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Community Outlook Survey (COS)

Third Quarter 2011| Update in PDF PDF

Letter from the Community Development Office

The Community Outlook Survey (COS), a quarterly online survey by the Federal Reserve Bank of Dallas, helps assess community and economic development in the Eleventh District of the Federal Reserve System—Texas, northern Louisiana and southern New Mexico. [1] The community organizations participating in the survey provide housing, health and nutrition, financial aid, workforce development and education services to at least 93 cities and 123 counties in the three states.

In the recent quarter, the energy sector remained a strong driver of the region’s economy, though job growth was slower than in the previous quarter. Existing-home sales rose, while past-due mortgages and foreclosures declined. However, drought conditions remained severe, hurting the region’s agriculture sector. There was also a sense of uncertainty both for businesses and consumers as confidence in economic recovery stagnated. [2] The low- and moderate-income (LMI) populations in the district still struggle with job security and access to affordable housing. Service providers are adjusting to ongoing sustainability challenges due to tightening budgets and increasing demand for services.

The following report highlights this quarter’s COS results.


If you are interested in participating in our 10-minute survey and are a nonprofit service provider to LMI households in Texas, northern Louisiana or southern New Mexico, please submit the request form.

Service Providers Adjust to Economic Conditions in the Eleventh District

In October 2011, we asked service providers how they evaluated changes in the needs of low- and moderate-income (LMI) households—ranging from the availability of jobs and affordable housing to financial well-being and access to credit—from second quarter to third quarter 2011. To better understand how well the needs of LMI households are being met, we also asked service providers about the changes in demand for their services, their organizations’ capacity to serve clients and funding for their organizations.

In addition, we asked what changes they expected from third quarter to fourth quarter 2011. Table 1 summarizes their feedback.

Table 1
2011:Q3 vs. 2011:Q2
Expectations for next quarter
2011:Q4 vs. 2011:Q3
Diffusion index*
Diffusion index*
no change
no change
2011:Q3 vs. 2011:Q2
2011:Q4 vs. 2011:Q3
2011:Q2 vs. 2011:Q1
2011:Q3 vs. 2011:Q2

Availability of jobs

19   54   27   31   55   14   46 59 51 60
Availability of affordable housing 7   68   25   11   70   20   41 46 44 51
Financial well-being 7   54   39   14   57   29   34 43 39 48
Access to credit 3   66   31   8   68   25   36 42 37 43
Demand for services 67   32   2   56   42   2   83 77 79 79
Capacity to serve clients 16   70   14   20   68   13  

51 54 50 53
Funding for organization 13   43   45   17   50   33  

34 42 35 40

*The diffusion index summarizes the three percentages (Increase/No change/Decrease) into one number for each question and is calculated by adding the percentage of the “Increase” responses to half of the percentage of the “No change” responses and then multiplying that total by 100. If the index is greater than 50, the attitudes of the service providers are positive. If it is lower than 50, the attitudes of the service providers are negative. If it is 50, there is no overall change in attitudes.

NOTE: Percentages may not add to 100 due to rounding.


Results from the third quarter 2011 survey illustrate growing pessimism about economic conditions in LMI communities. Only 7 percent of the 130 respondents perceived an increase in the availability of affordable housing and in financial well-being. The previous survey’s results showed increases in these indicators of 14 percent and 10 percent, respectively. In addition, the diffusion index for availability of jobs was in negative territory for the first time in a year, falling to 46. In the previous three quarters, it had hovered above the baseline of 50.

More respondents indicated no change in access to credit in this quarter (66 versus 61 percent). However, the diffusion index dropped by 1 point, from 37 to 36. The third-quarter survey shows a slight increase in the share of organizations reporting increased capacity to serve clients (16 versus 14 percent), as well as a minor 1 percentage point increase in respondents reporting increased funding (13 versus 12 percent).

As seen in previous surveys, there are discernible gaps between what respondents foresaw for the third quarter and what they reported as current conditions. In the second quarter, 33 percent of respondents expected increases in the availability of jobs, compared with 19 percent who reported increases currently. While responses matched expectations for increases in funding, there were large gaps between expectation and reality in the areas of affordable housing (20 versus 7 percent) and financial well-being (17 versus 7 percent). Table 2 highlights the differences between the expectations in indicators for this quarter from the previous survey and the share of respondents reporting increases in those indicators in the current quarter.

