INVESTING IN HEALTH:

Setting the Stage for Financing

April 2018

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Place Matters to Health

Source: Google Images

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Narrowing

Opportunities

Low wages

Long commutes

Poor education

High housing costs

Disinvested,

Overburdened,

Vulnerable Places

Structural racism,

conventional markets create

zones of disinvestment

(poor infrastructure, toxic

overload)

Legacy of discrimination,

perceived risk inhibit

capital flows into these

communities

GROWING INEQUITY:

& Current Community

Investment Outmatched

Income inequality, health

disparities, climate change

requires systemic change,

not financial gap filling

Existing mechanisms are

creative but underpowered

and siloed; focus on

transactions, not systems;

reach some places and not

others; fail to engage the

full range of relevant actors

Negative health and well-being outcomes

Community Context

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Funding vs. Financing: What’s the Difference?

▪ Funding pays for spending on goods and services that are consumed (e.g. food, gas). The funders do not expect repayment, although they may expect to achieve important outcomes as a result of the spending

▪ Financing (also called investment) supplies money now that is repaid over time.

• Example: buying a house with a mortgage; paying for college with student loans

• Investors supply capital because they expect a return on their investment

• Financial investors expect to receive the original sum (principal) plus a return in the form of interest (e.g. bank loans), capital gains (e.g. real estate or stocks) and/or savings/avoided costs (tax credits)

• Repayment may come from cashflows produced directly by the investment (e.g. rental properties, toll roads) or from other sources (e.g. taxes)

• Impact investors may trade off some financial return for the promise of social or environmental returns

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Different Types of Money

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What is a Capital Stack?

A capital stack is a structure that layers together capital from investors with different risk and return expectations to finance a particular project or group of projects.

Photos by Ruth Black

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CLINICAL (HEALTH CARE) NONCLINICAL (HEALTH/WELLNESS)

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Approaches to Reducing Costs and Improving Health Outcomes

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Expand access to

healthcare through

community-based

services

Example: clinics at

schools or public

housing

Emphasize outreach,

prevention, early

detection

Examples: primary care

in homeless shelters

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Reorganize care

delivery

Examples: step down

care facilities

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4 Integrate social services; release supports

Examples: referrals for housing services, social

determinants screening, transit passes to medical

appointments

5 Targeted nonclinical preventive actions

Examples: lead or mold remediation,

homeless supports

Create opportunity

Examples: train workforce for

construction/remediation jobs

Improve conditions

Examples: air pollution, complete streets, green

space

Change policies

Examples: affordable housing

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How Can Investment Drive Community Health?

From “easier” to “harder” investments (from a finance perspective):

▪ Affordable housing development, rehab, preservation

▪ Community facilities

▪ Grocery stores/access to fresh food

▪ Mixed use, walkable, transit-oriented communities

▪ Small business development (jobs)

▪ Infrastructure: transit, green infrastructure for storm water management

▪ Early childhood interventions

▪ Investments without obvious cashflows: blight mitigation, parks/green space

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Framework for Strengthening Community Investment

+ +

Shared

PrioritiesPipeline

Enabling

Environment

Create a shared vision

specific enough to

shape decisions

Generate deals and

projects that add up to the

realization of the

community’s strategic

priorities

Shape the context

that promotes or

impedes the

execution of the

pipeline

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Shared Priorities

▪ Ensure there is a shared, community-endorsed vision broad enough to matter and specific enough to shape decisions.

• Convene stakeholders

• Engage with community

• Define needs

• Assess opportunities and availability of resources

• Set priorities at the right altitude

▪ Priorities may emerge from a formal process (comprehensive plan); a crisis (natural disaster, consent

decree, traumatic event); or a group of leaders deciding that “we, together, will…”

Everyone

everywhere is

better off

Corner grocery

Store

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Pipeline

Identify and develop projects and investments that together add up to the realization of the community’s strategic priorities.

Spot opportunities Frame the projects Select project participants

Overcome barriers to investment Leverage public resources Assemble capital, including

identification and blending of

sources

Structure and underwrite

investments

Align deals and projects with

vision and priorities

$$$

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Enabling Environment

Shape the context to facilitate realization of the priorities.

1. Set and enforce

policies and

regulations

2. Identify and

align resources

and funding

flows

3. Ensure

availability of

needed skills

and capacities

4. Foster formal

and informal

relationships

5. Build forums and

platforms for ongoing

collaboration

6. Influence

practices and

processes

7. Generate and

provide data

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Priorities

Residents and local

businesses

Neighborhood

organizations

Local elected

officials

City agencies

Advocacy groups

Pipeline

Capital sources

• Banks

• Insurance companies

• Pension funds

• Foundations

• Anchors

• Federal, state, local

governments

Intermediaries

• Community Development

Financial Institutions (CDFIs)

• Development Finance Agencies

(DFAs)

• Banks and credit unions

• Small business intermediaries

Deal generators/Capital users

• Community Development

Corporations (CDCs)

• Affordable housing developers

• Small businesses

Enabling Environment

Set and enforce policies and

regulations

• State and local agencies

• Elected officials

Determine and align

resource flows

• State and local agencies

• Philanthropy

• Anchor institutions

• Investors

• Intermediaries

• Civic/nonprofit

organizations

Establish and sustain

platforms for collaboration

• Philanthropy

• Civic leaders

Generate/provide data

• Universities

• Nonprofit organizations

• Government agencies

Community Investment Actors

$

Structuring,

Monitoring,

$

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The Opportunity

What we believe:

1. Big problems require collaborative approaches. No one institution or leader can solve complex challenges.

2. If you don’t put equity at the center, you won’t succeed in your efforts to create opportunity in your community.

3. There are no easy answers or linear solutions to the challenges you’re taking on. So creativity and an adaptive mindset are required

4. You’re going to have to shift business as usual and introduce new practices, relationships, structures, policies . . . to get where you’re trying to go.

5. You need divergent perspectives to understand the systems you’re trying to change and shape solutions. Working together in an aligned and intentional way, you can have impact. You can make a difference.

6. Capital matters. If you’re going to get to a scale that is transformational, you need to shift investment flows.

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Avoiding the Pitfalls

Across the U.S., many cross-sector partnerships have set out to achieve big results. Most of them will fail to meet their targets or have any significant, material impact on their communities.

What could your team do differently?

▪ Set a clear result that reflects shared priorities

▪ Bring the right partners together, aligning the stakeholders whose agreement and direct contributions are required to achieve your result.

▪ Make sure your strategies match the scale of your ambition. Don’t aim for population-level impact with just a program or a few deals.

▪ Don’t wait to act. You can’t align in the abstract. And you can’t learn what works or what will make the change if you don’t start trying.

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To Learn More:

See the resources on our website at: www.centerforcommunityinvestment.org

Or contact Robin Hacke at: Rhacke@centerforcommunityinvestment.org