I am fortunate to come to San Francisco to work every day. From the views of the Golden Gate Bridge, to the amazing food and the technological innovation, this city is a wonderful mash-up of diverse experiences. But, I am struck by the stark contrast of opportunity with the homelessness that I encounter as I move throughout the city during the day. It is a heartbreaking challenge shared by nearly every city in our country and one impacting more people every day. The causes are many as are the people and solutions trying to address it. One thing is certain, we have to build more housing that is affordable to more people.
The crisis of a lack of affordable housing throughout America’s communities is not new. Cities and advocacy organizations have invested significant financial and human capital, yet the problem persists and is growing. A recent report by the National Low-Income Housing Coalition noted that, for every 100 extremely low-income renter households, there are just 35 affordable and available rental homes—in all, a shortage of over 7 million rental homes affordable and available to extremely low-income renter households. Seventy- one percent of extremely cost burdened renter households spend more than half their incomes on rent and utilities.
Access to safe, affordable housing is not just a basic human right. It offers a way out of poverty and is critical to the fabric of family and community. Clearly this is the right time to shine a light on the role of impact investing and how it can unlock trillions of dollars of capital to address community challenges, like the lack of affordable housing.
What is impact investing? Impact investing is simply investing– with a purpose. Many people default to thinking about the environment when they hear of impact investing. But “purpose-driven investments” can also build affordable homes. Lots of them. Since 1998, IMPACT Community Capital (IMPACT) has innovated the use of private debt and equity structures to originate nearly $2 billion of impact investments on behalf of its institutional investors, including $1 billion for affordable housing to create approximately 45,000 new affordable units in 41 states plus D.C.
What has driven our success? IMPACT has built an investment platform that structures investments that are suitable for institutional investors and generates positive benefits in underserved communities. In our view, it is “how community happens.” We recognize that institutional investors have the sophistication and capacity to bring capital in the scale that can create systemic change. Of course, these investors are stewards of the assets they hold for their shareholders, customers and other stakeholders, so they must be prudent. We have developed an investment platform built on a 20-year track record of making impact investments in scale without compromise to investment quality or performance.
Impact investing works not despite the pursuit of financial gain, but because of it. Investments have the power to generate outsized community impact because they are driven by investors with large amounts of capital, doing what they do best: allocating it to opportunities that have high chances of success. Can capitalism have a soul? We believe it can. And there’s a 20-year track record to back up that point of view.
With this blog, we look forward to a dialogue about how to unlock capital to unleash the power of opportunity in our communities. In future blogs, we’ll dive deeper into IMPACT’s approach and look forward to hearing from you about your work.