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Local Government Funding and Financing Comparison Matrix
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SourceWhat It IsWhat Makes it Special?
Typical Project Types/Phases
Project Budget LimitsLevel of Effort (High/Med/Low)Key Partners
Timeline (Apply/Project Readiness/Funding Dispersal)
Watch-OutsExamplesWhere to Learn More
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FUNDING
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Federal GrantsFunding provided to local governments through a grant-making process for specificly-identified project that meet the priorities laid out in the NOFODedicated funding to specific priorities and goals. Typically, consistent funding that releases in a regularly-scheduled cadence to make for easier planning.Grants are typically for shovel-ready projects. Project types are determined by the grant you are applying for.Depends on the grant. Project limits are identified in the Notice of Funding Opportunity (NOFO)HighThose required by NOFO or those required to ensure an adequate project that meets the identified priorities and key goals.

Consider community based organizations (CBOs), universities, development community, other departments in your jurisdiction, and other local jurisdictions.		Federal grants often give 4-6 weeks after being posted. Check grants.gov or the agency website to keep an eye out for forecasted dates, deadlines, etc. The grant NOFO will determine project readiness, but vast majority of grants require shovel ready projects. Grant funding can take 1+ years from application to project start.Regular reporting, which can be burdensome. Can include cost matches, that should be included in your annual budget. How many awards are being considered?DOT Safe Streets and Roads; HUD Resident Opportunities and Self-Sufficiency (ROSS); DOL Registered Apprenticeships; SAMHSA First Responders-Comprehensive Addiction and Recovery ActSeeking Federal Funding: A Guide for Local Governments
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Community Projects (earmarks)
Direct funding for local projects, secured through your House/Senate members. More flexible funding and can help support first/last dollars needed for a project, a pilot program, or planning dollars needed for a future grant/project.
Community Project requests are the most flexible federal funds that you can get.Depends on the type of project. If you're doing an infrastructure project, it will be most competitive for Congressional Earmark funding if design is near completion and you have secured or are in the process of securing your permits.$5 million tends to be the ceiling for an Earmark request. Some projects have been funded at higher amounts but it isn’t typical. MediumHouse or Senate Office; Community Partners, including your state legislators, city/county partners, and local institutionsJanuary-March. Often only have 2-3 weeks to submit from when your Member releases their applicationShort turnaround. Congress may give your award amount a "hair cut". Historically, Congress has needed to operate under regular order, not a continuing resolution, for Community Project funding to be included.Stay tuned - In August, NLC is kicking off a series of blogs highlighting the vast variety of Community Project funding. Unlocking Funding: A Guide to Community Project Requests
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State GrantsFunding provided to local governments through a grant-making process for specificly-identified project that meet the priorities laid out in the NOFODedicated funding to specific priorities and goals. Typically, consistent funding that releases in a regularly-scheduled cadence to make for easier planning. State grants tend to be more specifically-aligned with community priorities.Grants are typically for shovel-ready projects. Project types are determined by the grant you are applying for.Depends on the grant. Project limits are identified in the Notice of Funding Opportunity (NOFO)HighThose required by NOFO or those required to ensure an adequate project that meets the identified priorities and key goals.

Consider community based organizations (CBOs), universities, development community, other departments in your jurisdiction, and other local jurisdictions.		Check your state-run grant website for more information. For example: California (https://www.grants.ca.gov/), Colorado (https://dlg.colorado.gov/funding-opportunities), and North Carolina (https://www.nc.gov/your-government/all-nc-state-services/grant-opportunities) Regular reporting, which can be burdensome. Can include cost matches, that should be included in your annual budget. How many awards are being considered?Varies by state!Federal and State Grants
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TAX CREDITS/ELECTIVE PAY
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Clean Energy Tax Credits + Elective Pay (aka Direct Pay)Elective Pay gives tax-exempt eligible entities (i.e. states, local
governments, nonprofits) the ability to receive direct payments from the IRS for clean energy
tax credits by filing tax forms		It isn't competitive, and an unlimited source of funding.

