A coalition of philanthropic and financial institutions led by the Kresge Foundation, Robert Wood Johnson Foundation, Goldman Sachs, and KeyBank has committed more than $70 million to launch a pilot pay-for-performance project that will finance affordable housing for low-income families.
Over the next three years, the Strong Families Fund will finance the construction or renovation of between six hundred and seven hundred affordable housing units, as well as support on-site access to high-quality social services coordination over the next decade. The fund will combine federal Low-Income Housing Tax Credits for capital development with a pay-for-performance model to provide housing developments with access to incentive payments. In return, the developments will provide on-site coordination of social services designed to improve resident and property outcome measures in five areas, including health and wellness, housing stability, and education.
Kresge has pledged $7.25 million to the initiative, including $6 million in social investment commitments and $1.25 million in grants through its Human Services program, while RWJF will provide $4.8 million in grants, a significant portion of which will fund the incentive outcome payments. Goldman Sachs has committed $30 million to the fund through a Low-Income Housing Tax Credit equity investment in a limited partnership with National Affordable Housing Trust, Inc. Up to $20 million in debt for the developments will be invested from the Community Development Trust. The first funded project will be the rehabilitation of a hundred and twelve units of family homes in Deborah Strong Housing in Ypsilanti, Michigan.
"This fund is a great example of the bold, innovative approaches that philanthropy and the private sector can use to create positive change," said Kresge Foundation president and CEO Rip Rapson. "Bringing together so many strong partners allows us to marshal shared resources around a common agenda and achieve a greater impact than any of us can have by going it alone."