Table 2
Percent reporting increase in...

Q3 current conditions

Q3 expectations
from Q2 survey

Availability of jobs
Availability of affordable housing
Financial well-being
Access to credit
Demand for services
Capacity to serve clients
Funding for organization

Expectations for next quarter are slightly less optimistic than they have been in previous surveys, with the exception of funding for organization. The diffusion index for availability of affordable housing fell below 50 this quarter, suggesting that service providers are less hopeful than before about housing for LMI communities.

The charts that follow identify the factors affecting LMI households’ access to credit and affordable housing and the factors impacting service providers’ financial sustainability. [3

Access to Credit

The three factors cited most frequently in the survey as affecting LMI clients’ access to credit—tightening underwriting standards/credit ratings, clients’ lack of cash flow and clients’ lack of financial knowledge—remain the same as in previous surveys (Chart 1). However, slightly more respondents reported concerns about regulatory issues than in the past.

Chart 1: Factors That Affect Access to Credit

Service providers cited the lack of mainstream banks in LMI neighborhoods, fear of the current political environment and the reluctance of financial institutions to lend as other major issues that are affecting credit access.

Availability of Affordable Housing

As in past surveys, respondents cited lack of capital, development costs and the competition for grant/subsidy funding as the largest factors affecting the availability of affordable housing (Chart 2). Community opposition was reported at a slightly higher frequency than in the second quarter. Comments from service providers supported this finding, with some respondents citing “not in my back yard” attitudes as a hindrance to construction of affordable housing units. In addition, respondents mentioned that financial institutions are increasingly risk averse due to the current economic climate and that affordable housing may not stand out as a particularly good investment for institutions with constrained resources.

Chart 2: Factors That Affect the Availability of Affordable Housing

Financial Sustainability

Consistent with previous surveys, respondents in the third quarter selected lack of governmental and grant funding as the most prominent issues affecting their organizations’ sustainability (Chart 3). Some respondents pointed to decreases in individual and corporate donations and foundation funding, while others reported that tightening state budgets had impacted their organizations’ balance sheets.

Chart 3: Factors that Affect Organization's Financial Sustainability

Additional Insights from Survey Respondents

As in previous quarters, we asked nonprofit service providers for additional insights that would help us better understand the issues faced by LMI households. The most frequently mentioned issues were availability of affordable housing, fear and uncertainty over future economic conditions and a shortage of jobs. Many service providers discussed the lack of opportunities for LMI communities in rural areas, tightening credit requirements and the heavy impact of even the smallest unexpected changes in circumstances on LMI financial security. Many also wrote of market conditions that disincentivize construction of affordable or multifamily housing units. The following word cloud represents the words used most frequently in comments; the larger the word appears, the more often it was cited.

Coping with Capacity Constraints

In addition to soliciting comments on prevailing circumstances in LMI communities, we asked an additional question in the third-quarter survey regarding the impact on the community organizations themselves. Noticing a growing trend of funding concerns for community organizations and nonprofit entities, we asked the following: What steps, if any, has your organization taken to cope with current financial or capacity constraints?  

Many respondents pointed to new or more aggressive fund-raising initiatives, cuts in operating costs that include layoffs and salary freezes, and increases in service fees. Others mentioned their searches for partnerships with other organizations, including private for-profits. The following word cloud represents the most frequently used words in their responses.

Interestingly, some comments centered on developing an in-house, for-profit part of the organization to help sustain the nonprofit’s work and mission. Others discussed seeking socially minded private partners to lend resources or to help provide services.


  1. Data collected represent the opinions of organizations that complete the survey and should not be interpreted to represent the opinions of all service providers to low- and moderate-income households in the Eleventh District of the Federal Reserve System. In addition, the organizations that respond to the survey will not necessarily be the same from quarter to quarter.
  2. For more economic statistics and analyses on the Eleventh District, see
  3. The number of respondents to the third quarter 2011 survey is 130. The previous four surveys had 165, 162, 128 and 130 respondents.
Community Outlook Survey
Questions regarding the Community Outlook Survey can be addressed to Emily Ryder at

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