We recently posed an important question to NeighborWorks organizations (NWOs): “Do you believe national investors and funders provide you with better terms because you are a member of the NeighborWorks network? Stated differently, does the brand value of NeighborWorks membership translate to material financial benefits from national investors?”
This was a key consideration in developing the NeighborWorks Capital Equity Fund, a groundbreaking Low-Income Housing Tax Credit (LIHTC) partnership with National Equity Fund that provides NeighborWorks members with LIHTC terms that meet or exceed those available to the largest for-profit developers.
Now, this question takes on new significance as we move forward with our Capital Aggregation Strategy in collaboration with NeighborWorks America. The purpose of this work is to maximize network members’ ability to efficiently access all types of capital by achieving a state where major investors and funders understand the impact of the NeighborWorks network, have access to efficient avenues to deploy capital to the network at scale, and are actively using those avenues to provide preferred loan, philanthropic, and other capital. Our Capital Aggregation Strategy is the next big step in creating a growing capital advantage for the NeighborWorks Network.
Insights from the 2023 Capital Convening
During the Capital Convening in Chicago, NeighborWorks America presented the capital survey results, which captured the network’s current and projected capital needs. It examined funding sources for NWOs, the most important types of capital, ideal terms, and the total funding required. The findings revealed that NWOs face significant capital needs to meet their existing pipeline demand. This challenge can be seen as a substantial opportunity. NWOs present a compelling opportunity for investors seeking to deploy their funds. Our goal is to help investors recognize this potential and capitalize on it.
Early Progress and Momentum
We have an excellent opportunity to gain significant traction with this work. Since launching the Capital Aggregation Strategy, we’ve engaged potential investors in discussions about the NeighborWorks Capital Equity Fund, and these discussions have provided an opportunity to showcase the collective strength of the network. Many investors, including some of the largest players in the market, were unaware that NWOs are the largest producers of affordable multifamily housing in the U.S. This gap in understanding presents both a challenge and an opportunity. Now that we have begun to raise awareness, investors are excited to learn more and explore ways to support the NeighborWorks network. That itself is a win, and now we must continue building this understanding and provide investors with clear, efficient avenues to deploy preferred capital to NWOs.
The Next Steps – Growing Your Capital Advantage
While NeighborWorks Capital is driving this effort forward, true success will depend on active engagement from across the network. By working together, we can create a sustainable capital advantage for NWOs that will grow over time. In the coming months, we will further roll out the Capital Aggregation Strategy. Ultimately, we envision multiple funds and structures aggregating different types of capital—whether for single-family, multifamily, or community facilities—and bringing together diverse contributors. This is a bold and ambitious effort, but by working together, it is one we can achieve.
Get Involved
If you’d like to discuss how you can get involved in the broader Capital Aggregation Strategy, please reach out to Jim Peffley via email.
You can shape your future – let’s work together to build it!
