Funding Streams

Introduction

A wide range of funding streams are available for your city to explore. The key to a strong diversified funding strategy is leveraging the right mix of these streams to achieve sustainability and ensure equitable outcomes across the issue areas that influence health and wellbeing, including housing, infrastructure, social services, and public health.

Prior to exploring individual funding streams, it is important to understand the difference between restricted and unrestricted funding:

Restricted Funding: These funds are designated for specific purposes, often by the funder, with strict conditions on their use. Examples include federal grants (e.g., Community Development Block Grants) that must be applied to housing or urban development, or philanthropic contributions tied to specific projects.

• Pros: Provides targeted resources for pressing needs.

• Cons: Limits flexibility and requires careful compliance with funder requirements.

As you review these selected funding streams, keep in mind that restricted and unrestricted funding sources are complementary. Restricted funds can be directed to specific issue areas and programs, while unrestricted funds can be used to fund innovation, fill gaps, scale successful initiatives, invest in long-term priorities, and leverage resources to develop new funding opportunities. 

Navigation Tip: Use the links in the left sidebar navigation to jump to jump to a specific funding stream. Once you have identified possible funding streams, navigate to Chapter 4: Capital Strategies using the top down to explore how you can bring these streams together using strategies like blending and braiding.

Property & Sales Taxes

Taxes, simply put, are payments collected by governments by applying a rate to a defined base. Property and sales taxes are two of the most common examples. Property taxes are based on the assessed value of land and real estate, while sales taxes are based on the value of consumer spending, such as food, clothing, or gasoline. Property taxes tend to remain relatively stable over time, whereas sales taxes fluctuate with business cycles and shifts in purchasing behavior.

Together, these sources of municipal revenue can help fund a range of services, from infrastructure improvements to public health programs. Effectively leveraging these taxes often requires navigating legal processes, city ordinances, or voter approval for new taxes or tax increases. 

Pathways for Action  

• Local Ordinances and State Laws: Cities typically need to pass local ordinances or work within state laws that establish tax rates, determine tax collection processes, and allocate the revenues. These laws define the scope and structure of how tax funds are raised and distributed across different services. 
• Budgetary Process: Once the revenue is collected, cities use their annual budgetary process to allocate these funds strategically to high-priority areas like public health, housing, and infrastructure. The allocation process often involves city councils, public hearings, and consultations with stakeholders to determine how the funds will be distributed. 
• Ballot Measures and Voter Approval: In some cases, especially for tax increases or the introduction of new taxes (e.g., a dedicated housing or health tax), voter approval may be required through a ballot measure. This process involves advocacy, public education, and campaigns to gain support for tax-related proposals. 

Challenges

• Resistance to New Taxes: When introducing new taxes, particularly for issues with less established community support, cities may face significant resistance. Overcoming this requires strong public engagement, including education campaigns to demonstrate how the funds will benefit the community in the long term.
• Balance Revenue with Tax Burden: The need to balance the tax burden on residents while ensuring enough funding for essential services is a critical challenge. Cities must weigh the need for sustainable revenue against the impact on lower income individuals and families, who can be disproportionately affected by property and sales tax increases. Strategies to address this include exploring exemptions or rebates, rate adjustments, and engaging the community in discussions on how tax revenues are distributed.

Special Purpose Taxes

Special purpose taxes are sales taxes whose funds are earmarked for a specific purpose. They are typically timebound, running for a set number of years before expiring unless renewed. Unlike general sales tax, which enters the city’s annual fund, special purpose taxes are restricted to defined uses such as roads, schools, or affordable housing. To continue beyond their initial term, special purpose taxes generally require renewal or reauthorization through a new vote or ordinance. Two common examples of special purpose taxes are Special Purpose Local Option Sales Tax (SPLOST) or Tax Allocation Districts (TADs), which allow cities to target funds to critical areas like infrastructure and affordable housing.

