Scratch the surface beneath Microsoft’s generous affordable 500 million dollar housing pledge to Seattle. Vague on details so far, Microsoft itself points to a California project that may be a prototype for using its grant dollars to leverage far more than 500 million dollars worth of affordable housing.
Central to virtually all affordable housing thinking these days: forget direct funding for construction, whether through grant money, foundation money, or public funds. First and foremost, funding is used to create a tiny economic micro-climate in which speculators can invest and make at the very least small profit, in the process investing funds and thus stretching the money available for affordable housing construction, refurbishment and other support functions.
The key to this productive economic micro-climate would appear to be hard-working non-profits dedicated to helping others make money, even as the non-profit itself does not (as the title says).
In this version of neo-democracy, speculators are an essential ingredient of any successful affordable housing project, extracting their inevitable pound of flesh. The only other option is currently out-of-favour big-government liberalism, which squeezes out the speculative windfalls as well as developer profiteering.
How do community development financial institutions (CDFIs) work? Learn more by exploring how the financial manipulations of Housing Trust Silicon Valley earned a nod from Microsoft. Read more in Crosscut: Will Microsoft’s housing plan work? Silicon Valley offers some clues
For some of the more esoteric financial reasons of how a gift or grant can leverage profitable investment, read more in Financial Times/Alphaville: One person’s charity is another person’s loss-absorbing capital
