In a wide-ranging conversation with Nonprofit Quarterly, LISC COO Annie Donovan delves into LISC’s 40 years of connecting capital to disinvested places, and people to opportunity. From spearheading a “comprehensive” approach in community development, to elevating health and racial equity in its investments, to forging a $500M affordable housing fund for the Bay Area, LISC continually refines and augments its work. The commitment to truly upend inequalities demands intentional action, says Donovan, which has led LISC to take on “more capacity building, more support for advocacy. That is how you create systems change.”
The excerpt below was originally published:
LISC at 40: Coming to Terms with the Limits of Markets
Steve Dubb, Nonprofit Quarterly
Within the field of community development, LISC (Local Initiatives Support Corporation) is a very large intermediary. With offices in 35 urban centers and a rural operation that spans 45 states and 2,200 communities, “LISC is in more places than any other community development organization,” touts its website.
Founded by the Ford Foundation in 1979, LISC estimates that it has invested $20 billion in four decades, including $1.5 billion in 2018. LISC once focused nearly exclusively on affordable housing; it estimates it helped finance 400,500 units of housing in its first 40 years. Today, its focus is much broader, but it is still a major affordable housing supporter, financing an estimated 20,085 units in 2018.
As Mike Kingsella, who directs the nonprofit Up for Growth, explains, LISC forms part of a network of organizations that emerged in the late 1970s and early 1980s, including Enterprise Community Partners, the National Housing Trust, NeighborWorks America, and the Housing Partnership Network, that “led the effort to direct capital markets toward community-oriented investments, including affordable housing.”
Kingsella observes that these groups were responsible for “an increased flow of private capital and public funding into disinvested communities, the creation of public-private partnerships to build housing (rather than direct public investment into public housing), and efforts to combat the long-standing impacts of redlining and racial segregation.”
And yet, despite production success, affordable housing, absent other forms of community economic development, has failed to keep pace with accelerating demand. The federal low-income housing tax credit, which LISC and others have heavily used, helped finance an estimated 2.3 million units of affordable housing in 30 years. But that pace, about 77,000 units a year, pales in comparison to the 366,100 units of housing that the federal government directly financed back in 1970.
In response, LISC (among others) have diversified to meet broader community needs, with LISC calling its altered orientation a comprehensive approach. Review LISC’s work today and you’ll see its fingertips in workforce development, addressing the social determinants of health and supporting youth sports and recreation facilities, to name just a few areas.
Annie Donovan, LISC’s chief operating officer, came to LISC less than a year ago. But while new to LISC, she is hardly new to community development, having worked for about four years at the Catholic Campaign for Human Development; about 20 years at Capital Impact Partners, a leading national community development financial institution (CDFI); a year-long stint in the Obama White House; and four years as director of the CDFI Fund.
Donovan joins LISC at a time when the national intermediary has become increasingly aware of the limitations that accompany its (not inconsiderable) successes. LISC, as Kingsella notes, made its name by creating quasi-markets to boost community development in low-income communities and communities of color. But, as Donovan points out, “Markets have their limitations. Market-based solutions are kind of what got us to where we are now. It’s not just about markets. Markets fail in some places.”
Donovan observes that you can’t simply rely on “market-based solutions when markets are part of the problem.” What can you do in these circumstances? Donovan contends that what is required is a “combination of policy and advocacy and capacity building at the local level” along with market interventions. “It is by combining these things that you can have an impact.”