Community Development

Link Social Mission with Private Enterprise to Develop Better Affordable Homes

Kristin Siglin
Vice President of Policy, Housing Partnership Network

Would housing policy in the United States benefit from a greater emphasis on institutions that combine deep social mission with strong business acumen? A recent Housing Partnership Network (HPN) paper explores the benefits of such an approach, drawing on lessons learned through the International Housing Partnership (IHP), a collaborative of more than 175 nonprofits from Australia, Canada, the U.K., and the U.S. that collectively operate one million affordable homes. Since the collaborative’s founding in 2003, IHP knowledge exchanges have refined our thinking about innovative models that have the potential to better leverage private sector resources to deliver affordable housing. In our paper, we investigate models of this kind in the U.S. and the U.K., and observe that the British and American affordable housing systems both rely on hybrid public-private, social enterprise–based partnerships that work well in both countries, but in different ways.

For instance, in the U.K. the relatively significant scale and capacity of nonprofit housing associations stems in large part from the Large Scale Voluntary Transfer policy, which over the past 30 years has transferred subsidized housing to new management entities enabled to access private capital in order to make needed repairs. British housing associations have been able to improve the national housing stock and serve more people due to these efficiencies of scale.

The U.S. system also includes elements of public-private partnership. The primary capital source for affordable housing development in the U.S. is the Low Income Housing Tax Credit (LIHTC), which raises private capital from investors who receive credits against their tax liability for project-based investments in affordable housing.

While both systems have served as key affordable housing tools in their respective countries for decades, the particularly innovative impact of Large Scale Voluntary Transfers on the U.K.’s affordable housing stock reveals opportunities for the U.S. to build on its system’s current successes to deliver affordable homes more efficiently. IHP discussions and investigations of both models in our paper suggest five key policy changes drawing on the example of the U.K.’s Large Scale Voluntary Transfers that could enhance the capacity of mission-oriented U.S. housing providers to further leveraging public-private partnerships to develop affordable homes:

  1. Expand the Capital Magnet Fund.
    The Capital Magnet Fund competitively awards grants to nonprofit lenders and qualified nonprofit housing organizations, with a mandatory minimum 10:1 leverage ratio. The Fund has proven to be a uniquely effective tool for leveraging public funds to attract private investments for housing in low-income communities.
  2. Prioritize preservation.
    As resources for affordable housing development shrink, it is critical to preserve the existing stock of safe, decent affordable housing and ensure that it is managed efficiently for the long term. It can be more cost-effective to rehabilitate aging U.S. Department of Housing and Urban Development (HUD) program-assisted properties under new nonprofit management. 
  3. Use a portfolio model for multifamily housing preservation.
    HPN recommends a shift toward portfolio finance for aging HUD-assisted and LIHTC properties. Policies should enable mission-oriented housing providers to acquire and preserve multiple affordable housing properties more cost-effectively by packaging several properties into one financial transaction.
  4. Make housing a platform for improving communities and building assets for residents.
    High-performing housing nonprofits can also link affordable housing development to broader programs of community and individual improvement because of their scale. Social enterprises can advance opportunity for low-income people because they combine excellence in housing development with an extensive network of relationships with social service providers.Holistic community development is easier for organizations with resources and reach. 
  5. Improve access to affordable homeownership.
    Social enterprises also can efficiently deliver homeownership as well as rental housing. Proven approaches to affordable homeownership—including nonprofit acquisition and rehabilitation and rent-to-own programs—have been shown to be effective in both the U.S. and the U.K. and should be expanded.

Combining the nonprofit mission with private business discipline can generate more affordable housing and lead to more effective management of such properties for the long term. Innovations like these are particularly important now because three quarters of Americans who are income-eligible for housing assistance currently do not receive it, often because there are not enough stable, affordable, and livable units available to meet the housing needs of low-income Americans. The success of the U.K.’s Large Scale Voluntary Transfers reveals that more effectively leveraging private funds to develop, preserve, and operate affordable homes can help to speed up the process and increase and improve the stock available to those who need it. Through our work in the International Housing Partnership, we will continue to identify and highlight similar models that have proven effective in improving and expanding the stock of affordable homes in their countries of origin and could hold promise for future stable housing in neighborhoods around the world. 

Kristin Siglin is Vice President of Policy at the Housing Partnership Network, a business collaborative of the nation’s leading housing and community development nonprofits and a top-rated community development financial institution (CDFI).

How Hospitals Can Help Heal Communities

Ted Howard
President of The Democracy Collaborative

Tyler Norris
Vice President for Total Health Partnerships at Kaiser Permanente

Cincinnati Children’s is one of the best pediatric hospitals in the country—in a city where the infant mortality rate is double the national average, with an infant dying once every three days. 

