Community Foundations Spur Local Development for Health and Wellbeing

About this Project

Local and regional funders like community foundations have the closest insights into the unique needs of the places they serve, relationships with local residents, and the ear-to-the-ground knowledge needed to effectively implement meaningful neighborhood change.

In 2024, the Robert Wood Johnson Foundation allocated $21 million to invest in community foundations that are dedicated to expanding impact investing efforts in their communities to advance the social and economic factors that improve health outcomes.

Individual $5 million loans to the Community Foundation of Greater Chattanooga (CFGC), Saint Paul & Minnesota Foundation (SPMF), and Greater Cincinnati Foundation (GCF) are supporting community development and economic mobility through small business financing, increased access to affordable housing, and reduced costs of homeownership.

Learn more:

• Community Foundation of Greater Chattanooga (CFGC)
• Greater Cincinnati Foundation
• St. Paul & Minnesota Foundation

Challenge

Community foundations do exactly what their name implies—provide funding in the communities where they are based. Their leaders have greater proximity to the people on the ground experiencing the issues that need addressing, putting them in a better position to drive lasting change, and their long-term relationships with nonprofits and community leaders give them unique insights as funders. But their ability to provide this support is contingent on donors, and—in some cases—can lead to those donors’ priorities outweighing the wants and needs of the community.

Historically speaking, community foundations primarily serve as grantmakers. And while grant dollars can create positive change, investments are often better positioned to drive economic prosperity since they can be given to a wider range of organizations (including for-profit businesses), help programs scale, and support the long-term stability of community-based organizations.

Impact investments also give community foundations the flexibility to collaborate with other local funders and financial institutions such as local community development loan funds or credit unions, increasing their ability to respond to the needs of the residents they serve. A growing demand for investment capital to support local economies is driving community foundations to develop their own investment strategies. Yet, it can be a slow process to navigate this new space.

Solution

Flexible, long-term investments in community foundations give them time and space to pursue their own impact investing strategies. Many community foundations also provide technical assistance to their investees, helping them to build their skillset and transfer power into community leaders’ hands. National funders have a role to play alongside them, making these two types of organizations effective allies by combining their unique strengths.

RWJF’s investments in CFGC, SPMF, and GCF were made to reach places previously overlooked by other investors. Each aims to increase access to stable, affordable housing and drive economic development to improve health outcomes. But their approaches differ:

• CFGC will support affordable housing projects to tackle the significant housing shortage in the Chattanooga area by supporting the construction of new and the preservation of existing affordable housing, including Naturally Occurring Affordable Housing (NOAH) properties. It plans to work with a variety of partners, including nonprofit and government organizations as well as private developers to do so. 
• SPMF’s investment strategy utilizes an impact-first platform that matches philanthropic and nonprofit investment capital to community needs and opportunities across Minnesota. Its new Future Ready Portfolio, designed with extensive input from investors and the community, is designed to advance equity and scale solutions that create lasting change. 
• GCF will focus on building and preserving affordable homes for families with low incomes, creating quality local construction jobs and safe and healthy homes, and fostering generational wealth. RWJF’s investment will support its efforts to revitalize areas that have experienced disinvestment in Greater Cincinnati, addressing longstanding racial disparities in health, environmental quality, and economic opportunities.

Outcomes Sought After

• Increase access to flexible capital for small, underserved community development organizations.
• Produce investment strategies co-designed with community input, ensuring variety in levels of financial risk taken on per investment.
• Drive a shift in assumptions on how community foundations can leverage assets (grants, donor advised funds, endowment) to be truly community centered.