In her guest blog for Resonance, Debra Schwartz, Managing Director, Impact Investments at MacArthur Foundation explains how the Women in Safe Homes fund demonstrates the power of catalytic capital to fuel an innovative investment strategy with vital impact.

The John D. and Catherine T. MacArthur Foundation supports creative people, effective institutions, and influential networks building a more just, verdant, and peaceful world. MacArthur’s investment in the Women in Safe Homes fund was made through the Catalytic Capital Consortium, an investment, learning, and market development initiative conceived of by the MacArthur Foundation in partnership with The Rockefeller Foundation, and Omidyar Network to demonstrate the power of catalytic capital and to expand the reach of the impact investing field.

MacArthur Foundation was one of the seed investors into the Women in Safe Homes fund, investing £3.7 million. The fund launched with an initial overall investment of £15.3 million and has a target fund size of £100 million. The fund buys homes for women experiencing or at risk of homelessness becuase of domestic abuse, mental health issues or due to involvement with the criminal justice system.

As the long journey toward pandemic recovery begins, impact investors are called to action on many fronts: small business development, healthcare access, stable housing, equitable education, racial and ethnic justice, climate change, and more. As each of us looks to do our part by investing for an equitable recovery, we need to remember that this is not just about how much, but also what kind of capital we put to work.

Using flexible, patient, and risk-tolerant capital—catalytic capital—impact investors can fuel innovation. We can bridge gaps for high-impact projects and funds, helping them build the track records and scale needed to attract conventional investors. And we can play a role in making blended finance transactions less risky, helping unlock tens or hundreds of millions of dollars toward impact that otherwise would not be possible.

In the United Kingdom, the new Women in Safe Homes fund provides a powerful example of impact-driven financial innovation fuelled by catalytic capital. As one of the world’s first gender-focused real estate investment funds, it aims to raise £100 million to expand housing opportunities for women emerging from domestic violence, incarceration, homelessness, and other difficult life circumstances, while also building the capacity of nonprofit organizations that serve them.

While the fund presents a clear and compelling opportunity for positive impact, and Resonance and Patron Capital are experienced fund managers, the fund is new to the market. To offset this potential issue, the John D. and Catherine T. MacArthur Foundation made a $5 million (USD) program-related investment to provide equity capital to the fund. This commitment advances our global initiative, the Catalytic Capital Consortium, and adds to commitments from colleagues at Big Society Capital and the Lostand Foundation. Together, we are providing early catalytic capital that the co-managers can use to demonstrate this fund's economic and impact potential, by testing a promising model, reducing investor risk, and paving the way for scale and replication.

This early catalytic capital will be blended with investment from other future investors, enabling the Women in Safe Homes fund to purchase housing units across the UK and then lease them to women-serving charitable organizations. Those charities, in turn, lease the homes to their clients, offering women safe, affordable housing alongside other social programs to help them build stronger futures for themselves and their families.

By design, the fund also helps its nonprofit partners build a strong track record of property management and financial sustainability. It offers the nonprofit partners an opportunity to purchase the leased properties at the end of the lease term, so each charity can build its assets and cement its ability to provide housing solutions to clients for many years to come.

Fundamentally, the Women in Safe Homes fund uses its innovative financial approach and a pool of catalytic capital to tackle a problem that the private real estate market cannot solve on its own. Too little affordable housing is available—especially given the loss of tens of thousands of subsidized units throughout the UK in recent years—and too many landlords are unwilling to rent to women working to overcome social and economic challenges, even when they have the ability to pay.

Tragically, COVID-19 has exacerbated these challenges. Rates of domestic violence are soaring, and job loss has deepened the economic pressure that was already present. It all points to a simple truth: having a safe place to call home is not, and never has been, a luxury. It is a matter of public health, fundamental to the well-being of families, and a pillar of healthy communities.

The Women in Safe Homes fund is just one example of the innovation and impact that investors can achieve by deploying catalytic capital. Around the world, hundreds of innovative funds, initiatives, and organizations need financial partners who are committed to their goals, willing to prioritize impact alongside financial return, and prepared to be patient and take risk as they build a record of success.

At this moment of profound social, environmental, and economic challenges, there is an opportunity for transformational change, Impact investors have a special role to play. Let’s go beyond conventional financial approaches, put catalytic capital to work, and make more innovation, investment, and impact possible.

Debra is Managing Director, Impact Investments and serves on Leadership Advisory Team of the John D. and Catherine T. MacArthur Foundation – a private, global philanthropy with approximately $6 billion in assets and annual grantmaking of roughly $300 million. A pioneer in impact investing, MacArthur has dedicated $500 million of its assets for impact investments  that advance its programs and support special field-building initiatives, including  the Catalytic Capital Consortium.

Debra joined MacArthur in 1995, having previously worked as an investment banker at John Nuveen & Co., and as CFO for a nonprofit child welfare agency. A frequent speaker and guest lecturer, Debra is a past presidential appointee to the United States Treasury Department Community Development Advisory Board. Currently,  she  serves on the boards of the Mission Investors Exchange and the International Women's Forum - Chicago chapter. Debra has a Master's degree from the Kellogg School of Management at Northwestern University and a Bachelor's degree from Yale College, summa cum laude.

Find out more about the Women in Safe Homes fund:

FOR INVESTORS

FOR CHARITY PARTNERS