The Johns Hopkins medical center is an internationally renowned research institution—but in Baltimore’s poorest neighborhoods, life expectancies are on a par with those in failing countries like Yemen. 

 Cleveland is home to the world-class Cleveland Clinic—but the average male resident of the nearby and largely African-American inner city neighborhood of Hough can expect to live, on average, 24 years less than a man in the largely white suburb of Lyndhurst, eight miles due east. 

The list goes on and on—many of America’s finest multi-billion-dollar healthcare institutions make their home in communities beset by poor health outcomes and racial and economic disparities.

Nonprofit hospitals and health systems can no longer accept such disparities as facts of life. Clinical treatment and research, while vitally important, are simply insufficient to ensure the health of the communities they serve—because poverty is the single largest contributing factor to poor health outcomes. That means a hospital that takes its health mission seriously needs to understand its responsibility to leverage its economic activity for community benefit whenever possible in partnership with others in its community.

As part of a $3 trillion sector that commands 18% of the US Gross Domestic Product (GDP), hospitals and health systems have annual expenditures of $780 billion and an estimated $500 billion in their collective investment portfolios. With such financial clout, these institutions can be a powerful force for revitalizing and rebuilding the economies of America’s hardest hit communities: even shifting a relatively small percentage of their purchasing and investments could have an impressive impact.

Encouragingly, such a shift seems to be underway, with leading US health systems developing strategies for more inclusive local hiring, more intentional systems of local procurement, and more targeted use of their investment capital to drive transformative local economic development. (In the fall of 2016, the Democracy Collaborative, with the support of the Robert Wood Johnson Foundation, will be releasing a series of toolkits designed to highlight the emerging best practices in each of these key areas.)

The not-for-profit integrated health care system, Kaiser Permanente, is redirecting its enormous procurement dollars to support sustainable local agriculture, address the health impacts of climate change through massive renewable energy projects, and purchase more than $1.5 billion annually from minority- and women-owned firms. It is calling this approach “total health,” working in partnership to begin to utilize all of its assets to maximize the physical, mental and social well-being of the members and communities it serves.

In Detroit, Henry Ford Health System is working to localize its supply chain, recognizing the tremendous impact it can have on bringing vitality back to Detroit. In Cleveland, University Hospitals has launched “Step Up to UH,” a targeted employment pipeline strategy connecting residents of low-income neighborhoods to good jobs. San Francisco-based Dignity Health, the nation’s fifth largest health system, has established a $100 million low-interest loan fund to develop affordable housing, provide job training, and build wealth in underserved neighborhoods.

These and other hospitals and health systems are “going local” not only because it is simply the right thing to do, but also because it makes the most sense for their mission and their bottom line. By going “upstream” to tackle the underlying social determinants of health in poor communities, hospitals and health systems can produce increased, measurably beneficial impacts on population and community health. Over time, this can reduce preventable demand on the health care sector, lowering costs and making care more affordable.

Recent and forthcoming policy changes amplify the case for hospitals to rethink how they spend, hire, and invest.  In Maryland, a closely watched “all-payer” system of Medicare reimbursement replaces the fee-for-service model with one in which hospitals receive a pre-agreed share of available funds—meaning that moving the needle on economic inequality translates, through a reduction in patients, to a more stable bottom line. Nationally, under the Affordable Care Act (ACA), non-profit hospitals are now required as a condition of retaining their tax-exempt status to assess the health needs of their communities—and detail their plans for addressing those needs.

For their own sake, and the sake of the communities they serve, hospitals need to move beyond narrow notions of corporate social responsibility and toward a future where the targeted use of their economic activity has the power to transform lives and neighborhoods. With such a shift beginning across the country, there’s reason to believe that hospitals will be able to help heal America’s communities.

Ted Howard is the President of The Democracy Collaborative and Tyler Norris is the Vice President for Total Health Partnerships at Kaiser Permanente. Howard and Norris authored the new paper “Can Hospitals Heal America’s Communities?”

Supporting Cross-Sector Teams through Designing Effective Learning Communities

Beth Siegel
President, Mt. Auburn Associates

Over the past decade, national foundations and the federal government have designed many multisite initiatives that seek to address complex social problems. These initiatives have spanned many fields, from criminal justice to early childhood education to community development and health. In addition to providing sites with funding and technical assistance, a number of these initiatives have included some type of cross-site convening within the design, often referred to as “learning communities.” Evidence suggests that, when addressing complex problems, the common learning mechanisms in a field, such as traditional conferences, are not effective. Learning communities provide an opportunity to learn and network but with a more deliberate focus on knowledge exchange, team building, and innovation.

