Through a Gender Lens: New Blended Capital Fund for Urban Cores

We’ve written about Living Cities before, particularly its collaborative work with Bloomberg Philanthropies, and its partnership with the Citi Foundation to create the City Accelerator, a program that builds both local economies and government efficiency. Now, Living Cities has announced a new Blended Catalyst Fund which will bring together $31 million in funding for distressed cities.

This “impact investing debt fund” will address tough urban problems like affordable housing and homelessness, as well as catalyzing overall economic development and reducing poverty in the nation’s urban cores.

This is not the first time that Living Cities has led a collaborative fund to work on economic development in America’s cities. In 2008, the Catalyst Fund was launched by Living Cities using philanthropic capital alongside commercial capital from Living Cities’ members—22 foundations and financial institutions, including Annie E. Casey, Ford, MacArthur, and Surdna, working to “get results for low-income people, faster.”

This new Blended Catalyst fund combines philanthropic and commercial capital into one financial vehicle that is under Living Cities’ management, and which also offers flexible terms for investees. Many big investors are involved in this effort to focus on cities as units of change, including Deutsche Bank, the Kresge Foundation, MetLife Insurance, Prudential Financial, Robert Wood Johnson Foundation, and The San Francisco Foundation.

Rather than straight grants, the Blended Catalyst Fund provides “loans, lines of credit and equity investments at below-market rates to organizations, both for-profit and non-profit, and local governments.” The goal of this capital fund is to get more money into the community to build local entrepreneurship and help people out of poverty. Five organizations will receive a total of $7.5 million, including:

  • Denver Pay for Success: $500,000 loan “for permanent housing and supportive services to chronically homeless individuals across Denver.”

  • Detroit New Economy Initiative Fund: $1 million loan to the New Economy Initiative Fund for loans to entrepreneurs and small businesses.

  • Impact Ventures III: $2 million equity investment for “mission-based entrepreneurs focused on education, safety and the environment.”

  • Regional Equitable Development Initiative Fund: $3.5 million loan to “create quality, affordable housing near transit to connect low-income residents with jobs, schools and services in the greater Seattle region.”

  • Urban Innovation Fund: $500,000 equity investment for  “early-stage social entrepreneurs solving critical urban challenges.”

These sound like promising efforts. But with the gender focus on funding right now, we wondered how much the Blended Catalyst Fund was targeted to women-led and women-owned projects.

More women live in poverty in America’s urban cores, so you could make the argument that much of this money targets women in distressed communities. But we also wanted to drill down to see how well women are represented in the organizations and programs leading the charge.

Of the five projects funded by the Blended Catalyst Fund, only the Urban Innovation Fund is led by two women, Clara Brenner and Julie Lien. Both are highly accomplished business leaders who, in 2012, started Tumml, an urban ventures accelerator. Julie and Clara have been recognized for their work defining the urban innovation brand by numerous publications and organizations such as CNN, TedX, Forbes 30 under 30, and TechCrunch.

One of the Blended Catalyst Fund initiatives will also target women-owned businesses as one of its populations. The Detroit New Economy Initiative Fund has a goal of providing loans that match Detroit’s demographics, which are 80 percent minority and over 50 percent women.

These two projects, one of which has a partial focus on women and one of which is women-led, comprise 20 percent, $1.5 million, of the total funding of $7.5 million for projects currently being funded by the Blended Catalyst Fund.

We wonder how to ensure that more ventures to bring capital and other resources to underserved communities could be women-owned and women-led. One way would be for nonprofits serving cities to conduct outreach for applicants so that more women are included in the applicant pool.

We challenge Living Cities to consider new ways to fund with a gender equity lens when considering investment partners in distressed communities. Doing more work on the ground to encourage women-owned and women-led businesses to apply for the Living Cities opportunities would likely bear fruit.

Source: Through the Gender Lens: A Look at a New Blended Capital Fund for Urban Cores — Inside Philanthropy



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Author: Kiersten Marek

Kiersten Marek, LICSW, is the founder of Philanthropy Women. She practices clinical social work and writes about how women donors and their allies are advancing social change.

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