Local Philanthropy as Catalyzer, Convener, and Deployer
Community foundations and other place-based philanthropy can play critical roles in supporting housing production, preservation, and affordability in their geographic areas through four main avenues.
Defining and Prioritizing
Place-based funders can serve as initial catalysts to help regions identify the scale and scope of their housing challenges, as well as gaps or deficiencies in their regional housing ecosystems. Specific actions could include funding a market analysis or needs assessment of the local housing market, convening a group of civic (public, private, and philanthropic) leaders to evaluate the housing market, and developing strategic plans for bolstering housing production. Atlanta and Omaha are both examples of geographic regions where philanthropy played critical roles in developing strategic plans for addressing the housing crisis.
Ongoing Convening and Organizing
Local philanthropy can be essential to “setting the table” for longer term collaboration around housing policy and production. Housing markets are inherently regional, meaning no single local government entity can coordinate housing production for a broader metro area. Furthermore, the short-term tenure and competing daily demands of elected o cials may not align with the longer-term strategic focus needed to increase housing production and supply, making it critical for nongovernmental actors to deeply engage in implementing long-term housing priorities. Local Foundations have supported ongoing convening and organizing through the funding of intermediaries to coordinate regional strategic plans over the long-term (Atlanta, Omaha) and collective impact efforts that partner with local governments and other philanthropy to coordinate transitional housing and homeless services (Oregon, Chicago).
Piloting New Investment and Program Models
Elected leaders and public officials may hesitate to pilot new programs, particularly due to “NIMBY” constituent concerns and competing budget pressures over the commitment of limited government funds. Private investors, particularly those managing institutional capital, may be reluctant to invest in projects they view as risky (e.g., investing in historically disinvested neighborhoods with high loan-to-value and large appraisal gaps). Philanthropy can play a unique role in funding pilot funds, programs, or projects to validate the feasibility of new models for producing or financing housing. Examples include funding to support projects that use innovative building technologies like modular construction (Telluride, Los Angeles), new models for supporting homeownership opportunities (San Diego, Chicago), creating new financing vehicles and products to support affordable developments (Atlanta, Austin) through demonstration models that prove the concept and/or market, and providing seed funding to launch organizations like Community Land Trusts that steward long-term affordability (Western Nevada).
Organizing and Aggregating Long-Term Capital
Many community foundations already serve as capital aggregators for their communities. They pool donations from individual donors, families, and businesses into a unified investment portfolio, achieving economies of scale that enable more effective fund management and greater returns. This provides an opportunity for community foundations to establish and raise impact investment funds focused on housing production. Impact investments through program related investments (PRIs) offer several potential advantages over traditional grants. These include the ability for funds to revolve, exceeding the traditional 5% or similar annual fund threshold for deployment, the possibility of attracting and pooling capital from a wider range of funders (including private investors), and a broader range of investment vehicles through which funds can be deployed (including equity-like instruments). When offering PRIs to nonprofits, foundations can play a role in building up the balance sheet and credit history of a nonprofit, enabling long-term scaling and growth. Foundations can fund administrative, management costs, and seed funding, with most of the investment capital itself coming from private donors. Examples of foundations that have established and are managing large ($100+ million) impact investment funds include the Community Foundation of Greater Atlanta, San Diego Foundation, and Seattle Foundation.
Other organizations like the Scranton Area Community Foundation are beginning to assess how impact investing and philanthropic capital can be most effectively deployed to fill gaps, scale innovative solutions, and support housing and other issue areas relevant to inclusive economic development.
Ideally, place-based philanthropy can act as a flexible, strategic, and long-term convener and catalyst for local efforts in increasing housing production and supply. I can leverage its unique position to take risks in funding new pilots or new investments models that traditional funders may not be willing to take. It can also foster collaboration among the public, private, and philanthropic sectors, serving as a neutral “table-setter” to bring together all the necessary actors in the local housing ecosystem. Philanthropy can also serve as a long-term advocate for systemic changes, an important position in a system where many political actors are constrained by electoral cycles and the desire to differentiate their policies from their predecessors.