While there is extensive literature concerning organizational learning that is relevant to the design of multisite learning communities, including research on “communities of practice,” there is limited literature on best practices in the design of learning communities where multiple stakeholders involved in place-based initiatives are brought together. To fill this gap in the field, the Robert Wood Johnson Foundation asked Mt. Auburn Associates to research how learning communities have been designed, the challenges that have been faced when implementing this work, and what have been some of the best practices in terms of building team cohesion, strengthening the capacity of the stakeholders involved in the work, and sparking new and creative thinking.

With limited literature on the subject, we turned to the experts who have designed learning communities. These interviews revealed many common elements in the design of the learning communities as well as best practices to address implementation challenges.

Interviews found diversity in terms of the goals of the work; some learning communities emphasize peer learning, while others emphasize building strong cross-sector teams. Regardless of the emphasis, however, there was consensus among the interviewees that the goals of the work must be clear and that elements of the design, such as whom to invite and how to structure convenings, must be aligned with those goals. For example, if building cross-sector teams is a goal of the work, having an individual in the role of “team” leader or “champion” and developing both customized support and set responsibilities for this person is important. To achieve this goal, it is also critical that there is some consistency in the team over time. If cross-team peer learning is one of the goals, designers must make sure there is enough commonality across the teams convened that they are able to learn from each other.

Aligning Goals and Design

Goal Who Attends Design Elements
Building Cross-Sector 
Teams Assigned team leader

Consistent core team
Sufficient team time during convenings

Focus on action project at home

Community Coach

Sufficient focus on “how”

Communities of Practice for leads

Cross-Team Learning Sufficient commonalities across teams in terms of role & level of authority

Each community has a peer

Working on similar problems, systems, or results
Sufficient informal time – receptions, etc.

Site Visits

Sufficient focus on strategies

Sub-groups based on common interests

Effective networking platforms
Catalyzing Innovation Diversity in terms of perspectives and roles

Working on similar problems, systems, or results

Open and trusting environment

Use of design labs/innovation labs

Specialized physical environment
Field Building Working on similar problems, systems, or results Use of documentarian

Staffing for policy and best practices reports

Communication and knowledge dissemination strategy

One commonality across all types of learning communities is creating a format and “culture” that encourages honesty and supports risk taking. This helps to create a safe place and level of comfort both within and across teams. Methods for building this safe place include having enough informal time, including receptions and networking time during the meetings, to support personal and professional interactions; encouraging honest feedback and exploring the learning in failure; including work sessions on having honest or difficult conversations as part of the convening; and utilizing design thinking and innovation labs that encourage risk taking and experimentation.

Another area of wide agreement across many of those involved in designing learning communities is the need to balance team time, peer exchanges, and external experts. In particular, while many learning communities include outside experts who make a presentation or an “inspirational” speech, most interviewees felt strongly that this practice should be minimized and that expertise should emerge from within the group. While the initial meetings may devote more time to outside experts or faculty, as the work evolves, much of the convening should be devoted to team time and cross-team sharing.

While the convenings are important platforms to learning, building a learning community can involve other activities that strengthen cross-site relationships and promote knowledge exchange. For example, site visits, learning circles focusing on specific issues or strategies that are of interest to subgroups, and other real-time platforms such as conference calls, video conferencing, and webinars, can all contribute to the outcomes. Similarly, experts agreed that assigning a coach to each community involved and/or to the team leads, providing small grants for experimentation, and providing rapid TA during learning communities and at home are best practices that add significant value to the overall work.

As collective impact and other forms of cross-sector collaboration become the norm to address a wide range of community challenges, learning communities provide a critical opportunity for the stakeholders in these collaboratives to meet away from home, to focus their attention on “how” to work together more effectively to make a difference in their communities, and to learn from their peers who are working on similar challenges. As this platform becomes a more important component of the work, it is critical that those sponsoring learning communities are more deliberate about learning from best practices and ensuring that the time spent provides significant value to those attending.

Read Best Practices in the Design and Implementation of Learning Communities for more details about the findings from the literature review and interviews.

Beth Siegel is the president of Mt. Auburn Associates. Over the past decade, she has led the evaluation of a number of multisite initiatives that have involved the use of learning communities. She has particular expertise in the design and evaluation of complex system change initiatives.

The Color of Wealth in Los Angeles

Laura Choi
Senior Research Associate, Community Development

With the demographic shifts already underway in California and across the nation, recognizing and understanding wealth disparities is a step toward building financial stability and net worth among all communities, including communities of color.

On March 10, over 150 stakeholders gathered at the San Francisco Fed’s LA branch to mark the official release of “The Color of Wealth in Los Angeles,” a joint publication of Duke University, The New School, the University of California Los Angeles, and the Insight Center for Community Economic Development. Building on the “The Color of Wealth in Boston” released by the Boston Fed last year, this new report provides detailed data on assets and debts among subpopulations in the Los Angeles metro area according to race, ethnicity, and country of origin. The study includes data on liquid assets, small business ownership, homeownership, retirement assets, as well as various forms of debt such as credit cards, student loans, medical debt, and mortgage and vehicle debt. What emerges is a stark picture of racial wealth inequality in Los Angeles.

