CASE STUDY
Low Income Investment Fund
Since its inception in 1984, LIIF has worked overwhelmingly in communities of color, but in recent years has confronted the reality of the ongoing inequities that people of color face. LIIF has confronted the links between traditional capital and financial markets and the perpetuation of racial inequalities.
Mission & vision, Theory of change, Operations, Evaluation & learning
Background
The Low Income Investment Fund (LIIF) was founded in San Francisco in 1984, and is now headquartered in New York City (with offices in San Francisco, Los Angeles and Washington, DC). With total assets of more than $575 million for the 2019-2020 fiscal year, LIIF has invested over $2.5 billion in facilities and programs that have benefited millions of people with the aim of helping low-income people participate more fully in the American economy. LIIF’s programs focus on affordable housing; childcare; education; green financing; health; and transit-oriented development. LIIF also engages in national policy work to advance the interests of low-income families and communities.
The equity journey
Since its inception in 1984, LIIF has worked overwhelmingly in communities of color, but in recent years has confronted the reality of the ongoing inequities that people of color face. LIIF has confronted the links between traditional capital and financial markets and the perpetuation of racial inequalities. Community development financial institutions have often failed to expand access for under-resourced communities and provide financing for people of color. This has led the organization to adopt new mission and vision language for communities supporting opportunity, equity and well-being for all, as well as embedding racial equity within its 2020-2024 Strategic Plan. LIIF considers lending to be its main tool for impact, and has committed itself to $5 billion in investments over the next ten years to advance racial equity.
Mission & Vision
In 2020, LIIF adopted new mission and vision language: “Everyone in the United States should benefit from living in a community of opportunity, equity and well-being. LIIF mobilizes capital and partners to achieve this vision for people and communities.” LIIF also commits itself to fostering communities of equity, opportunity and well-being. As of July 2020, LIIF had invested $1.4 billion to build 82,000 homes for 231,000 people; $168 million to create 273,000 child-care slots benefiting 870,000 people; $686 million to create 98,000 spaces at schools benefiting 313,000 people; and $438 million to create 38 million square feet of community space to benefit 809,000 people.
Theory of change
LIIF has developed a new impact framework and decision-making tool guiding the fund to “lending and programs that support access, improved outcomes, and power and agency for people of color.” The 2020-2024 strategic plan (“Mobilizing Capital to Build Communities of Opportunity, Equity and Well-Being”) focuses on the following areas:
- Centering racial equity (to dismantle barriers to opportunity, equity and well-being and to seek strategies that prioritize the voices of communities);
- Impact-led lending (to guide LIIF toward the establishment of measurable, equitable outcomes for people of color through its investments by 2024);
- Affordable housing (to preserve and increase the supply of quality, affordable homes, and to provide strategies addressing housing inequities and displacement issues for people of color and lower income). By 2025 the organization aims for over 70% of its lending and programs to be explicitly anti-racist. To realize the goal of equitable access to housing LIIF is offering capital products, seeking out partnerships with like-minded organizations, and filling funding gaps to drive equitable access to housing; and
- Early care and education (which aims to expand and preserve access to high-quality early care and education and double the number of children and early-care and education professionals LIIF serves by 2024).
To support its new strategic direction, in late 2020 LIIF and Stewards of Affordable Housing for the Future formed a joint venture with National Affordable Housing Trust. The partnership is predicated on “a shared commitment to housing equity, which encompasses building quality, safe affordable housing with an approach that centers resident voice and community choice to achieve our vision for more equitable, opportunity-rich communities.” LIIF’s theory of change aims to achieve:
- Direct outcomes such as developers and partners that create community assets reflecting community needs and whose business tactics promote equity; and
- Indirect outcomes such as policy shifts and increased capital flow that support communities of opportunity, equity and well-being.
Operations
LIIF is committed to a strategy to develop new products and initiatives aiming specifically to fill gaps caused by racial inequities (including more flexible underwriting criteria and a diversity hiring and procurement plan), investing its own financial resources and fundraising for this purpose. LIIF is also working to develop clearer accountability mechanisms, such as making its perspectives and commitments public (including the organization’s current $5 billion financial commitment). LIIF has also created a social-justice and racial-equity working group that includes staff organization-wide who represent diverse identities and professional roles. LIIF is also a participant in similar groups with external partners.
Evaluation & learning
LIIF’s 2020-2024 strategic plan identifies measures of impact for each area of focus. For example:
- Centering racial equity:
a. Launch a new framework that centers racial equity and will lead to LIIF doubling the capital it mobilizes driven toward measurable, equitable outcomes for people of color via steady increases of targeted investments over the next 10 years. - Impact-led lending:
a. Refine LIIF’s lending impact and risk criteria to more explicitly focus on measures of opportunity, racial equity and well-being. - Affordable housing:
a. Finance affordable housing connected to economic development—such as health-care centers or early-learning centers—to ensure equitable access in every community. - Early care and education:
a. Double the number of children and early-care and education professionals, specifically entrepreneurs who are women of color, LIIF impacts by expanding its San Francisco flagship model or replicating it in new geographies, using racial equity, need and sustainability as criteria.
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