Working at Scale Home Funders
Home Funders was created in 2003 to address a crisis in affordable housing in Massachusetts. Its specific objective was to raise $26 million to create 1,000 housing units for extremely low-income (ELI) families as part of developing 4,000 more mixed income affordable units over 10 years.
The collaborative emerged from conversations among the directors of two local family foundations and their trustees, who’d expressed concern about the homelessness problem in the state and wanted to devise more permanent solutions to it. Three other local funders joined the effort very early on.
Home Funders began by commissioning experts with deep experience in Boston community development to provide ideas as to the best approach for addressing the issue. Their report underscored the need for “slow patient capital,” rather than short-term dollars, and recommended that the group establish a pooled fund that would use PRIs to offer long-term loans at low interest rates to developers and others willing to build housing for ELI families.
Four funders — including the Highland Street, Hyams, Fireman, and Boston Foundations — agreed to collaborate by contributing $15.5 million that would be structured as loans or PRIs at a 1% interest rate over 10-20 years. To streamline the process, they granted the funds to two intermediaries charged with approving and tracking loans and repaying the PRIs. Once the initial financing had been met by developers, the money that had been lent would go back into the pool. The group also created an LLC to hold the PRIs and share risks. The collaborative had two other components: funding for transitional services to homeless families to mitigate the perception among some developers that helping them was a “lost cause”; and a public education campaign to advocate for better public policies to support long-term permanent housing for homeless and other ELI families. A recent midpoint evaluation found that the collaborative has made progress toward its goals, with $22 million raised and about 1,550 affordable and 440 ELI units financed to date.
In 2007, with more projects in the pipeline than funds to support them, the collaborative made reaching out to new funders a top priority, turning grantmakers into grantseekers — a new role for some members. “We had to pitch our colleagues and found what most nonprofits find — that grantmakers want results that we hadn’t yet produced,” said Mari Berrera formerly executive director of the Highland Street Foundation and now at the Eos Foundation. “That’s a major reason why we undertook an evaluation, which showed what we had accomplished. We also brainstormed about what we could do if we had, say, another million dollars and then presented that as our vision with potential donors.”
The progress the collaborative has made hasn’t been without its challenges, among them the complexity of the model, which required considerable staff time; an economic climate that has made it more difficult to build affordable housing; and changes in foundation staff, including some of the original “champions” of the initiative. The benefits, however, have far outweighed these challenges, says Berrera, who points to the extraordinary sense of commitment each funder brought to the table, their ability to be frank with one another, the single system of grantee reporting, and their agreement to encourage grantees to report failures as some of the most important.
In 2008, in response to a Boston Globe article that warned that the city was becoming a “frozen Katrina,” with “poor people being unable to feed their kids and heat their homes,” several Home Funders members decided to create a pool of funds with other donors that could respond to shorter-term needs of social service providers. The group also hired a PR firm to get the word out about these grants and to encourage other funders to “step up and do this on top of their investments.” Although originally envisioned as a “one-time effort,” the new collaborative plans to pool resources again for the coming winter. Two other Home Funders members have made additional PRIs to a new pooled fund created to address the housing foreclosure crisis in Massachusetts. “These new initiatives grew, in part, from the close and productive relationships built through Home Funders,” said Hyams Foundation president Beth Smith.