ImpactAlpha, Sept. 3 – It’s expensive to be poor in America. Low- and moderate-income communities face a shortage of at least 7.2 million affordable housing units.
With its Reconstruct Challenge, Louisville-based Access Ventures, aims to identify approaches to reduce ancillary costs, including transportation and food costs, that can push many families’ total housing costs north of 50% of disposable incomes, founder Bryce Butler told ImpactAlpha.
The impact investment firm awarded $1.8 million in grants to a half-dozen companies to test and evaluate innovations in Louisville and southern Indiana over the next 18 months.
The group includes Austin’s Haven Connect, which has brought online the affordable housing application process. Nesterly, based in New York, connects elderly homeowners with excess space in their homes with younger, medium to long-term renters. Atlanta’s Padsplit provides furnished housing via a “membership” that includes rent, utilities and parking for a fixed, weekly price.
Urban Institute, a Washington DC think-tank, will test a new micro mortgage product to streamline downpayment costs and fees for affordable homes. Chicago-based mRelief streamlines the process for accessing food stamp benefits. New Directions, the one Louisville-based company selected, helps employers boost employee retention by providing downpayment assistance.
“Housing is necessary but not sufficient,” said Living Cities’ Ben Hecht in a keynote at the Louisville event where the awardees were selected. “We have to re-knit our social fabric so that citizens actually care about each other.”
The Reconstruct Challenge will provide the companies a stipend and executive education course to support impact measurement. Access Ventures is also reserving another $1 million for follow capital to help scale successful tests.
The investment firm contracted with a local company to evaluate the efficacy of the solutions, as well as the effectiveness of the process itself as a mechanism for financing innovation.