Below-Market Loan” -- an off-site option for congregations with signature funding accessible for affordable housing.

Judy Seldin