Community Solutions, a New York-based, national nonprofit founded by Rosanne Haggerty in 2011, has a bold goal: to put an end to homelessness. Or at least make it “rare and brief.” As its website proclaims, “Homelessness is solvable. This is not a radical belief.”
It sounds pretty radical to me, a Los Angeles resident who can’t walk from my house to get a donut without stepping past someone sleeping on the sidewalk. But Community Solutions’ grand ambition for accelerating an end to homelessness in the country and world — plus its detailed, data-driven, community-based plan to get there, called Built for Zero — is the kind of thing that activates funders.
Philanthropic supporters include the Ballmer Group, Rocket Community Fund, the Tableau Foundation, Home Depot Foundation, Conrad N. Hilton Foundation, Annie E. Casey Foundation and the Harry and Jeanette Weinberg Foundation. And in 2021, the nonprofit won the second round of the MacArthur Foundation’s much-heralded 100&Change grant contest, which netted Community Solutions $100 million over five years to help with its vision, as IP reported when the award was announced. Community Solutions quickly put $10 million of the MacArthur money toward the housing piece of its Built for Zero plan, using it to kickstart a social impact private equity fund called the Large Cities Housing Fund. The fund is designed to buy buildings in partner cities, then lease units to people experiencing homelessness.
This summer, Community Solutions reached an important milestone: It met its goal of raising $135 million for the Large Cities Housing Fund. Investors include banks, health systems, family offices, and the Ford Foundation, the Frances and Benjamin Benenson Foundation and the Leon Levine Foundation, through their endowments. The fund has so far bought 1,155 apartment units in 13 buildings in six participating communities — Baltimore, Charlotte, Denver, Jacksonville, Nashville and Phoenix — and leased affordable units to more than 350 (now formerly homeless) people. Other foundations have invested in specific properties at the community level, including Baltimore Community Foundation, The Community Foundation for Northeast Florida, The Home Depot Foundation, Alliance Healthcare Foundation, and BQuest Foundation. The $135 million will allow the fund to reach its goal of buying 2,500 units overall.
Community Solutions plans to lease half the units to people experiencing homelessness and reserve the other half for low-income individuals or families. These buildings are not already deed-restricted affordable; some were previously affordable but at risk of becoming unaffordable. Community Solutions transitions them into affordable housing.
The Large Cities Housing Fund will hold its properties, which range in size from about 40 units each to just over 200, for seven to 10 years, then sell them to Community Solutions or a local nonprofit. That way, they can guarantee that the units are affordable in the long term instead of getting snapped up by a real estate investor who is not onboard with the program.
Buy, don’t build
The Large Cities Housing Fund is just one part of the Built for Zero puzzle, which includes getting all the players in a partner city or community to work together toward a shared vision of ending homelessness, collecting “by-name” data on every single person sleeping on the streets and then focusing on one population a time, tapping existing supportive services for them, centering racial equity, and finding people long-term places to live. That last part — finding homes for people — is the critical struggle in a nation with a crushing housing shortage.
The Large Cities Housing Fund isn’t creating new housing units, but rather buying existing apartment buildings in affordable areas and waiting for tenants to move out through the natural course of events. When a vacancy occurs, Community Solutions, or the management company overseeing the building, repaints, updates appliances if necessary, and handles other (generally minor) renovations, then rents the apartment to someone experiencing homelessness.
Community Solutions does not pay tenants’ rent. Instead, some new tenants will come in with subsidies, such as veterans who have a VASH voucher (Veterans Affairs Supportive Housing program), providing a housing subsidy and clinical services and case management. Others will pay the affordable rent with their own earnings.
Buying buildings and waiting politely for vacancies to open up may sound like a slow way to get people housed. But this housing crisis workaround can actually move with free-market speed and take as few as 90 days from making a bid to moving someone in, said Nadine Maleh, Community Solutions’ principal of housing systems and a long-time leader in the field. Meanwhile building a new project from scratch with federal tax credits — the usual way to create affordable housing — can take five years.
“In the past, before the fund, a lot of our work had been developing permanent supportive housing using low-income tax credits. Those projects are continuing to be developed by nonprofits and are a wonderful resource. This fund provides a faster way to get deeply affordable units accessible to people in the community, in addition to that other affordable housing, which we need,” Maleh said.
