We understand that financing for intentional communities can feel daunting for founders. We hope the following resources and tips can help. In addition, see our Consultants page for finance and realty specialists.
Most groups planning an intentional community face a similar hurdle in their quest for affordable housing that accommodates themselves and those they care about. Below are some options communities have used for the lease or purchase of their building or land.
Financing Community Real Estate Thru Non-profits
- Group-financed: An individual or group can create a cooperative business, which can distribute or sell shares of ownership to residents or rent to members. This can offer a viable option to create group ownership with low-cost implementation. A primary investor or original owner could hold title, but with a legal document that divided the ownership.
- Community land trusts: A non-profit entity can own the land upon which housing units are built, and sell or rent the units on top of it at affordable rates. A homeowner can sell and recoup their initial investment, but would not get a profit if the land value increases. Instead they would receive some set percentage of interest on their initial investment.
- Grant-funded: While organizations with non-profit status are eligible for a greater number of grants, some grants are available to community groups or businesses. Our grant writing consultants specialize in financing for intentional communities. They may be able to help you identify some you are eligible for and fine tune your applications.
Financing Community Real Estate With Loans
- Diversified Community Investment Fund: A for-profit fund will invest primarily in real estate, but also invest a portion of its portfolio in local businesses. Those investments in local businesses can take any form, including loans, equity investments (like stock), or a revenue share.
- National Coalition for Community Capital: NC3 allows people of any economic status to invest in their community. Community capital projects utilize locally-sourced and locally-invested financial capital, raised from an economically diverse group of investors.
- Local credit union financed: Credit unions or small local banks are sometimes more willing to take a risk on locals. Some lenders are willing to manage a multiple-owner loan, called a mixer mortgage or fractional mortgage. The lender holds the title as the loan gets repaid. The members who contributed to the down payment, would each have their share of payment to make, and their share of ownership. If a decision were later made to dissolve the IC, the land could be resold. Investors would likely get all or part of their investments back. However, the co-owners could be personally liable for amounts they cannot pay if they decide to sell at a point that the value of the land has diminished.
- Business-funded: Vocation-based ICs may be able to secure low-interest business loans to purchase a residence for employee housing. Operating costs could also be covered.
- Title company loan: You may find a title company willing to co-own the title. The residents with shares might rent and make payments as a rent-to-own arrangement. Hiring a lawyer ensures that security laws are complied with, which are often complicated.
Seller-financed
- Retirement-financed: If parents use retirement funds to make a down payment or full payment for a joint purchase of real estate, it could be co-owned by the parents and their children. The investment would be more secure than many types of retirement funds. It would be backed by land rather than subject to market fluctuations. However, definitely hire a lawyer to set this up. This option can make the land subject to debts of the children if not done correctly. There are also tax downsides to co-owning land as opposed to passing the land to a child. Property law generally creates rights that don’t favor co-ownership, unless you or your lawyer publically files an owner agreement.
- Owner-financed property sale: If sellers trust you, they can avoid high capital gains tax thru a rent-to-own structure that allows buyers to pay over time. You might also be able to structure the legal agreement in a way that allows the owner to live on site also. The agreement might last thru the end of their life and may include caretaking. The former owner might then agree to rent from you at the point that you as buyer have completely paid the agreed-on amount.
- Peer-to-peer (P2P) financed: For joint real estate purchase, as investment or co-housing, see sharetini.com. Their profiles are organized by location. You might reach out to people on their platform to suggest they join ICmatch to assess compatibility if they are looking for a cohousing situation. Alternatively, some simply want to share in the purchase as an investment, rather than live there.
Loans Providers
- National Cooperative Bank: NCB provides loans to serve the needs of U.S. cooperatively owned business operators, socially responsible independent retailers, cooperative housing units, and non-profits.
- Seed Commons: A community wealth cooperative with a principle of non-extraction. This means the lender won’t get a higher return than the borrower does.
- Mercy Housing (and Mercy Community Capital): One of the nation’s largest affordable housing organizations. They develop, preserve, manage, and/or finance U.S. housing. Their affiliate, Mercy Community Capital, is a CDFI specifically focused on providing loans and support for affordable housing projects.
- Habitat Community Capital: While known for building homes with volunteers, Habitat for humanity also engages in advocacy for affordable housing. Their affiliate, Habitat Community Capital, is a CDFI that provides loan opportunities and financing options to other affordable housing organizations.
- National Housing Trust (NHT): Focuses specifically on preserving, improving, and maintaining affordable housing, ensuring its long-term viability.
- Affordable Housing Tax Credit Coalition (AHTCC): While not an “organization” in the same way as NC3, it’s a significant coalition of housing credit developers, investors, and lenders. They advocate for the Low-Income Housing Tax Credit (LIHTC) program, which is the largest source of affordable housing development capital in the United States. Their member list can lead you to many development and investment firms.
Affordable Housing Advocacy and Strategists
- NeighborWorks America: A national non-profit organization that creates opportunities for people to live in affordable homes, improve their lives, and strengthen their communities. They work through a national network of local organizations to provide affordable housing, financial counseling, and community development.
- Enterprise Community Partners: A national leader that invests capital and expertise to strengthen communities and advance affordable housing. They work on a wide range of initiatives, including developing and preserving housing, advocating for policy change, and building capacity in the affordable housing sector. They are also part of Power Forward Communities, which focuses on making energy efficiency more affordable in housing.
- Local Initiatives Support Corporation (LISC): A national CDFI that invests in communities to build affordable housing, create jobs, and foster economic development. They work with local partners to provide capital, technical assistance, and other resources. LISC is also a key partner in Power Forward Communities.
- Community Development Financial Institutions Fund (CDFI Fund): While a government entity, it’s crucial to understand as it certifies and provides funding to CDFIs. Many CDFIs directly focus on affordable housing, leveraging these federal resources to attract private investment.
Short Term Strategies for Beginning Founders
- Jointly rented house: This guide from an expert can help you find a good value on the rental market, make adaptations to increase occupancy, and persuade a landlord to rent to your group.
- Contracted emergency timeshare: Intentional communities adjacent to but not within metropolitan areas may consider offering disaster relief temporary shelter as a contracted prepaid service. While this may not be sufficient for full financing for intentional communities, it could cover partial costs.
- Grants: Team up with a certified non-profit, local municipality, school, or religious institution as an umbrella organization under which you can apply for additional grants. Offer the umbrella organization a cut, which they will expect. This link contains many grants lists and tips.
- Crowdfunding: Some communities have purchased land with individual donations, some less than $10, based on a vision that others resonate with.
Further Reading
Hoeschele, W. (2018). The economics of abundance: A political economy of freedom, equity, and sustainability. https://www.routledge.com/The-Economics-of-Abundance-A-Political-Economy-of-Freedom-Equity-and/Hoeschele/p/book/9781138383371
Horowitz, B. (2021). How to co-purchase and thrive on a land share. https://issuu.com/cowichanvalleyvoice/docs/april_2021_issue_149_web
Phil. (2020). Co-buying property with friends: Learning to love the process. https://supernuclear.substack.com/p/co-buying-property-with-friends?s=r