Utilizing the National Scorecard for Communities of Color (NASCC) survey, the report features estimates for U.S.-born blacks, blacks who are recent immigrants from Africa (African blacks), Mexicans, other Latinos (inclusive of Puerto Ricans, Cubans, Salvadorans, other South Americans, other Central Americans, and Europeans), Asian Indians, Chinese, Filipinos, Japanese, Koreans, and Vietnamese. Table 1 shows median family income among survey respondents, ranging from $40,000 among other Latinos to $115,000 among African blacks (note that African blacks have a median income more than twice that of U.S. blacks, revealing major differences within the same race category).

Table 1. Los Angeles Metropolitan Statistical Area Sample Characteristics

n= % Bachelor’s Degree or Higher Median Family Income
White 56 56.9 95,000
U.S. Black 45 44.0 53,500
African Black 23 58.9 115,000
Mexican 100 17.8 50,000
Other Latino 31 45.7 40,000
Chinese 75 68.4 70,000
Japanese 68 68.6 75,000
Korean 77 57.1 60,000
Vietnamese 124 36.5 50,000
Filipino 42 76.7 80,000
Asian Indian 41 79.2 100,000

Source: NASCC survey, authors’ calculations

As significant as these income disparities are, they pale in comparison to the wealth differentials across racial groups in Los Angeles. Table 2 reveals that white households in the LA NASCC survey have a median net worth of $355,000, while Mexicans and U.S. blacks have a median net worth of $3,500 and $4,000, respectively (roughly one percent of the wealth of white households). Japanese, Asian Indian, and Chinese households had higher median wealth that whites, while all other racial and ethnic groups had much lower median net worth than white households. The community development field tends to focus on income as a primary metric, but there’s a growing recognition that net worth (assets minus debts) is a better indicator of financial well-being. Even more critical is the ability to transfer wealth from generation to generation, creating greater security for the future.

Table 2. Comparison of White and Nonwhite Household Median Net Worth

Median Net Worth Nonwhite household percentage of white household median net worth
White 355,000 100.0
U.S. Black 4,000 1.1**
African Black 72,000 20.3
Mexican 3,500 1.0**
Other Latino 42,500 12.0*
Chinese 408,200 115.0
Japanese 592,000 166.8
Korean 23,400 6.6**
Vietnamese 61,500 17.3*
Filipino 243,000 68.5
Asian Indian 460,000 129.6

Source: NASCC survey, authors’ calculations

Note: The difference in the percentage of nonwhites as compared with the percentage of white households is statistically significant at the ***99%, **95%, *90% level.

Perhaps one of the most intriguing aspects of the NASCC data in Los Angeles is the detailed disaggregated data on Asian American households, a rarity in many national datasets. Dramatic wealth differentials across Asian American households (with median net worth ranging from $23,000 among Koreans to $460,000 among Asian Indians) reflect the significant variation that often gets masked under the single race grouping.

Stay tuned as we revisit The Color of Wealth in Los Angeles in an upcoming blog post and dig deeper into the data on Asian Americans.

Economic Opportunity + a National Culture of Health: Did You Miss a Game-changer?

Originally published by the Build Healthy Places Network on February 17, 2016

Douglas Jutte, MD, MPH and Colby Dailey, MPP
Directors, Build Healthy Places Network

If you missed the speeches by Williams and Lavizzo-Mourey that closed out the National Interagency Community Reinvestment Conference (NICRC) in Los Angeles, you missed a game changer.

Really?  Yes.

John C. Williams, President and CEO of the Federal Reserve Bank of San Francisco, talked about health.

Risa Lavizzo-Mourey, President and CEO of the Robert Wood Johnson Foundation (RWJF), talked about finance (and walked us through a New Markets Tax Credit deal in Philly!).

In a unique role reversal, a leading macro economist and banker, whose jurisdiction includes one-fifth of our country’s population, and the physician-CEO of our largest domestic health foundation nailed it: you can’t expect to succeed if you separate poverty, economic prosperity and health. This, in front of a full room of 1200 bankers. In the words of Lavizzo-Mourey, talk does nothing, “investment makes changes.”

All across America, financiers, community development, philanthropy, public health and health systems are choosing to make progress together. It was not always this way.

