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When a community can secure appropriate investment, it increases its chances of attracting more capital. Businesses flourish, housing values increase, the taxes flow.

Capital naturally flows to where other investments have proven to find good returns with similar projects.

Housing values fall, vacancy rises, blight and crime increase, and the tax base thins.

Meanwhile, communities that have experienced prolonged disinvestment are often deemed too risky for traditional investors—driven by maximizing financial return with the least amount of risk—to invest.

Role

Federal and state policy makers, from elected officials to heads of units like the U.S. Department of Housing and Urban Development or the Federal Reserve Bank, can create policies and programs that favor or incentivize investment in community—or not. They can also provide better access to dollars already earmarked for this purpose.

Motivation

The public sector’s motivation lies in its duty to serve all its constituents well—and secure political wins.

Role

Traditional banks and investors are important sources of capital; they have billions of dollars and are necessary partners. Without their capital, there’s no way to meet all the needs in community. Meanwhile, community development financial institutions are key intermediaries in this system, in that they can act like banks but have a mission to serve underserved communities.

Motivations

Traditional investors will always be principally motivated by returns. However, tax incentives or regulatory requirements like CRA can provide motivation to invest their capital in sectors or places they might not otherwise consider. CDFIs meanwhile must also seek a financial return enough to sustain their operations but are social-outcome minded at heart.

Role

Foundations and other impact investors can play a key role providing concessionary capital, reducing the risk inherent (or perceived!) in these investments. They can provide a variety of “credit-enhancing” capital types including loans, equity investments, guarantees and grants..

Motivations

Motivated by social outcomes first and returns secondly.

Role

Individual community leaders as well as community organizations and nonprofits can organize and amplify resident voice and flex their political might to ensure investors and public sector leaders align capital and policies with community needs.

Motivations

Building the community that will best serve their residents and having a say in their community’s future.

Small businesses and entrepreneurs can access start-up capital and finance their real estate and working capital needs, leading to more local hiring and vibrant commercial corridors.

Seniors, veterans and individuals and families with low incomes find housing options they can afford, leading to better access to quality educational opportunities, better health outcomes and stable employment.

Groceries and small food enterprises return to communities, allowing residents easier access to culturally relevant and healthy food options, which ultimately improve health outcomes and lower environmental loads.

Residents experience the positive impacts of feeling heard and included. They take ownership of changing their community and get involved in the political process and in their community block clubs and organizations.

Green spaces, libraries, museums and other cultural and gathering places thrive and sprout new creativity and knowledge sharing.