Part of the approach of this fund is that the investors are agreeing to take a below-market return, said Dave Foster, president of BDP Impact Real Estate and the manager of the Large Cities Housing Fund. “If you were to agree to go out and buy a building, you would expect to make a 12 to 13% return. Our investors are going to expect returns that are more like 8.5%. It’s not super complicated,” he said. “They want to do good things with their money and get a return but are willing to cede some of that return to make an impact and get folks housed.”
Impact investing is not a new idea, of course, nor is the notion of encouraging foundations to invest their endowment dollars in companies seeking to do well and do good. IP has covered Los Angeles-based journalist-turned-philanthropy innovator Daniel Heimpel’s efforts to create a similar investment fund to attract foundations’ endowment dollars toward housing for foster youth transitioning into adulthood. As Heimpel and others point out, a foundation is only required to donate 5% of its potentially massive endowment per year, and can invest the rest however it sees fit. Both Heimpel’s fund and Community Solutions Large Cities Housing Fund gives foundations a chance to put their investment dollars where their grants are.
The national scope of Community Solutions’ Large City Housing Fund also makes it unusual, as does its connection to the Built for Zero community work. The fund is only buying buildings in communities already engaged in the Built for Zero movement. “It’s bringing affordable housing to all these stakeholders who are working together around this shared goal of ending homelessness,” Foster said.
Ford and Benenson may soon find themselves in the company of more philanthropic real estate partners. Foster said he and his team are seeing a growing interest in this kind of socially responsible investing from foundations. “We spoke at Mission Investor Exchange, where lots of philanthropic organizations gather. We filled the room and there was a waiting line. Folks want to understand how they do this.”
The unhoused are unique individuals — and populations
A key insight that drives Community Solutions’ approach is that communities need to know who, exactly, is sleeping on their streets (or camping out by their donut shops). “When you think about homelessness in its entirety, it’s hard for people to get their head around,” Maleh said. Built for Zero community partners agree to focus on housing one sub-population at a time, usually starting with veterans. “Then they go to another sub-population, usually people who are chronically homeless. Then they tackle that. Then it might be families, or youth,” Maleh said, noting that these population groupings may well include subgroups within them — young people aging out of foster care might be part of youth homelessness; those recently released from prison may be vets.
Part of this methodology includes something I have not heard much about before: having a “by-name list,” as Maleh put it — knowing the names of every individual experiencing homelessness in a particular area, and the details of their situation. “You need to know them by name. You need to know their background,” Maleh said. This is important because knowing the details of each person’s situation allows communities to help them access resources that may be already allocated for them.
So far, according to Community Solutions, nearly half the 105 communities participating in Built for Zero have reduced homelessness, 14 have “functionally ended” homelessness for a specific population, and three have functionally ended both veteran and chronic homelessness. Some 176,000 people have been housed since 2015.
“The vision is that communities will have the tools to understand what they need to do to get to a state where homelessness is rare, brief and not recurring. We call that ‘functional zero.’ That is feasible,” Maleh said. “We’ve seen communities do that and have a drastic reduction in people experiencing homelessness.”
Multisector movement in housing
Community Solutions’ by-name, population-specific approach to ending homelessness has another benefit: It helps the nonprofit obtain funding and investment. The housing fund’s focus on homeless vets and low-income families, for example, and its connection to supportive services, made it attractive to UnitedHealth Group, a health insurance and “health and wellbeing company” that invested $25 million into the Large Cities Housing Fund, said Catherine Anderson, senior vice president of health equity strategy at UnitedHealth Group. “We ask our partners to really link healthcare to housing, so people are getting support they need to transition from being homeless to being stable. Those support systems are built into their model, and in our experience, greatly improve the stability and longtime health of individuals.”
UnitedHealth Group’s investment points to a potential funding source for nonprofits and partner for foundations involved in community-based multisector partnerships focused on homelessness, another growing movement, as we’ve written. As John Vu, vice president for community health strategy at Kaiser Permanente, another investor in Community Solution’s Large Cities Housing Fund, put it, “Housing and homelessness are a growing priority for healthcare, and we expect impact investing will continue to grow as a core area of focus.”
