The Bay Area may be ground zero of the nation's affordable housing crisis. Many residents are spending the bulk of their income on housing, while many workers—especially in the service and the helping professions—endure long commutes to get to their jobs.
Over the past few months, we have highlighted what funders are doing to create more affordable housing, including efforts like the San Francisco Housing Accelerator Fund. That particular effort is a public-private partnership that involves the city, local foundations, private lending institutions and corporations. And the lead investors backing it include Citi Community Development, Dignity Health, the San Francisco Foundation and the Hewlett Foundation.
Here, we look at a newer collaborative effort in Silicon Valley that aims to tackle the affordable housing crisis, an issue that local foundations know is too big for any funder to address alone—or with just the tools of traditional grantmaking. It's called the TECH (Tech + Equity+ Community + Housing) Fund, and it’s using financial markets to fund affordable housing through Housing Trust Silicon Valley. The big idea behind this fund is to provide startup capital to construct 10,000 affordable homes over the next decade.
The first two early investors in the TECH Fund were the Sobrato Family Foundation and the Cisco Foundation. Cisco initially kicked things off back in April with a $2.5 million grant, and then Sobrato added $5 million in May. But now the David and Lucile Packard Foundation is getting in on the action, too, with a $5 million investment of its own.
Not only that, but Packard is the first purchaser of a Community Impact Note, which is the fund’s investment vehicle. Housing Trust Silicon Valley explained the investment strategy like this:
Investors can choose between a five-year note at 1.5 percent interest or a 10-year note at 2 percent interest. All investments will be repaid in full at the end of maturity, and investments in the TECH Fund are backed by the Housing Trust’s AA- Standard & Poor’s rating.
This brings the TECH Fund’s total up to $12.5 million, a bit closer to its goal of raising $50 million and making an investment of $150 million in lending capital for regional housing developments.
Carol Larson, president and CEO of the David and Lucile Packard Foundation, said,
The lack of accessible, affordable housing in Silicon Valley is a threat to the social fabric and economic stability of these communities. This is a pivotal moment for action. Investing in the TECH Fund is an important pathway towards housing crisis solutions.
A big part of Packard’s local “Food and Shelter” grantmaking strategy is affordable housing, as well. Yet the outcomes are still a bit bleak for nonprofits that haven’t worked with Packard in the past. Less than 1 percent of grants come from unsolicited proposals these days. However, it gives about 15 percent of grants to first-time grantees, so there’s some hope there.