Less than six years ago there was a landmark meeting at the Federal Reserve Board of Governors in Washington DC, co-sponsored by RWJF. A leadership audience — half from the Fed’s constituency and half from RWJF’s world — were introduced to each other. Like a high school prom, they clustered with their own, but left intrigued: at this low-point for American prosperity, was there a better way forward? The painful Great Recession had highlighted that America’s economic stability rests on the shoulders of its people, and America needed every resource, every new strategy and every opportunity to complete a turnaround. It all begins with everyone having a pathway to opportunity. And with nearly one-in-five people living in low-income neighborhoods where those pathways were scarce, the bad times triggered a call for fundamental change. Exposure to each other’s work and the potential for collaboration has led leaders across sectors to evolve rapidly.

For community development and health, the message is clear: stable families support a stable economy, which supports our nation’s stability, prosperity and health. Or, as Williams put it, “physical and economic health are inextricably linked. Prosperity is like a Jenga tower: take out one piece and the whole thing can fall.”

Six ways economic opportunity and the Culture of Health are moving forward together

Here is what we are seeing now:

  1. Initial curiosity has progressed to enthusiasm and to real innovation; as Lavizzo-Mourey said, “we are standing on the threshold of a new era.”

    The Low Income Investment Fund (LIIF) jumped ahead of the pack, creating a Social Impact Calculator to help community developers demonstrate the monetary value of social returns as well as financial ROI.

    Stewards for Affordable Housing for the Future (SAHF) also took an early stand and developed a set of outcome measures to track not just medical needs of their residents but also important social determinants of health like community engagement and child educational success.
  2. In communities, partnerships are demonstrating how to improve economic opportunity, opportunity for better health and better lives.

    Purpose Built’s Villages of East Lake in Atlanta developed a vibrant, new, mixed-income community where there had been a public housing project. One outcome: where previously 5% of low-income children were reading at grade level, now 98% do, surpassing children from the wealthiest suburbs—an example of how a strong community can begin to break the cycle of poverty.
  3. There are increasingly more funders interested in cross-sector projects, more CDFIs as well as new players including Federal programs like Medicaid, health systems like Kaiser Permanente, anchor institutions like hospitals, and more.

    The Children’s Hospital of Philadelphia (CHOP), the city government, and a cluster of other investors have pieced together $42.5 million to build the Community Health & Literacy Center, bringing together better access to health care, a new library and a beautiful recreational center, all in a neighborhood where the poverty rate is 24 percent.

    Meanwhile, in New York, Medicaid allocated $47 million for supportive housing units for high-cost Medicaid recipients. (Read more here)
  4. Philanthropy is engaging in new ways to support cross-sector initiatives.

    At the NICRC plenary, Lavizzo-Mourey announced a new $30 million program funded by RWJF and other national foundations, in collaboration with LIIF, Enterprise Community Partners, the National Resources Defense Council and the Federal Reserve Bank of San Francisco, to transform the social determinants of health in up to 10 metropolitan regions.

    And, the Healthy Futures Fund, a joint effort of the Kresge Foundation, Local Initiatives Support Corporation (LISC) and Morgan Stanley bank, provided financial support to So Others Might Eat (SOME), a faith-based community organization focused on poverty, for the $90 million Conway Center in Washington, D.C. Sited in a high-poverty neighborhood, it will include more than 200 affordable apartments, a health center, job-training center, shops, offices and green space – all across from a Metro station.
  5. Increasingly, the market is valuing health.

    It takes investment to create real change, and capital is flowing. If we add it all up, the examples noted here plus many others, we’re talking about more than a billion dollars in current investments that address social determinants of health.
  6. With the ACA requiring nonprofit hospitals to conduct a community health needs assessment, and the CRA requiring banks to conduct a community needs assessment, there is an opportunity for new alignment at the local level.

    By working together to assess a community’s needs, both investors in economic growth and the payers who foot the bill for poor health can craft a more holistic and promising pathway forward. A brief by St. Luke’s Health Initiative in Arizona outlines concrete, discrete ways community developers can be part of the needs assessment process.

Where we are headed; are you going with us?

For too long our country has tried to fix intractable problems in isolation: an economic fix or a health improvement fix or an educational fix or a jobs fix. We’re now seeing the Jenga tower. As Williams said, “we have a broad definition of health that encompasses jobs, education and safety.” And from Lavizzo-Mourey’s perspective, “health is the bedrock of personal fulfillment, the backbone of prosperity and the core of a strong competitive nation.” We applaud Williams and Lavizzo-Mourey for standing together across sectors, linking America’s problems and opportunities, and, in the words of Lavizzo-Mourey, embracing new allies.

At the Build Healthy Places Network, we represent cross-sector perspectives, expertise and advocacy. We are energized by the rapid, exciting changes we see – and share. As a “connector” among leaders, practitioners, investors and policymakers, across sectors, we strive to advance progress by synthesizing research, identifying best practices, encouraging measurement and providing capacity-building tools and resources.

Williams and Lavizzo-Mourey epitomized leadership at the conference, but we are also seeing leadership and best practices explode in neighborhoods around the country.

