Connecting Capital and Capacity for Community Housing
The ‘Connecting Capital and Capacity for Community Housing’ Lab, funded by the National Housing Strategy under the NHS Solutions Labs, is led by SVX in collaboration with Enfin Impact.
The Lab aims to support capital intermediaries and impact investors so that they can effectively and efficiently finance and/or deploy capital into affordable housing projects owned and operated by community housing providers.
*This project, ‘Connecting Capital and Capacity for Community Housing’ received funding from the National Housing Strategy under the NHS Solutions Labs, however, the views expressed are the personal views of the author and CMHC accepts no responsibility for them.
Our Focus
We define a capital intermediary as: Any entity that seeks to pool investment capital into a portfolio for multiple projects, enterprises or organizations. They may include a loan fund, equity fund, REIT, Trust, credit union, or even an NGO with multiple projects in a single vehicle.
We aim to build a stronger, more connected affordable housing capital ecosystem. By strengthening the capacity and readiness of smaller and emerging capital intermediaries, we lay the foundation for more effective capital deployment.
In turn, enhanced collaboration, supported by digital platforms, shared data tools, and new partnership mechanisms, helps intermediaries and impact investors find alignment, grow trust, and increase deal flow.
We will explore the following pathways:
Building Capacity for Investment Readiness:
Close the “financial fitness” gap to build trust and transparency between impact investors and capital intermediaries.
Example: Design and deliver a capacity-building program that strengthens governance, financial acumen, and housing development expertise; enabling intermediaries to more effectively manage and deploy investor capital. This could include rethinking deal structures through blended finance, guarantees, pooled funds, or outcome-based instruments. This may also include tools to professionalize the operations of capital intermediaries so they can sustain and scale up their ability to finance community housing projects.
Connecting Capital to Affordable Housing
Uncover and enable new partnership models, communication channels, and affordable housing investment opportunities between capital intermediaries and impact investors.
Example: Develop a shared digital platform that connects intermediaries, facilitates collaboration, and helps translate between social and financial value.
Unlocking Barriers for Impact Investors
Experiment with products, policy and/or incentive models that attract impact investors to affordable housing.
This may include the exploration of fund aggregation into a single product (like an affordable housing wholesaler or fund-of-funds) or managed portfolio solutions by Portfolio Managers/Advisors to get to greater levels of scale.
Which Capital Intermediaries Are We Focused On, and Why?
While Canada’s capital intermediary ecosystem includes both large, well-established organizations and relatively smaller, emerging players, this project is intentionally focused on supporting the latter. We aim to support this group because the larger intermediaries often have access to institutional relationships, in-house financial expertise, and established systems for sourcing and managing capital. Smaller intermediaries, such as community finance organizations, first time impact funds, and non-profit entities, typically operate with limited resources but play a critical role in financing affordable housing at the local and community level.
By focusing on these intermediaries, the project seeks to build their capacity, credibility, and readiness to engage with impact investors, enabling a more inclusive and diverse financial ecosystem. Strengthening these actors can unlock new pathways for capital to reach underserved communities and housing providers that are often overlooked by mainstream finance.
A few illustrative examples of housing focused capital intermediaries that this project may focus on (but is not limited to) are:
- Union Co-op ($20M)
- CATCH Fund ($18.5M)
- Indwell Bond and Loan Fund ($6M)
- Kaleidoscope Impact Fund ($5M)
- Keewaywin Capital ($10M)
- Community bonds focused on Affordable Housing:
- Housing Forever Community Bond (OCLT): $25 M raise
- Brique par Brique bond: $5 M raise
- SHIP $4 million
- Propolis Housing Cooperative Society $1.5 million
The Need
Traditional real estate investment is primarily driven by financial return maximizing yield, rent, or capital appreciation for investors.
Affordable housing, on the other hand, has a dual mandate:
- Social: to deliver safe, stable, affordable homes for people on lower incomes or with special needs.
- Financial: to ensure the project is financially sustainable (often with modest or capped returns).
This tension means investors and developers must navigate trade-offs: balancing financial viability with social impact.
Yet, as the development and operational costs of building housing increases, so too does the need for more affordable housing that is backed by solid financial investments, delivers returns, and serves communities.
The Missing Middle
Specialized pools of investment capital known as capital intermediaries could be the key missing ingredient to dismantle this barrier and unlock the sector’s full potential to increase the supply of community housing.
Capital intermediaries are purpose-built to raise capital from donors and/or impact investors into a pooled fund and deploy it towards a portfolio of community and affordable housing projects.
The Opportunity
These critical intermediaries face common challenges in realizing their full potential to mobilize capital at scale for community housing. In the development of the Lab, we reviewed several existing research studies and conducted a survey across 13 small capital intermediaries.
We learned:
1. Their creation is often driven by organizations with limited experience and capacity.
2. They are often subscale, which means they do not have the financial sustainability to grow their team, invest in back-end fund management, or implement the necessary infrastructure for scaling and growth.
3. Further, investor access and awareness of these intermediaries is very limited. There is no single location for investors to find and invest in these intermediaries.
Ultimately, the result is much less capital flowing to the community housing sector than is needed and available.
If we have a desire and need for the community housing sector to increase the supply of affordable housing, we also need to increase the quantity, capacity, scale, and investment readiness of capital intermediaries focused on community housing, and we need to make it easier for investors to find and capitalize these critical intermediaries.
Our Approach
Our Lab process moves ideas from insight to action: we define the project, dive deep into the problem, ideate and refine solutions, prototype and test with expert advisors, and finish with a clear roadmap for implementation.
Lab Updates
Co-Designing Solutions for Community Housing Capital
Since our last update, the Lab has moved from diagnosis to design. This update shares progress: the personas developed to ground the Lab’s work in experience, how participants evaluated existing tools through the lens of those personas, and the emerging insights.
What We’re Learning About the Capital Gap in Community Housing
Over the past few months, we’ve been working with capital intermediaries, impact investors, housing providers, and ecosystem builders. In this blog, we share back the insights, trends, and patterns that we are seeing.
SVX & CMHC’s Solutions Lab for Affordable Housing Funds and Investors
We are faced with a generational housing affordability crisis in Canada. The need to expand the supply of affordable housing has never been more critical. But Canada faces a major barrier to building and preserving community housing: access to capital.
Challenge Brief: Connecting Capital and Capacity for Community Housing
Traditional real estate investment is primarily driven by financial return maximizing yield, rent, or capital appreciation for investors. Affordable housing, on the other hand, has a dual mandate: social and financial. Read more in SVX and Enfin Impact’s Challenge Brief.
Tell Us About Your Capacity-Building or Cohort-Based Programs for Housing or SPOs
If your organization runs or supports capacity-building or cohort-based programs for housing or social purpose intermediaries, we would love to hear your experiences to share insights, compare approaches, and co-develop tools to better reflect what housing providers need to raise and deploy capital.