Navigating Key Financial Changes for Affordable Housing Developers & Nonprofits

As we progress through 2025, both affordable housing developers and nonprofit organizations must adapt to evolving financial landscapes shaped by new regulations and emerging opportunities. Staying informed and proactive is crucial to navigating these changes successfully.

1. Navigating Enhanced Affordable Housing Goals for 2025–2027

The Federal Housing Finance Agency (FHFA) has finalized new affordable housing goals for Fannie Mae and Freddie Mac, emphasizing equitable housing access for low-income families and underserved areas. Notably:

• Low-income home purchase goal: 25%

• Very low-income home purchase goal: 6%

These targets aim to increase the availability of affordable housing, presenting opportunities for developers to align projects with these objectives.

Action Steps:

• Align Development Plans: Consider these goals when planning new projects to enhance eligibility for support from Fannie Mae and Freddie Mac.

• Engage with FHFA Programs: Explore available programs and incentives promoting affordable housing initiatives.

2. Understanding Beneficial Ownership Reporting and Compliance Strategies

The Beneficial Ownership Information (BOI) reporting rule, introduced under the Corporate Transparency Act (CTA) to combat financial crimes, has sparked confusion among business owners. Many are unaware of their filing obligations, leading to concerns over noncompliance penalties of up to $500 per day.

In response to widespread backlash, the Treasury Department has temporarily suspended late penalties, but the requirement remains in place. Organizations must ensure compliance before enforcement resumes.

Action Steps:

• Assess Applicability: Determine if your organization is subject to BOI reporting requirements.

• Consult Experts: Seek guidance to navigate the complexities of reporting obligations and avoid penalties.

3. Preparing for Potential Budget Cuts in Nonprofit Funding

The U.S. Senate has approved its Fiscal Year 2025 budget resolution, outlining spending and revenue goals that could impact various sectors, including nonprofits. Potential funding reductions, including cuts to Medicaid and social services, may affect revenue streams for many organizations.

Action Steps:

• Advocacy: Engage in efforts to communicate the importance of sustained funding for social services.

• Financial Planning: Prepare for potential funding shifts by diversifying revenue sources and building financial reserves.

• Collaboration: Partner with other organizations to strengthen collective advocacy and resource-sharing efforts.

4. Managing Rising Insurance Costs in Affordable Housing

One of the significant financial challenges in 2025 is the sharp increase in insurance costs, which can strain budgets—especially for projects with rent caps due to program requirements.

Action Steps:

• Risk Management: Implement comprehensive strategies to mitigate potential liabilities and reduce insurance premiums.

• Insurance Shopping: Regularly compare providers to secure the best rates and coverage options.

• Budget Adjustments: Account for rising insurance costs in financial planning and project budgeting.

Partner with First Hand Accounting Solutions

At First Hand Accounting Solutions, we understand the unique challenges affordable housing developers and nonprofits face in this evolving financial landscape. Our team provides tailored financial strategies to help you stay ahead of regulatory changes, optimize funding, and maintain financial sustainability.

Schedule a consultation today to develop a financial strategy that keeps your organization resilient in 2025 and beyond.

Note: The information provided reflects developments as of March 2025. Organizations should stay informed about ongoing policy changes and adjust their strategies accordingly.