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Commercial Stabilization projects face two different but related financing challenges:
Any inclusive community process requires some level of ongoing staffing to keep residents and merchants involved and informed. Even relatively inexpensive activities like organizing cultural events, planting new street trees, and designing street banners still cost money.
The most obvious source of funding
for this kind of work is local governments. It's in their interest:
they benefit from increased sales taxes when a 
neighborhood
improves and bear the cost of increased maintenance and policing costs when
a neighborhood declines. Cities can provide grants to community organizations
to manage these initiatives through their general fund budgets or with federal
Community Development Block Grant funds.
One common challenge is identifying the appropriate place in the local government budget for this kind of grant. A broad stabilization initiative serves the interests of many city departments, including public works, economic development, community development, police, and perhaps even parks. The organization leading the initiative would ideally receive funding from at least one of these departments, and may have to mix and match.
Another potential source of local government funding is tax increment financing (TIF). TIF funds are generated when property tax revenues increase in a targeted redevelopment area. The increased income is set aside to finance further improvements. In the early years of a new TIF district, commercial stabilization initiatives offer an inexpensive way to generate noticeable improvement while also building the kind of community consensus that can guide larger scale investment toward more equitable projects. TIF funds have generally been used to finance large scale physical redevelopment projects, but increasingly, local governments recognize that these large projects are not generating sustainable change and often hurt low-income families more than they help, and so may be open to other options.
A BID is a special tax district in which businesses or property owners in a specific area vote to add an additional fee to their tax bill to fund specific services over and above what's publicly available-from parking to street cleaning to safety patrols. A BID is simply a way of raising money. Whether that money is used to harm or help local residents comes down to who controls its expenditure.
In Oakland's Fruitvale District, the Unity Council led a campaign to enact a BID which is now providing $250,000 per year. These funds all flow directly to the Unity Council, which uses them to hire a team of "Fruitvale Ambassadors" to clean and monitor the safety of the commercial district. Most of the ambassadors are participants in the Unity Council's welfare-to-work training program. In Berkeley's Elmwood district, BID funds are controlled by a nonprofit board that includes residents and are used exclusively to support the preservation of the neighborhood movie theater.
A growing number of private foundations are funding commercial stabilization work, often as part of a broader "comprehensive community initiative." They are more likely to be interested when the local government is actively partnering in the process and allowing the community to have a real say in how public funds are invested. This funding continues to be very difficult to come by, however, and few foundations have special funding dedicated to commercial stabilization. There is no comprehensive list of foundations interested in commercial districts but the Neighborhood Funders Group is a network of foundations that support comprehensive neighborhood improvement efforts. A list of its members can be found here.
Another common source of funds for commercial stabilization projects is community fundraising. Programs like Adopt-a-Block involve regular voluntary contributions from local businesses and residents who support neighborhood improvement. Well-managed special events and cultural festivals can also raise significant amounts of money. Generally, however, these community fundraising efforts are used to supplement rather than to substitute for government and foundation funding.
The growth of CDCs and other nonprofits as developers of affordable housing has led to the development of an entire industry of community development financial institutions and related public sector programs. The Bay Area office of the Local Initiatives Support Corporation publishes a Directory of Financing Sources for Commercial and Mixed Use Projects . Some of the sources listed are specific to California but many are national including:
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