Pathways for Action

• Define the Purpose and Scope: Cities must establish clear objectives for the tax, specifying how revenues will be allocated (e.g., affordable housing, public health, infrastructure). This is often formalized through resolutions or ordinances.
• Legal and Procedural Steps: Implementing SPLOST or TADs requires compliance with state laws and local regulations, including approvals from city councils or county boards.
• Engage Stakeholders: Cities often involve community leaders, businesses, and local organizations to build consensus on the benefits of the proposed tax.
• Ballot Measures: For SPLOST or similar taxes, voter approval is typically required. Public education campaigns play a key role in gaining support, focusing on transparency, and highlighting community benefits.

Challenges

Equity Concerns: Ensuring that the tax benefits all residents and does not create disproportional harm or greater burden on low-income or already marginalized communities, requires careful planning and prioritization of projects.

Voter Resistance: As with any tax, securing public approval can be challenging, especially if residents are uncertain about the tangible benefits. Clear communication about the long-term community impact is essential.

CASE EXAMPLE: Seattle, WA

Funding Model: Traditional Revenue (Property Tax)

Seattle has long recognized that safe, stable housing is foundational to individual and community wellbeing and since 1986, the Seattle Housing Levy has been the cornerstone of the city’s housing strategy—a voter-approved property tax measure designed to tackle Seattle’s growing affordability and homelessness challenges. Since inception, five voter-approved levies have delivered thousands of affordable homes, preserving housing stability for Seattle residents.

Consistent Voter Support

Thanks to investments from the Housing Levy, thousands of residents currently live in safe, stable homes they can afford. For nearly 45 years, Seattle residents have consistently supported this critical resource, with the most recent Housing Levy in 2023 receiving a voter approval rate of over 69%.

What the Latest Levy Funds

In its latest iteration, the $970 million measure will fund the construction of more than 3,100 new affordable rental and ownership homes, preserve existing units, and provide short-term rent assistance for households at risk of homelessness. The initiative also includes critical workforce stabilization efforts by raising wages for frontline housing and service providers.

The program is designed to serve families, seniors, people with disabilities and individuals earning up to 60% of Area Median Income (AMI). At least 60% of funds support those earning up to 30% AMI, including people experiencing homelessness.

Collaborative Planning and Equitable Design

Over 16 months, collaborations between the Mayor’s Office, City Council and the Office of Housing led an extensive community engagement process, meeting with local nonprofits, housing developers, and community advisory committees to refine priorities and ensure equitable distribution of funds. Those efforts culminated in strong public support.

Tracking Impact Over Time

The city tracks progress closely, setting clear benchmarks: serve over 9,000 low-income households through direct stability services, expand housing options for seniors and families, and ensure that all investments support long-term affordability for at least 50 years. Since the levy’s inception, more than 16,000 people have benefited from safe, affordable homes funded by the initiative.

Housing Levy Dollars are Trusted

County, State, and Federal agencies, as well as private financers, know that an affordable housing development with Levy funds is a good investment. Every 2016 Housing Levy dollar invested has been matched by more than $3.50 from other sources of public and private investment.

In a region where housing costs continue to rise, Seattle’s Housing Levy remains a durable model of how cities can use local tax authority, community trust, and sustained partnerships to advance housing justice for generations to come.

CASE EXAMPLE: Lawrenceville, GA

Funding Model: Special Purpose Taxes (Tax Allocation District) 

Located in Gwinnett County, Georgia, Lawrenceville has emerged as a model for how small cities can use strategic tax policy to spur inclusive growth. By creating a Tax Allocation District (TAD) in its downtown area, the city redirected incremental property tax revenue toward revitalization, infrastructure improvements, and affordable housing—without raising existing taxes. 

How the TAD Financing Works

A TAD is Georgia’s version of tax increment financing (TIF), allowing jurisdictions to designate a geographic area and dedicate the growth in property taxes within that area to public improvements. In Lawrenceville, that revenue has been used to support major infrastructure upgrades, residential development and the enhancement of public spaces—all designed with guidelines that ensure community input, with equity in mind. 

Guidelines also state that TAD financing will generally be reserved for projects that do not qualify for alternative methods of financing as well as high-quality redevelopment projects that will create a “halo effect” of reinvestment in surrounding areas outside the TAD boundary. 