Challenges we all face

We commend everyone—across finance, community development, health and health care—who has taken the plunge, working in tandem to improve opportunities in our poorest neighborhoods.

Our challenge now is to spread and sustain cross-sector, systemic changes in policies, financing, and long-held practices that compartmentalize problems and solutions. So what do we need to do to keep the momentum?

  • Ensure that enthusiasm does not outpace strategies that will work;
  • Grow the evidence showing that cross-sector projects, programs and policies produce success—economically for our nation and personally for our families—and that we can achieve both;
  • Open even more channels between sectors and keep them open—share the challenges, share new approaches, share what works.

That’s where the Network comes in.  We hope that you will share with us what you have learned and what you see coming down the pike. Send us examples of success, and your ideas for effective cross sector collaboration.

A new era

In Investing in What Works for America’s Communities, published by the Federal Reserve Bank of San Francisco and LIIF in 2012, Lavizzo-Mourey wrote:

“I envision a time in the near future when our fields and the people who work in them…will be working side by side in communities, in states, and nationally, with common aims, combining our best assets and skills to improve the lives of all Americans.”

Last week we heard it loud and clear–the dawn of that future is here! We’re excited to usher it in.

Community Development Crowdfunding: The Need for Better Data

Rodrigo Davies
MIT Center for Civic Media

Amanda Sheldon Roberts
Federal Reserve Board of Governors

In the past half-decade, crowdfunding has emerged as a popular way to raise money online for a wide range of projects, from films and video games to technology and clothing. It has grown both due to its success as a fundraising mechanism and its ability to build demand and engagement among audiences.

Social causes also have the potential to benefit from crowdfunding. The community development field in particular might be uniquely positioned to benefit because crowdfunding has the potential to create fresh pathways to community-led development and to bring an infusion of new capital into an industry that has seen repeated cuts in government funding in recent years. In addition to being a fundraising mechanism, community development crowdfunding can serve as a way for members of a community to express their preferences, and the intensity of these preferences, as measured by dollars donated to a project. 

Despite these possibilities, the idea of using crowdfunding for community development remains largely unexplored and the field is small and scattered. In our recently published working paper Understanding the Crowd, Following the Community: The Need for Better Data in Community Development Crowdfunding, we argue that the lack of reliable and comprehensive data is a key limit on the field’s expansion. Why focus on data? Without it, there is no way to know who is contributing to crowdfunding projects or what their motivations are. There is also no way to conduct large-scale analysis of community development crowdfunding activity and outcomes, which discourages the involvement of established impact-driven organizations. Better data can help the field in a few keys ways: it can provide transparency and help enhance the credibility of crowdfunding; it can inform user expectations and decisions by donors and campaign organizers; and it can allow researchers to measure the impact of community development crowdfunding. 

Our paper thus makes the case that in order for community development crowdfunding to reach its potential scale, and to involve the full range of potential stakeholders, better standards of data reporting and collection need to be established. Our paper proposes a draft crowdfunding data model to enable community development professionals and the crowdfunding industry to more thoroughly analyze the field, begin to measure the impact of crowdfunding and better understand its potential future pathways. We offer these ideas not as prescriptions, but rather as stimuli for further debate among crowdfunding platforms, community development professionals, and other stakeholders.

Download the working paper (pdf, 368.13 kb)

Stemming the Tide of Displacement: The Highlight Reel

By Naomi Cytron, Senior Research Associate, Community Development
Federal Reserve Bank of San Francisco

An unsolved challenge–particularly in fast growing places like the Bay Area–is ensuring that economic growth, investment in new transit and infrastructure, and changing residential preferences do not lead to displacement of low-income households. Can data and research help shed light on pathways to more equitable and sustainable metropolitan areas? Bay Area researchers and practitioners believe so, and on August 26, 2015, they came together at a convening held at the Federal Reserve Bank of San Francisco to consider the ways that data and research can help identify both neighborhoods at risk of displacement pressures and opportunities for program and policy intervention.

In case you missed it, here are some key points shared by speakers:

  • Getting some clarity around definitions is important to this conversation. UC Berkeley’s Urban Displacement Project uses these definitions:

    Gentrification: The transformation of historically disinvested urban neighborhoods of the working-class and communities of color into higher income residential and/or commercial uses with associated racial and ethnic turnover.

    Displacement: When households are forced to move or are prevented from moving into a neighborhood that was previously accessible to them due to conditions which are beyond their ability to control or prevent (e.g., rent increases).

