Profiting from Poverty: The Competition between For-Profit and Non-Profit Developers for Low-Income Housing Tax Credits

Abstract

This article introduces the idea that for-profit entities compete against nonprofit organizations for limited governmental incentives offered to promote the privatization of social services. This competitive dynamic can adversely affect the intended beneficiaries of social policy to the extent that for-profit social service providers threaten to overpower valuable nonprofit participation in outsourced programs. This article identifies and explores this competition through an analysis of how it has affected the shape and operation of the Low-Income Housing Tax Credit (LIHTC) – the largest federal subsidy for affordable housing. It maintains that this competition impacts the tax credit program in a way that could harm tenants who live in tax credit housing. Accordingly, it calls for statutory protection of nonprofit participation in the LIHTC.