Stakeholder Engagement at the Center 

From the beginning, the city worked closely with local businesses, community leaders and county officials to define the TAD boundaries and set priorities. Transparent public meetings and forums helped shape the investment plan and build public trust. Lawrenceville’s city government took an active role in coordinating these efforts, ensuring that funds aligned with long-term goals for affordable housing and economic development. 

Early Wins and Long-Term Impact 

As a result of the TAD, Lawrenceville’s downtown has seen a surge in development activity—new businesses, mixed-use buildings and affordable housing options are now part of the landscape. The city has prioritized reinvestment in infrastructure, such as parking and pedestrian improvements, to ensure accessibility and sustainability. Other eligible expenses include: 

• Land clearing and grading 
• Real property acquisition for public use 
• Demolition of existing structures 
• Environmental remediation 
• Construction of public works 
• Other system improvements or professional service fees that may be necessary to support projects 

Equity as a Guiding Principle 

In line with Gwinnett County’s TAD guidelines, Lawrenceville emphasized housing and economic access for historically underserved communities. The city tracks the use of TAD revenues through public reporting, helping to ensure that outcomes align with community priorities and support low-income residents. 

A Replicable Approach to Community-Focused Growth 

Lawrenceville’s success demonstrates how even smaller cities can use tax tools not only to revitalize neighborhoods, but to do so in ways that are community-informed, equity-centered and economically sustainable. 

Social Impact Bonds (SIBs)

Social impact bonds allow private investors to fund initiatives upfront, with the expectation of repayment based on successful outcomes. This model shifts the financial risk from the public sector to private investors while promoting accountability and results. Social impact bonds can be used for social or public health initiatives, aligning financial incentives with the achievement of positive results.

Pathways for Action

• Establish Outcome Metrics: Define clear, measurable outcomes, such as reduced homelessness or increased employment, tied to the payment structure.
• Align Stakeholders Early: Involve investors, service providers, and government entities from the start to ensure shared understanding of goals, funding expectations, and outcomes.
• Develop Payment Structures Based on Results: Create repayment plans linked to outcomes, such as milestone payments or lump-sum payments after all outcomes are achieved.
• Ensure Performance Monitoring: Set up robust tracking and evaluation systems, including third-party evaluators, to ensure transparency and accountability.
• Foster Partnerships: Build strong public, private, and nonprofit partnerships to ensure sustainability and community relevance.

Challenges

• Defining Meaningful Metrics: Choosing the right outcome indicators is challenging. They must be specific yet flexible to address unexpected issues.
• Investor Risk: Investors bear the risk of non-repayment if outcomes are not achieved, especially in high-risk or untested areas.
• Complex Outcome Measurement: Assessing the direct impact of interventions can be difficult, especially for issues with long timelines.
• Stakeholder Misalignment: Differing expectations among stakeholders may lead to delays or misalignment in goals and progress.
• Operational Complexity: Managing multiple stakeholders, funding streams, and reporting requirements requires significant oversight and can overwhelm agencies.

CASE EXAMPLE: Denver, CO

Funding Model: Social Impact Bond + Braided Funding 

Denver’s innovative approach to chronic homelessness gained national attention in 2016 with the launch of the Denver Supportive Housing Social Impact Bond (SIB) Initiative—an outcomes-based funding model designed to increase housing stability and reduce costly interactions with the criminal justice and emergency health systems. 

Targeting Those with the Greatest Needs 

The program focused on individuals experiencing long-term homelessness who also frequently cycled through jail, detox facilities, and emergency rooms. These residents were identified through cross-agency data, with the City of Denver playing a central role in coordinating data sharing, structuring the SIB contracts and selecting participants most in need of intensive, integrated services. 

How the SIB Was Funded 

The SIB initiative raised $8.7 million in upfront capital from private investors, including the Denver Foundation and the Walton Family Fund. These funds supported housing-first services provided by local nonprofits like the Colorado Coalition for the Homeless and the Mental Health Center of Denver. Investors were repaid by the city only if participants showed measurable improvements—namely, stable housing and reduced jail bed usage. 

To deepen the program’s reach, the city braided funding from federal and state housing vouchers and leveraged Medicaid expansion for behavioral health support. This blend of financing made the program more sustainable and responsive to participant needs. 