  • In the Bay Area, we see that:
    • Neighborhood change is inherently linked to shifts in the regional housing and job market.
    • Stable neighborhoods have strong housing policies, community organizing, and tenant protections.
    • Gentrification and displacement can be accelerated by even just the planning for transportation and infrastructure investments.
  • Detailed local data allows for identification of places–and even properties–at risk of displacement. It also allows for code enforcement and tenant organizing activities that can enable preservation of affordable units at risk of conversion to market rate.
  • Using tools like commercial linkage fees, housing impact fees, and community benefits zoning, private development can be a source of revenue for building new affordable housing.  But to be successful, a balance must be struck between maximizing public benefit and maintaining financial feasibility.
  • Good data and research can help debunk myths, validate community experience, and put pressure on decision-makers. But data alone isn’t always enough to move what are inherently political processes; community empowerment and organizing are also needed to push political actors to shift policy and practice.
  • When data is embedded in storytelling about real people in real places, it can be more powerful than numbers alone in helping policymakers and societal members at large understand the costs and risks of displacement.
  • We need to engage a wide range of stakeholders–including community members, advocates, the public sector, landlords and developers, and business leaders–in developing and making use of the data sources that can point to viable solutions to the challenges that face our cities and regions.

Watch the full discussion on our YouTube channel.

Download the agenda and speaker bios (pdf, 178 kb)

Top 10 Things You Should Know about Place-Based Initiatives

David Erickson, Director, Center for Community Development Investments
Federal Reserve Bank of San Francisco

I recently joined Carol Naughton, President of Purpose Built Communities, on stage to discuss the latest thinking and research about how place-based initiatives can help achieve better outcomes. Here are the top 10 things you need to know:

  1. Your ZIP code is more important than genetic code for your health
  2. Your body is the sum record of your challenges and opportunities
  3. Opportunity is arrayed over space/neighborhoods
  4. We all win when we all win
  5. Five elements are essential to successful community-improving interventions
  6. Data is key part 1: It’s a dashboard to allow for better management of community interventions
  7. Data is key part 2: Better data helps us tell our story and monetize savings from ups interventions
  8. Plan for Success: Community improvements do not help everyone equally
  9. Community quarterbacks are social entrepreneurs

We left number one up to the audience to discuss, since discussion – and collaboration – is really the top thing you need to know. When more sectors share knowledge and work together to address place-based problems, our outcomes will carry greater impact.

Watch the full discussion on YouTube.

CDFIs as Economic Shock Absorbers

Nancy O. Andrews, President & Chief Executive Officer
Low Income Investment Fund

Dan Rinzler, Manager, Special Projects and Initiatives
Low Income Investment Fund

The Great Recession sent shock waves through the world economy. One by one, more than a dozen flagship financial institutions collapsed, accepted forced mergers or submitted themselves to the safety of federal oversight. The Federal Reserve Bank of Dallas estimates that the United States lost anywhere from $6 trillion to $14 trillion in the crash, equivalent to $50,000 to $120,000 for every U.S. household1. Few lenders emerged unscathed, and the economic consequences for their investors and borrowers were often catastrophic.

The damage was especially great in low-income and minority communities, resulting in worsening neighborhood inequality2 and racial segregation3. Unemployment rates in these communities hit levels higher than at any time since the Great Depression.

While profit-motivated lenders hunkered down and withdrew from these places, one type of lender defied this trend. Community development financial institution (CDFI) loan funds lent into this storm, acting as economic shock absorbers for these communities in the worst of the downturn. And remarkably, a new analysis reveals how their patience and commitment enabled them to dramatically outperform regulated commercial banks during the recession.

CDFIs operate in the most challenging conditions our economy offers: they work in the poorest, most depressed places—considered risky by all standards. They are unregulated, mission-oriented nonprofit enterprises providing unconventional capital to small community-based organizations. What could explain their success during the most economically stressful period in a generation?

As described in a new working paper published through the Federal Reserve Bank of San Francisco, CDFIs offer an unusual blend of flexible and “patient” capital, rigorous risk management, and commitment to the projects in their communities and the sustainability of their borrowers. As economic shock absorbers in distressed communities, their long-term perspective and social commitment enabled them to create a virtuous cycle of community improvement and social return, even in the toughest economic conditions.

The challenges that the Low Income Investment Fund (LIIF) faced during the Great Recession, as profiled in the working paper, were typical of CDFIs at this time. Even the strongest borrowers faced difficulty repaying loans. However, instead of foreclosing on properties, as banks would do, LIIF and other CDFIs exercised patience, agreeing to loan extensions and softening terms so that community organizations could ride out the economic cycle. This approach allowed community organizations to survive—ultimately strengthening the communities they serve. And, perhaps counter-intuitively, it meant that CDFIs suffered lower losses than other financial institutions.

