Editors note: This article is part of a partnership between ImpactAlpha and Mission Investors Exchange (MIE) to present new ideas and perspectives in impact investing. The MIE 2026 National Conference takes place April 27-29 in Atlanta. If you are a foundation or other mission-driven asset owner, learn more about MIE and the National Conference here.

Six years ago, the Robert Wood Johnson Foundation formalized its focused impact investments strategy. In that time, we have allocated $525 million for investment in people and places often overlooked by the traditional finance system.

As an impact investor, we have the opportunity to deploy “patient” capital, prioritizing impact over the immediate financial returns often required by mainstream financial institutions or investors. 

It’s hard to feel patient, however, when we face a perfect storm of factors threatening homeownership and long-term affordability: rising insurance costs, aging water systems and housing stock, and surging food, childcare and utility costs. 

Deep-pocketed corporate investors are competing with individual homeowners for a limited amount of affordable housing. And artificial intelligence — a potential productivity boon that could also decimate entire categories of jobs — is increasingly determining which entrepreneurs and would-be homeowners qualify for loans.

The need for private investment has never been greater. But in recent years, the subsidies and programs that channel private capital toward community solutions have come under increasing pressure, leaving state and local governments struggling to fill the gaps. And the policy infrastructure that makes private investment viable is being eroded despite broad public support for the outcomes it produces.

To help decision makers understand the long-term value and return on investment of these public policy tools and why allowing them to disappear would be a costly mistake, three narratives need to be reinforced.

Public programs pay dividends, literally

Public programs steer capital to lending for small businesses, jobs, home building and preservation, childcare centers, and healthcare facilities. The CDFI Fund, for example, provides federal dollars to local credit unions and banks to finance household essentials at low interest rates, leveraging $8-$10 in private investment for every federal $1 spent. 

While threatened cuts to the CDFI Fund did not come to pass in the US’s fiscal 2026 budget, the majority of funding allocated for last year has still not been released. 

Similarly, the Greenhouse Gas Reduction Fund created under the Biden administration is designed to lower utility bills, improve health, and make homes more resilient to the extreme weather that three out of four US households have experienced. When fully funded, the program was expected to leverage $7 in private investment for every $1 in federal funds. A concerted effort to dismantle the program over the past year means fewer healthy, energy-efficient affordable housing units and higher utility bills.

Other federal programs that incentivize private investment are the Small Business Administration’s guarantees to lenders to make loans to small businesses, and Federal Home Loan Banks that provide low-cost capital to their members in economically disadvantaged communities. The government backstopping helps to create a robust lending market in underserved areas.

Subsidies are not handouts (and wealthy people get them, too)

Government subsidies in the form of tax benefits or cash payments spur local economic growth and create jobs while also meeting community needs. 

One of the most well-known examples is the rental housing support subsidies that are provided to nine million people in the US, including more than three million children and two million people with disabilities, along with nearly two million seniors. Families with stable housing are proven to earn more, pay more in taxes, have better educational outcomes, and be less likely to experience financial distress. Conversely, when residents can’t pay for housing, local social service agencies become strained as the need for shelter rises and more people struggle to pay for food and healthcare.

Individuals also receive government subsidies through federal mortgage and state and local property tax deductions, though these subsidies often benefit higher-income households that are more likely to itemize their tax deductions. In fact, the federal mortgage interest deduction is estimated to currently cost the government more than $25 billion, while foregone federal revenues from the SALT deduction totaled $23 billion in 2025. 

Investors, too, receive subsidies such as tax credits, grants, loans, equity or guarantees to reduce the financial risk in developing and building housing, childcare centers, or small businesses. 

For example, HUD’s Section 4 Program helps community-based organizations create and preserve homes, finance small businesses, and build health clinics and childcare centers in communities of all sizes. The program requires a 3-to-1 match of private investment for every federal dollar, bringing investment to places that mainstream financial institutions traditionally overlook. Between 2020 and 2024, Section 4 helped build or preserve more than 40,000 homes. 

Other subsidies that incentivize vast amounts of private investment include the Opportunity Zone legislation, which offers tax incentives for private investors who put money into designated low-income census tracts across the US, and the Low-Income Housing Tax Credits and New Market Tax Credits.

Public policies can build wealth, not red tape

Public policies can catalyze private investment by providing clear guidelines and incentives, such as reducing bureaucratic hurdles, streamlining permitting, and creating frameworks that make capital more accessible to underserved markets. 

The Community Reinvestment Act encourages private sector financial institutions to invest in communities with low incomes that they would otherwise not serve, expanding access to financial services, mortgages, and small business loans. 

Special Purpose Credit Programs allow private lenders to extend credit to historically underserved borrowers, including people of color, people with low incomes, or women-owned businesses, without running afoul of anti-discrimination rules.

These policies expand access to opportunity, but others can have the opposite impact. Zoning laws, for instance, determine how land can be used, what types of housing can be built, and where rentals are permitted, all of which profoundly shape housing supply and affordability. 

It’s incumbent upon us to distinguish between policies that open doors and those that close them, and to advocate clearly for the former while pressing for reform of the latter.

Meeting the moment 

Our collective progress is being hampered by the retreat of the public sector and waning support for policies that seek to level the playing field for communities with low wealth and communities of color. 

Sustaining the conditions needed to advance opportunity in the US vastly outstrips what we as investors can provide. The challenges we face were created over generations, and while the solutions may take time, we cannot lose our sense of urgency and momentum while remaining patient with our capital. 

Kimberlee Cornett is the Director of Impact Investment at the Robert Wood Johnson Foundation

The Robert Wood Johnson Foundation’s broad mission is to build a future where health is no longer a privilege but a right, and everyone—no matter who you are, where you live, or how much money you have—has the resources to reach their best health and wellbeing. We approach this through grantmaking, strategic communications, policy change, and impact investment. Core areas of investment are strengthening the community development finance system, advancing racial equity through homeownership preservation and economic inclusion, and making program-directed investments specifically in our home state of New Jersey and through creating access to safe, affordable water.