Measurable Results and Lasting Impact 

The program tracked its outcomes rigorously, and the results were compelling: participants spent an average of 560 more days in stable housing over three years than the comparison group. Jail days dropped by 30%, and shelter use and emergency service visits also declined significantly. These results triggered performance payments to investors and demonstrated cost savings for the city, especially in reduced criminal justice and crisis health expenditures. 

A Replicable Model for Other Cities 

The Denver SIB initiative ultimately showed that pairing affordable housing with wraparound services not only improves lives but also saves public dollars. It remains one of the most studied examples of outcomes-based funding in the U.S., providing a replicable model for other cities looking to address chronic homelessness through data-driven, collaborative finance mechanisms. 

Public-Private Partnerships (PPPs)

Public-Private Partnerships (PPPs) are a strategic collaboration between public entities, such as a government agency, and private-sector organizations, such as for-profit corporations or private charitable foundations, to design, finance, and implement public services or infrastructure. By leveraging private capital and expertise, public agencies are able to develop and expand transformative initiatives while sharing financial and operational risks – and rewards – across all stakeholders.

Pathways for Action

• Leverage Private Expertise and Capital: Cities can tap into the private sector’s financial resources, technical knowledge, and operational efficiencies to drive public projects such as infrastructure development, urban revitalization, and sustainability efforts.
• Develop Clear Legal Frameworks: Establishing transparent legal agreements and governance structures ensures accountability and safeguards public interests.
• Align Objectives: Engage stakeholders early to align goals, ensuring the partnership balances public benefit with private returns.
• Focus on Shared Risks and Rewards: Clearly outline risk-sharing mechanisms to avoid overburdening any single party while incentivizing private-sector participation.
• Community-Centered Projects: Use PPPs to deliver projects that directly impact community health, housing, and economic vitality, such as affordable housing or transit-oriented development.

Challenges

• Complex Negotiations: Developing agreements that satisfy public and private stakeholders requires significant legal and administrative effort.
• Equity Concerns: Ensuring that PPP projects serve underserved communities and avoid reinforcing systemic inequities is essential but challenging.
• Public Skepticism: Perceptions of undue private influence or profit-seeking can erode trust, requiring robust communication and transparency.

CASE EXAMPLE: Boston, MA

Funding Model: Blended Funding (Public, Private + Philanthropic) 

Launched in 2003, SkillWorks is a collaborative, public-private workforce initiative designed to address both Boston’s and Massachusetts’ persistent skills gap. By pooling public, private and philanthropic resources into a single fund, SkillWorks has become a durable model for how cities can improve access to economic opportunity through smart investment and cross-sector collaboration. Its structure provides a roadmap for other cities seeking to break down silos and align workforce strategies across multiple funding and delivery systems. 

The Boston Foundation—SkillWorks’ lead philanthropic partner—worked closely with the City of Boston, community colleges, state agencies, employers in healthcare, hospitality, construction and financial services, and dozens of nonprofit service providers. Together, they have crafted targeted training programs, career pathway strategies and policy solutions that reflect the needs of both workers and employers. 

The City of Boston played an anchor role in the initiative’s governance and strategic design. By aligning local policies with regional workforce goals, the city helped SkillWorks create scalable, equity-centered solutions that complement Massachusetts’ larger workforce ecosystem. Public partners also helped direct investments to high-impact training providers and career navigation services. 

Measurable Results 

Since its inception, SkillWorks has invested over $18 million in workforce programming, supporting thousands of jobseekers and incumbent workers with training, upskilling, and advancement opportunities. The initiative regularly tracks and reports on key metrics like job placements, wage increases and program completion rates. It has also been instrumental in aligning community college programs with real-time labor market demand. SkillWorks-funded programs have shown measurable improvements in worker retention and earnings, contributing to long-term economic resilience in participating communities. 

System-Level Impact on Workforce Funding 

Skillworks’ pooled fund was structured with The Boston Foundation serving as the fiscal agent and convener. This allowed multiple funders—private foundations, corporations, public agencies, and national philanthropies—to contribute to a single investment vehicle, which was then governed by a funder collaborative. This collaborative jointly determined investment priorities and grantee selection, ensuring that funders had aligned goals and shared decision-making power.  As a result—beyond direct services—SkillWorks has influenced state workforce funding, contributing to the alignment of over $70 million in additional public resources across Massachusetts. Its long-term impact lies not only in the people served, but in how it has changed the way funders, training institutions, employers, and governments work together to create economic mobility. 

