Neither governments nor nonprofits alone seem able to marshal the resources needed. Where, then, can the money be found? Increasingly, the answer seems to be private investors—who are making great strides in learning how to partner with governments and nonprofits to address the housing crisis. In 2019, Bank of America was recognized on Fortune Magazine’s annual “Change the World” list for its work to address this gap in affordable housing through innovative financing solutions.
New financing partnerships could reshape housing
The federal government spends nearly $200 billion per year on housing assistance programs, but the vast majority of it is allocated, via tax deductions, to households earning more than $100,000 per year. Americans earning less than $30,000 per year receive only a small slice of that assistancefootnote2.
Meanwhile, it’s estimated that as many as 7.2 million new units are neededfootnote3 to meet current demand for affordable housing. To address this shortfall, local governments often partner with nonprofits to finance the building of more affordable homes. These partnerships provide critical support, but the problem is simply too large to be resolved on a state-by-state, or even county-by-county, basis.
That’s where private capital—through grants or direct investments, and working in partnership with local governments and nonprofits—can help come up with solutions. In 2020, for example, Bank of America deployed a record $5.9 billion through its Community Development Banking unit to help neighborhoods across the country in greatest need of affordable housing.
This investment helped produce more than 13,800 housing units, of which more than 13,000 were affordable, including:
- 6,000 green housing units
- 2,400 housing units for seniors
- 1,600 housing units for veterans, special needs and the formerly homeless
This investment also supported 1,650 affordable housing units developed by Minority and Women-Owned Business Enterprises