You receive a rebate for implementing qualifying clean energy projects. Reimbursement of 30%, 40%, potentially 70% cost of the project
Solar, geothermal, wind, electric vehicles, and electric vehicle charging infrastructure.Depends on project category.Medium (can be a high learning curve as it is a new process)Your internal legal and finance departmentsYou must complete pre-filing registration before filing your tax forms. This will provide you with a registration number for each qualifying project.

Tax filing for elective pay rebate must be submitted 4.5 months after the end of your community's calendar year or fiscal year, the year when the project was placed into service.

A step-by-step instruction manual to guide your city through the elective pay filing process: https://www.nlc.org/article/2024/08/16/new-resources-helps-cities-successfully-file-for-ira-elective-pay-provision/ 		Clean energy tax credits are being phased out or eliminated: https://blogs.law.columbia.edu/climatechange/2025/07/07/the-one-big-beautiful-bill-act-considerations-for-cities-and-community-partners/

Bonus incentives can act as a reduction to your rebate if your project doesn't qualify:
1. Domestic Content: Can be a (+) (add 10%) or a (-) (ʻhaircutʼ starts in 2024)
2. Prevailing Wage and Apprenticeship (PWA): Only a (-); must meet to keep 30%
3. Energy Communities: (+) Adds 10%
4. Low Income Communities Bonus (LICB): (+) Can add 10-20% depending on who benefits and where itʼs located		Local Government Elective Pay Tracker - See examples where elective pay has already been successfulLawyers For Good Government Elective Pay website - full of the latest news, fact sheets, annotated forms, and webinars
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Clean Energy Tax Navigator to help you navigate the tax filing process
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FINANCING
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Community Development Finance Institutions (CDFI)Certified by U.S. Treasury (CDFI Fund)
with a mission of enerating economic growth and opportunity in some of the nation's most distressed communities by offering affordable loans, TA, and blended finance/diverse capital stacks.
Small communities often face limited staff, budget constraints, and project scale issues, and traditional finance doesn’t always align with climate adaptation, resilience, or energy affordability goals.
CDFIs are trusted, community-rooted lenders that can help overcome institutional mistrust and financing barriers in historically underserved communities and unlock capital for community-led initiatives by blending mission-driven investment with flexible, accessible financing solutions.
Energy Efficiency & Building Retrofits [residential and small commercial energy upgrades (insulation, lighting, HVAC); weatherization and mold remediation; energy-efficient appliances and systems (e.g., heat pumps)] - Renewable Energy [Rooftop solar installations (especially on low-income housing); community solar projects; Solar + storage systems for resilience] -
Resilience & Preparedness Infrastructure [microgrids and backup power systems for community centers; emergency shelters with clean energy systems; cooling and resilience hubs for extreme weather events] - Green Affordable Housing [pre-development and construction financing for energy-efficient affordable housing; transit-oriented or climate-resilient housing developments] -
Transportation & Clean Mobility [Electric vehicle (EV) charging infrastructure; clean vehicle loans for community organizations or transit operators] - Workforce & Business Development [loans to small businesses in the clean energy sector; financing for workforce training providers (e.g., HVAC, solar installation)] - Water & Environmental Infrastructure
[water conservation or reuse systems; green stormwater infrastructure; remediation of contaminated properties for green reuse]		$50,000 to $2 million range, although can vary based on the project type, CDFI capacity, and the availability of credit enhancements or co-investment.Energy Efficiency & Retrofits
$50,000 – $500,000
Solar & Renewable Energy
$100,000 – $1 million
Affordable Green Housing (Pre-Development or Gap Financing): $250,000 – $2 million
Emergency Resilience Infrastructure: $100,000 – $1.5 million
Clean Transportation (e.g., EV Chargers): $50,000 – $500,000
Workforce & Clean Energy Business Lending: $25,000 – $750,000
Environmental Infrastructure / Water / GSI
$100,000 – $1.5 million