Foundation Funding

Philanthropic funding from foundations and donors can support initiatives that prioritize public health, equity, and long-term societal impact. These funds typically come in the form of grants or donations, allowing for flexibility in addressing community needs. Cities should consider local, regional as well as national philanthropic organizations when looking for foundation funding.

Pathways for Action

• Cultivate Relationships with Foundations: Engage philanthropic organizations early to align funding priorities with community needs, fostering collaboration and trust.
• Leverage Local Foundations: Build partnerships with regional or community-based foundations that have a vested interest in local development.
• Promote Transparency: Clearly outline goals, funding uses and expected outcomes to encourage donor confidence and accountability.
• Maximize Matching Opportunities: Seek matching funds to incentivize additional contributions from other funders or the community.
• Incorporate Flexibility in Program Design: Allow room for adjustments based on donor feedback or shifting community needs to ensure alignment with funding priorities.

Challenges

• Short-Term Funding Cycles: Many grants are limited in duration, requiring additional effort to sustain programs once initial funding ends.
• Restricted Funds: Philanthropic contributions often come with specific use restrictions, limiting their flexibility in addressing emerging needs.
• Competition for Resources: Cities frequently compete with other organizations for limited philanthropic funding, making it challenging to secure grants.
• Accountability Requirements: Foundations and donors often require rigorous reporting, which can strain administrative resources.

Federal & State Funding

The federal and state governments provide funds to cities through multiple pathways. This most commonly includes grants, such as the federal Community Development Block Grant Program (CDBG) or the HOME Investment Partnerships Program. Some federal grants may be passed through states, and then distributed to cities, while other federal grants are directly available to municipalities. Individual states may also have tax funded or other state-designated programs available to cities.

Pathways for Action

• Research Opportunities: Proactively identify grant opportunities that align with city needs and priorities.
• Plan Ahead: Federal funding requests can be complex. Having a clear plan for application and use is vital.
• Ensure Eligibility: To qualify for federal grants, ensure your city has an active System for Award Management (SAM.gov) account.

Challenges

• Navigating Regulations: Regulations for federal funding in particular can be complex and differ by agency. Ensure you are familiar with the rules and regulations before applying and the city has the appropriate administrative staff for financial and reporting requirements.
• Matching Fund Requirements: Funding may require non-federal match for a percentage of the total cost. Other funding streams must be leveraged to meet these match requirements.

Private Corporation Contributions

Corporations contribute to public initiatives through grants, sponsorships, and in-kind support, often as part of their Corporate Social Responsibility (CSR) or Environmental, Social, and Governance (ESG) strategies. Cities can leverage these partnerships to fund programs, enhance community services, and foster innovation.

Pathways for Action

• Identify Strategic Alignments: Seek partnerships with corporations whose goals or CSR strategies align with the city’s priorities, such as workforce development, public health, or sustainability.
• Engage Employers as Stakeholders: Involve local employers in community initiatives, emphasizing benefits such as enhanced workforce readiness, reduced healthcare costs, and improved local infrastructure.
• Offer Tailored Proposals: Present initiatives as opportunities for shared value, highlighting how corporate participation benefits the business, such as through co-branding, tax benefits, or employee engagement.
• Establish Clear Qualifications: Evaluate potential corporate partners based on their track record of community involvement, funding capacity, and alignment with project goals.
• Foster Long-Term Collaboration: Build enduring relationships with corporations through ongoing communication, mutual goal-setting, and periodic reporting of outcomes.

Challenges

• Misaligned Goals: Corporate objectives may prioritize short-term visibility over long-term community impact, creating potential conflicts.
• Narrow Focus Areas: Companies may limit support to specific initiatives, regions, or populations that align with their brand.
• Conditional Funding: Corporate grants often come with stipulations, such as naming rights or control over program decisions.
• Public Skepticism: Perceptions of undue influence or self-interest in corporate partnerships may raise concerns among community members.