In March 2022, Jacksonville was featured on an episode of “60 Minutes” for its rising rents. In just one year, rents had risen 31%, a spike comparable to those in New York City.
The segment explained why rents are rising so fast: Large, for-profit investors are buying up modest homes and then raising the rent. This hampers homeownership for two reasons: Fewer starter homes are available for purchase, and higher rents make it harder to save for a down payment.
There is another way.
Community development corporations are local nonprofits that develop housing with and for the neighborhoods they serve. The Community Foundation for Northeast Florida has made grants to trusted CDCs for years. But we have learned they still lack access to capital to meet the growing need for affordable housing.
That’s why we are excited to ramp up our support of CDCs through a new approach — impact investing.
Impact investing fills a gap in the market, providing affordable loans to nonprofits and small businesses that otherwise might not qualify for loans from traditional lenders. The potential for impact is great because financial capital is re-invested in the community, creating a continuous cycle of investment.
Recently, The Community Foundation made its first impact investments to support affordable housing, totaling $1.1 million from our Local Capital Pool, which we established one year ago. A loan to LISC Jacksonville will expand the supply of affordable housing through CDCs, with an emphasis on single-family housing for ownership.
At The Community Foundation, we believe we can play a unique role as impact investors because of the financial and charitable tools we possess as a full-service philanthropic institution.
For example, we recently helped secure an affordable single-family rental property in Northwest Jacksonville. This unusual opportunity began when a local couple reached out for help finding a way to hand off an investment property without selling it to speculators. The Community Foundation acquired the house as a tax-deductible donation, sold it to Northwest Jacksonville Community Development Corp. with below-market financing from our Local Capital Pool, and established a charitable fund with the proceeds.
This arrangement has social and financial returns that continue to ripple outward. A family has a new home for the holidays, the donors have charitable dollars to invest locally, and Northwest Jacksonville CDC has grown its portfolio of properties to the neighborhood’s benefit.
To solve our affordable housing crisis, we will need much more than one house. The National Low Income Housing Coalition estimates that our area is short by more than 35,000 units of affordable housing. That’s why impact investing is such an exciting concept — because it can help us finance housing on a much larger scale than grantmaking alone.
Grace Sacerdote, executive vice president and CFO, The Community Foundation for Northeast Florida
This guest column is the opinion of the author and does not necessarily represent the views of the Times-Union. We welcome a diversity of opinions.
This article originally appeared on Florida Times-Union: Impact investing can help fill gaps in the housing market