Low to moderate effort. Requires partner identification, outreach, and some coordination capacity.
Local Government Partners (City or County Sustainability Offices, Housing Departments, Planning or Community Development Departments, Public Works or Utility Authorities)
Capital & Finance Partners (CDFIs – primary lenders, underwriters, and fund administrators, Foundations / Philanthropy – provide credit enhancements, loan loss reserves, or grant capital, Mission-Aligned Banks / Credit Unions – co-lenders or deposit partners, Green Banks or Public Loan Funds – offer low-cost capital, subordinated debt, or blended finance);
Implementation & Execution Partners (Contractors & Installers, Workforce Development Boards & Community Colleges, Engineering, Architecture, and Design Firms), Community & Equity Partners (Community-Based Organizations (CBOs), Neighborhood Associations, Equity Advocates / Environmental Justice Groups),
Utilities & Energy Service Providers (Electric & Gas Utilities, Municipal Utility Districts, On-Bill Financing Program Administrators),
Technical Assistance Providers
(Regional Planning Agencies, TA Grantees (DOE, EPA, USDA-supported). Advisory Consultants)
Pre-Development & Engagement (1–3 months)
(May offer pre-development loans, planning grants, or TA support)
Application & Underwriting (1–2 months)
(CDFI reviews project alignment with mission, risk profile, and community benefit)
Project Readiness & Closing (1–2 months)
(Works closely with borrower to ensure readiness and financial close)
Construction & Implementation (2–9 months, depending on scale) (May offer flexible draw schedules and project oversight)
Post-Completion & Refinance (Optional – 3–6 months) (May involve longer-term CDFI loan, tax credits, or public capital)

CDFIs can accelerate timelines compared to traditional banks due to mission alignment, simpler underwriting for smaller projects, and familiarity with public/philanthropic co-investments.
1. Misalignment on Project Readiness
Barrier: CDFIs need clear project scopes, budgets, and timelines to underwrite loans. Solution: Use pre-development grants or TA support to reach readiness before approaching a CDFI.
2. Limited CDFI Capital or Sector Experience
Barrier: Not all CDFIs have deep experience in clean energy or climate infrastructure. Solution: Identify CDFIs with a track record in sustainability or infrastructure, or be prepared to co-design products with them.
3. Capacity Constraints – On Both Sides
Barrier: CDFIs often have lean teams, and local governments may lack grant writers or project managers. Solution: Clearly define roles and assign a point person from each partner. Consider hiring a TA consultant or using a fiscal sponsor if needed.
4. Small Project Size - Barrier: CDFIs often prefer loan sizes of at least $50,000–$100,000 to justify underwriting effort. Solution: Bundle projects (e.g., across departments or buildings) or work through a master borrower like a nonprofit or housing authority.
5. Regulatory or Procurement Hurdles
Barrier: Public procurement rules can delay contracting or restrict which CDFIs can be used. Solution: Engage procurement or legal staff early; explore MOUs or service agreements for flexibility.
6. Community Trust & Equity Outcomes
Barrier: Even mission-driven financing can miss the mark if not grounded in community priorities. Solution: Include community partners from the start and link lending to equity goals (e.g., workforce inclusion, targeted neighborhoods).
7. Complex Capital Stacks - Barrier: Some projects may require multiple funding sources (e.g., federal grants + CDFI + philanthropy). Solution: Start with simple projects first; then build up to layered financing with the right support team.

