A Discussion on Investing in Affordable Housing With a Racial Equity Lens

I was honored to be invited to the Confluence Philanthropy Advisors Forum to lead the discussion for the session "Investing in Affordable Housing with a Racial Equity Lens." I direct the affordable housing team at Travois, a Certified B Corporation focused exclusively on promoting housing and economic development for American Indian, Alaska Native and Native Hawaiian communities, and I am grateful for the opportunity to elevate the story of tribal communities.

Since the “inception” of this country, racism has systemically impacted the theft and ownership of land, access to capital and eventually the housing market that affects our lives today.

In the past year, we have seen the COVID-19 pandemic highlight the critical nature of overcrowding and the lack of quality, affordable housing. The resulting economic crisis enlightened a larger audience to the many low-income people across the country who are housing insecure.

Many readers will be familiar with the housing and urban development policies enacted by localities, states, and the federal government that have either directly or indirectly prevented people of color from building wealth, attaining housing and financial security, and improving their economic mobility. Examples in urban and suburban communities include redlining, predatory lending and banking practices, and urban renewal that decimated minority neighborhoods and the social capital within them. Today, researchers and advocates point toward policies and practices like appraisal-based lending that continue to perpetuate racism and exacerbate economic inequality.

To the same degree but for somewhat different reasons, tribal communities suffer significant financing gaps for affordable housing. The unfortunate reality is that the status of tribal reservation land (held in trust by the federal government) ends up excluding tribes and tribal developers from being able to access traditional financing products in the market. Trust land cannot be mortgaged, alienated or encumbered so tribes are unable to use the land as collateral (a key component of a traditional financial transaction). Moreover, the value of the physical units on reservations tend to decline over time due to the inability to value the underlying land. This increases the wariness of banking institutions when considering investing in tribal communities.

Tribal members want to live in quality, affordable homes in their cultural homeland and near fellow tribal members, but the lack of access to capital is one barrier preventing tribal governments from achieving this goal. Because of the trust land factors, there is no private market for housing. Tribal housing authorities are usually the only entities with the authority or appetite to develop housing for their communities.

The discussion participants work in diverse communities across the country and pushed the group’s thinking by speaking to their different perspectives and expertise.

As a group, we examined what it means to invest in affordable housing with a racial equity lens and asked: What basic principles are important when an organization is examining its own practices in pursuit of this mission? How can foundations and impact investors do a better job with investing in affordable housing (or other community or economic development) with a racial equity lens?

Key ideas and themes emerged from our discussion, no matter whether you are working with tribal communities or other historically underserved communities across country: