Housing Counseling Process Evaluation and Design of ... - HUD User

specialized training required for these services. The lowest per client costs are among social service
agencies ($264) and consumer credit counseling agencies ($254).
While the regression results help to identify some of the factors associated with the variation in
average per client costs, it is also the case that the model only accounts for less than a fifth of the
variation in average costs across agencies. In part the inability to explain more of the variation in
costs reflects the relatively imprecise cost information that is available. But is likely that a significant
amount of this variation is due to differences in how agencies provide their services. Unfortunately,
we do not have enough information to determine either the specific factors driving these costs or
which approaches are the most cost effective.
Summary
Obtaining funding for organizational operations is a significant problem for most HUD-approved
counseling agencies. This chapter discussed the sources of funding for housing counseling, as well as
the average cost per client assisted, and how costs vary with agency characteristics.
The survey results suggest that no one source of funding is predominant. HUD’s Housing Counseling
program is the single largest source, but accounts for only 14 percent of aggregate funding for the
industry. Other federal programs, state governments, other private sector sources, and financial
institutions are the next most important types, accounting for between 10 and 12 percent of aggregate
funding each. However, most agencies rely on only one to three sources of funds. Most agencies
also have fairly modest budgets for housing counseling and education—less than $100,000 per year
for more than half of the agencies surveyed.
By far the most common type of funding for housing counseling is HUD’s Housing Counseling
program, with nearly three-quarters of agencies reporting some amount of funding from this source.
However, the average HUD grant is small compared to the average amount obtained by agencies
from most other sources. While the relatively small size of average HUD grants likely reflects a
strategic choice to spread funding across a large number of agencies and communities, a common
theme in comments from agencies was that the size of their HUD grants, which averaged just under
$38,000 in FY 2007, as well as year-to-year uncertainty about the level of funding, limited their
opportunities to build organizational capacity. These concerns are likely to be mitigated somewhat in
the coming years with the availability in 2008 and 2009 of an additional $336 million in grants
through NeighborWorks® to support foreclosure mitigation counseling.
The chapter also provided rough estimates of the average costs of providing housing counseling
services. About half of all agencies have average costs per client of around $200 or less, another third
have average costs between $200 and $500, and about one-fifth have average costs of more than
$500. However, 10 percent of agencies having average costs of more than $1,000 per client, resulting
in a high average across all agencies ($431) compared to the median ($225).
The chapter used a regression model to estimate how much average per client costs vary with each of
these agency characteristics. The most important factor in explaining variations in per client costs is
agency size. Per client costs decline as client volumes increase, suggesting that there is some
efficiency to larger scale counseling operations. Average costs also vary with the number of staff
Chapter 5. Sources of Agency Funding and Costs of Providing Service 75