1. Craft3 + Clatsop County, Oregon
Population: ~41,000 (rural coastal region)
Project: Residential Energy Efficiency – Heat Pumps & Weatherization
Challenge: High home energy costs and aging housing stock among low-income residents.
CDFI Role: Craft3, a regional CDFI, partnered with the County and local utilities to launch an on-bill repayment program.
Financing Tool: Flexible loans for home energy upgrades, repaid via utility bills.
Impact: Lowered household energy bills, improved housing conditions, supported local contractors, and minimized administrative burden for the county.
2. MoFi + City of Anaconda, Montana
Population: ~9,000 (small, post-industrial town)
Project: Community Health & Resilience Center
Challenge: No centralized facility for emergency response, energy resilience, or health access.
CDFI Role: MoFi provided financing for a multi-use facility with solar, emergency shelter, and broadband.
Partnerships: MoFi, city government, regional planning agency, and philanthropic support.
Impact: A climate-resilient facility that provides health services, internet access, and emergency shelter—critical for climate adaptation in rural areas.
CDFIs: What They Are and What They Do
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DOE/CDFA Energy Investment Partnership (EIP) Guide
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Green Banks“Green bank” describes a wide array of finance entities. These organizations are designed to direct capital to clean energy projects by removing financing barriers through educating consumers on the value of clean energy upgrades and deploying tools like credit enhancements to decrease the cost of capital for borrowers. They connect capital to clean energy projects, filling financial and knowledge gaps in the market.Rather than traditional banks, Green Banks are mission-driven lenders whose main goal is to close market gaps. Their exact activities and mission vary by green bank, but generally they can support residential, commercial, non-profit and governmental projects. They typically lend at lower rates than traditional lenders and provide additional support.- Solar facilities and installations (rooftop and ground-mount)
- Energy efficiency upgrades (HVACs, heat pumps, appliances, windows, insulation, LED lighting, etc.)
- Geothermal systems
- Fleet electrification and EV charging infrastructure
- Energy storage or enhancements to grid resiliency
- Lead remediation
Varies by green bankVaries by green bankPublic Sector Consultants (PSC)
Green Bank 50 (GB50)
Coalition for Green Capital (CGC)
National Energy Improvement Fund (NEIF)
Inclusive Prosperity Capital (IPC)
Solar Loan & Energy Fund (SELF)		Varies by green bankMany green banks only invest in projects within their geographic region. If there is no green bank in your state yet, then you should consider convening leaders who could form a stakeholder group and begin launching a green bank with governmental or philanthopric support.Michigan Saves: Founding in 2009, promotes accessible, equitable, and just investments in energy efficiency and clean energy to support healthy and thriving communities. Focuses on supporting contractors with low-cost financing solutions and projects in low-income areas.
Connecticut Green Bank: Launched in 2011, confronts climate change by increasing and accelerating investment into Connecticut's green economy to create more resilient, healthier, and equitable communities. Funded by a ratepayer surcharge and Solar Home Renewable Energy Credits.
Indiana Energy Independence Fund: Founded in 2023, supported entirely by philanthropic founders and grants. Lowers costs of energy efficiency retrofits and energy investments through credit enhancements.		Advancing Green Banks - Public Sector Consultants
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Municipal BondsGovernmental entities have been using debt (most often in the form of “municipal bonds”) for over 200
years to fund public infrastructure such as government buildings, water distribution systems, schools, police stations and many other projects that require significant capital investment. When a government issues debt (Issuers), it receives an infusion of cash to build a project; in return the government repays the bond purchasers (Investors) over time, plus interest. By using debt, the government can complete a capital
project today with a repayment schedule that spreads the cost of that project over its useful life.		Affordable access to capital available exclusively to tax-exempt entitesAny potential need for capital for public entitiesNone unless local policy specificHigh for new issuers of municipal bonds, low for more frequent issuersMunicipal Advisors, Broker-Dealers of municipal securities, Bond and Disclosure counselVaries substantially depending on issuer and projectRequires continuing disclosure to investors and often has several projects included in a single bond issuance. Municipalities that have borrowed before (even if infrequent) should have policies and procedures in place to maintain disclosures required during the life of the bond.General Obligation Bonds are secured by the full faith and credit of the entity

Moral Obligation Bonds are secured by a moral commitment to appropriate funds from elsewhere to repay

Revenue Bonds have a dedicated funding stream as the primary source of repayment

“Green” Bonds have specific deliverables (or outcomes) that the issuers make to their investors
Capital Planning - Best practices, resources, and case studies on capital planning and infrastructure
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Tax-Exempt Municipal Bonds and Infrastructure
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Bank LoansGovernmental entities can likewise borrow from banks at synthetic tax-exempt rates (aka "Bank Qualified") or directly through a lender, often community banks. Ease of access and often local association, sometimes is linked with treasury operations of municipal entities but not alwaysInfrequent needs at generally smaller denominations (under $10M) and in shorter repayment terms than municipal bondsNone unless local policy specificLowMunicipal Advisors, Bank Relationship ManagersVaries substantially depending on borrower and projectTerms and conditions are set by the holder of the debt and may have dedicated levels of priority Local projects, often satisfy shorter-term needs. Can often supplement larger capital plansGovernmental Debt 101
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