When funding is scarce, many communities turn to HOA grants. Yet, grants are not always readily accessible, and there is a process for selecting and applying for qualifying subsidies. Board members must understand which grants are worth a second glance, whether they are eligible, and how to submit a complete and convincing application.
What are HOA Grants?
Homeowners associations rely on dues and assessments as their primary source of income. These dues come from the homeowners themselves, as they have a financial obligation towards their community. But when funding dries up and owners face too heavy a financial burden, many boards look for other streams of revenue.
This is where HOA grants come in.
Simply put, grants are funds awarded to a homeowners association, condominium, or similar housing provider. They typically come from a government agency, a public or private organization, or some other entity. That said, grants must usually go toward a specific type of project or need.
Grants are not like loans. With loans, HOAs borrow money from a bank or lender with the intention of paying back the principal amount with interest. On the other hand, there is no expectation of repayment with a grant.
Are There Grants for HOAs?
Beneficial as they may be, grants are not commonly used by HOAs and condominiums. This is because most grants are not designed with community associations in mind. Instead, they normally target local governments or nonprofit organizations.
Of course, that isn’t to say that grants for homeowners associations are completely unavailable. Every now and then, an organization or foundation will offer grant money to similar communities, but not often. Moreover, some grants are accessible to HOAs through partnerships with local organizations.
Federal Grants for HOAs
Grants can change from time to time, but here are the typical HOA grants at the federal level.
1. HUD’s Community Development Block Grant (CDBG)
The Community Development Block Grant program offers annual grants to states, cities, and counties. It funds local development activities, such as housing rehabilitation, public facilities, and economic opportunities.
That said, the CDBG program is not available directly to HOAs and condominiums. Instead, these associations can benefit from the program if their local government funnels grant money toward community infrastructure projects, stormwater improvements, sidewalk repairs, and the like.
2. FEMA’s National Dam Safety Program
The National Dam Safety Program is a part of FEMA’s initiative to support dam safety and minimize the risk of dam failures. Again, this grant is not geared toward HOAs and condominiums.
Instead, FEMA targets state agencies and dam owners who qualify for the funding. If an HOA owns a dam or reservoir, it may be eligible if it meets the program’s requirements and application procedures.
3. Energy Efficiency and Conservation Block Grant (EECBG)
The Energy Efficiency and Conservation Block Grant aims to improve energy efficiency and lower non-essential energy use. As with most grants, HOAs and condominiums don’t directly benefit from this program.
Still, these communities can partner with local governments to fund eligible projects. Examples include solar energy activities, energy-efficient lighting fixtures, and EV charging.
4. NeighborWorks America
NeighborWorks America provides funding for affordable housing projects and community development programs. Organizations within the NeighborWorks network are the typical recipients of grant money. Yet, associations may benefit from this program by partnering with qualifying local organizations.
State-Level Grants for HOA Communities
Federal grants are not the only option. Many states have their own grant programs with differing priorities or causes. Board members must check with their local government agencies or public or private foundations to see which ones are available to their community.
Some examples include Virginia’s Landowner Assistance for Forest Management, Ohio’s Clean Ohio Fund, Kentucky’s Neighborhood Stabilization Program, and North Carolina’s Land and Water Fund. Of course, most of these are grants for nonprofits or government agencies, but HOAs may be able to access funding by partnering with these bodies.
A Step-by-Step Guide to Applying for HOA Grants
Applying for a grant typically follows a structured process. Board members can’t simply send an email asking to be considered. Here are the proper steps to take when petitioning for HOA grants.
1. Verify Eligibility
First, the association must confirm that it meets the grant program’s eligibility requirements. Most grants don’t target HOAs and condominiums specifically. Associations must usually partner with a government agency or local organization to benefit from a grant program.
2. Select Appropriate Grant
Grants generally serve a particular cause or purpose. For example, FEMA’s National Dam Safety Program applies only to dam safety, while Virginia’s Landowner Assistance for Forest Management applies only to landowners with forestry resources. If a cause does not align with an association’s goals, it may not be worth the time.
3. Gather Requirements
Grant providers don’t just hand out money to anyone. Applicants must undergo a meticulous review process. Associations must prepare and organize all the documents they will need to submit.
Requirements can vary depending on the provider and proposal. That said, they typically include community demographics, membership data, financial reports, and reserve summaries.
4. Write a Formal Letter
Board members must draft a strong letter explaining the community’s goals and how the grant will help achieve them. Start with an introduction that clearly provides an overview of the HOA. From there, the letter should outline the association’s purpose and objectives, with specific, measurable results aligned with the funding goals.
The letter must also outline a detailed plan and timeline for the project. The proposal must also include an itemized budget with expected costs. Lastly, the letter must answer how the project will benefit the association and its community in the long run.
5. Monitor and Track Expenditures
Most grant providers require recipients to submit periodic and final reports. These reports must outline how the association spent the grant money, supported by receipts and invoices. This audit of the grant’s financials ensures that the HOA used the funds as promised.
Other Sources of Funding for HOA Projects
It is difficult to find grants specifically for HOA repairs, as most grant-giving bodies prioritize sustainability, clean energy, and conservation. If an association requires extra funding for purposes that grants don’t cover, it is best to seek alternative revenue sources.
For most communities, the first initiative is to raise dues or levy special assessments. These funds come directly from the association’s members, who have an obligation to pay. If neither option is feasible, the HOA should consider renting out its amenities or installing revenue-earning operations, such as coin laundromats or vending machines.
Fundraisers are another choice. While they take a lot of time and resources to plan, often requiring the HOA to spend money to earn money, they can be very effective when done well. Of course, smaller fundraisers and even donation drives are also viable.
Finally, boards can consider taking out an HOA loan. Loans provide an immediate cash injection, so they work best if the need is urgent and significant. That said, the association must still pay back the loan, with interest, which usually means raising dues or levying special assessments down the road.
All Things Considered
For many communities, HOA grants can be a potential source of additional funding, especially if their needs align with the grant’s goals. Still, most grants are not directly available to associations, making application challenging. While the right grant can be useful, it is best to prioritize other funding options.
Clark Simson Miller offers HOA financial management services to community associations. Call us today at 865.315.7505 or reach out to us online to request a proposal!
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