Sure, LIIF’s revenue from loans went down during this time as we conferred interest holidays or concessionary terms. But we also didn’t experience capital losses. After time and adjustment, the community projects we supported righted themselves and weathered the storm, leaving them—and us—whole. During this period, LIIF’s charge-off rate for construction and development loans originated from 2006 to 2009 was a minuscule 0.21 percent, compared to 2.51 percent for regulated commercial banks of comparable size. By and large, the 500 CDFI loan funds certified by the U.S. Treasury found similar success during the recession and emerged stronger than ever. A major shot in the arm for CDFIs came from quick equity infusions by the U.S. Treasury’s CDFI Fund grant program, which helped our balance sheets remain strong even as other liquidity drained out of the system.

Despite their track record, CDFIs today face a tough road in finding the patient, flexible investor capital needed to play this economic shock absorber role. Regulated banks are shortening the term of capital and raising the price. Even worse, they are decreasing flexibility, requiring that CDFIs pledge not only their balance sheets, but individual loans as well. Foundations now at times require that CDFIs subordinate to them, despite their vastly superior financial strength. Finally, the U.S. Treasury’s CDFI Fund—one of the last remaining sources of flexible capital—seems always to be under challenge. Without access to patient, flexible and reasonably priced capital, CDFIs can’t be nimble and patient as they were during the Great Recession.

Learn more in Weathering the Great Recession: A CDFI Case Study in Patient Capital.

1. Atkinson, et al. “How Bad Was It? The Costs and Consequences of the 2007-2009 Financial Crisis.” Federal Reserve Bank of Dallas. July 2013.

2. Ann Owens and Robert J. Sampson, “Community Well-Being and the Great Recession.” The Russell Sage Foundation and the Stanford Center on Poverty and Inequality. May 2013.

3. Hall, et al. “Neighborhood Foreclosures, Racial/Ethnic Transitions, and Residential Segregation.” American Sociological Review. April 2015.

Consumer Complaints against Banks: A Look at the Numbers

William Dowling, Research Associate, Community Development
Federal Reserve Bank of San Francisco

Consumer input has long been an important part of the free market system. It allows businesses to change and adapt products and services based on what individuals want and need at the time. If the speakers on your new laptop break a few weeks after you bought it, you might go online and leave a negative review of the laptop. Ideally, this would cause the manufacturer to look into the issue and ensure that future laptops don’t have the same problem. If the Italian restaurant you went to last week had terrible service, you might give the place a poor rating. Hopefully, this would cause the restaurant to retrain its server staff so that future customers would have better experiences.

Consumer input is just as important to banks as it is to other types of businesses. Financial institutions want to ensure that their customers are treated with fairness and respect and government regulators want to ensure the same thing. With this in mind, the federal bank regulators set up a consumer help center where individuals can file complaints against banks if they feel that they have been mistreated in any way. These complaints will be officially investigated by a federal regulator, and the appropriate action will be taken. While most regulators don’t make data on complaints publicly available, the Consumer Financial Protection Bureau (CFPB), in an effort to promote transparency and accountability, published its consumer complaint database in 2012. In 2015, the CFPB added a feature where consumers could share the details of their complaints with others. This database provides information on certain consumer complaints against the nation’s largest financial institutions. Let’s take a look at some of the numbers.

As seen below, consumer complaints increased in a relatively consistent manner from late 2011 (the earliest data released by the CFPB) to the later part of 2015. The CFPB received the most complaints in July 2015, when 15,900 grievances were filed. 

Monthly Consumer Complaints
December 2011-September 2015

Monthly Consumer Complaints: 
December 2011-September 2015

Since December 2011, 464,476 total complaints have been filed to the CFPB. The products identified most often in the complaints are outlined in the chart below.

Type of Product Identified in Complaint
December 2011- September 2015

Type of Product Identified in Complaint: December 2011- September 2015

Issues with mortgages were identified most often, comprising 35 percent of total complaints, with issues over debt collection and credit reporting following, comprising 18 percent and 15 percent of total complaints, respectively. The “other” category mostly represents complaints that have to do with student or consumer loans. When a complaint is submitted to the CFPB, the agency forwards it to the financial institution identified in the complaint. After the financial institution receives the complaint, it has 15 days to respond to the CFPB and the person who filed the complaint. Institutions are expected to close all but the most complicated complaints within 60 days. The individual who filed the complaint will be able to view the institution’s response to his or her complaint and give the CFPB feedback on that response.

While the number of complaints submitted to the CFPB is high, 98 percent of complaints received a timely response. Of these responses, 78 percent were not disputed by the consumer, while 22 percent were.1 As use of this database becomes more widespread, it will be interesting to see whether other federal regulators follow the CFPB’s model of publicizing complaints. The consumer complaint system is by no means perfect, but it is a promising step forward in building trusting relationships between consumers, banks, and regulators. 

1. 337,000, or 78 percent, of consumers did not dispute the financial institution’s response, while 95,000, or 22 percent, did. 31,700 consumers of consumer who submitted a complaint did not provide an answer to this question, and these consumers were not factored into the percentages.