Investing Endowment Funds to Create Savings and Assets for Low-Income Families

The Renter Wealth Cre­ation Fund, an inno­v­a­tive approach to pre­serv­ing afford­able hous­ing while help­ing renters build assets and sav­ings, recent­ly received a $3 mil­lion impact invest­ment from the Annie E. Casey Foun­da­tion. Man­aged by Enter­prise Com­mu­ni­ty Part­ners, the Fund acquires mul­ti­fam­i­ly rental prop­er­ties that pro­vide res­i­dents with cash-back rewards for on-time rent pay­ments and the oppor­tu­ni­ty to share in the increased val­ue of their buildings.

Watch an impact invest­ments explainer

“Sta­ble hous­ing is crit­i­cal to children’s suc­cess lat­er in life,” said Tra­cy Kar­tye, the Casey Foundation’s direc­tor of Impact Invest­ments. ​“The prop­er­ties acquired by the Renter Wealth Cre­ation Fund not only will be afford­able for low- and mod­er­ate-income fam­i­lies but also will pro­vide a range of ben­e­fits that sup­port their upward eco­nom­ic mobility.”

Reduc­ing Wealth Disparities

Home­own­er­ship his­tor­i­cal­ly has been the best way for fam­i­lies to build inter­gen­er­a­tional wealth. Accord­ing to a sur­vey by the Fed­er­al Reserve, U.S. home­own­ers have 40 times the sav­ings and assets of aver­age renters. More than one-half of Black and Lati­no fam­i­lies rent their homes. And ris­ing home prices and mort­gage rates have put home­own­er­ship out of reach for increas­ing num­bers of families.

Enter­prise Com­mu­ni­ty Part­ners, which has invest­ed $72 bil­lion in afford­able hous­ing since its estab­lish­ment in 1982, is work­ing to reduce these dis­par­i­ties with the Renter Wealth Cre­ation Fund. Devel­oped through an inten­sive res­i­dent engage­ment process, the fund part­ners with oth­er afford­able hous­ing orga­ni­za­tions, par­tic­u­lar­ly those owned or led by peo­ple of col­or, to acquire properties.

A key fea­ture of the fund is a cash-back rewards pro­gram that res­i­dents can use for sav­ings, debt reduc­tion or house­hold expens­es. The rewards — 2.5% of month­ly rent for on-time pay­ments — are dis­trib­uted through Stake, a mobile app that trans­fers these non-tax­able reim­burse­ments to residents.

The Fund invests in afford­able hous­ing projects through­out the Unit­ed States. The first two prop­er­ties acquired are in Texas and Col­orado. At each prop­er­ty, the Renter Wealth Cre­ation Fund pro­vides res­i­dents cus­tomized, on-site ser­vices such as job train­ing pro­grams, finan­cial lit­er­a­cy class­es and after-school tutor­ing for young people.

Shar­ing Profits

Ten­ants who have lived in a fund prop­er­ty for four con­sec­u­tive years and have com­plied with the terms of their lease will have an oppor­tu­ni­ty to share in the prof­its when their build­ing is sold or refi­nanced. Eighty per­cent of the fund’s prof­it on a prop­er­ty will be dis­trib­uted to eli­gi­ble res­i­dents. These dis­tri­b­u­tions could be sig­nif­i­cant, per­haps enough for a down pay­ment on a house.

In addi­tion to its finan­cial strat­e­gy, the Renter Wealth Cre­ation Fund reduces prop­er­ties’ vul­ner­a­bil­i­ty to nat­ur­al dis­as­ters by pro­vid­ing pro­tec­tion from cli­mate risks and oth­er poten­tial haz­ards. Ener­gy-effi­cient retro­fits and oth­er steps reduce nat­ur­al resource con­sump­tion and green­house gas emis­sions, enhanc­ing the envi­ron­ment of the com­mu­ni­ty served.

Learn why afford­able hous­ing is foun­da­tion­al to thriv­ing communities