Seeking Sustainability: Neighborhood Housing Services of Chicago Faces Financial Challenge

Nearly 30 years after it was first incorporated to help stabilize and improve older, declining parts of the city, Neighborhood Housing Services (NHS) of Chicago had become among the best-known and most-respected organizations of its kind. Its combination of low-interest lending to homebuyers and home renovators, as well as its neighborhood improvement efforts, had won it credit for helping to maintain or revive parts of Chicago during a time when the city was losing population and private financial institutions were loathe to make conventional loans in its poorer neighborhoods. But, in the late 1990s, NHS Chicago finds it is facing a struggle to survive. Poorer neighborhoods, long-starved of credit, find themselves flooded by lending offers from a new generation of so-called "subprime" lenders. NHS efforts to improve the nine Chicago neighborhoods in which it has offices are threatened both by mortgage foreclosures which result from such high-interest loans, and by a decline in NHS Chicago's own lending business, which has difficulty competing with well-advertised "subprimes". This case raises the question of what strategy NHS Chicago, under pressure from a major foundation which had historically helped support it, should adopt to right itself financially and whether and how it should continue the mission for which it was founded. Case discussion may include both an examination of data-including trends in its revenues and expenses-and of prospective long-term organizational strategies. HKS Case Number 1659.0

• Environmental sustainability
• Economics
• Infrastructure and urban development
• Nongovernmental organizations
• Finance and investing
• Nonprofit organizations
• Strategic planning