Catalytic Capital

Understanding Community Investment as a Set of Functions

For the purpose of analyzing capital absorption capacity, we define community investment (CI) as the application of capital to achieve targeted outcomes for underserved communities and to build equitable and sustainable cities

What types of outcomes are relevant? Investments that create affordable housing in underserved areas have been and remain central to CI. Recently, elements such as affordable financial services, access to healthy foods, community health clinics, charter schools, energy efficiency retrofits that lower the cost of living, small business lending, and transit-oriented development that links homes to jobs, have become part of the CI discussion.

In order to better understand CI as a vehicle for enhancing human capabilities, social equity, and environmental sustainability, we suggest here that it may be useful to think of CI as the delivery of a set of functions rather than as a set of actors (who are, of course, engaged in delivering those functions). We propose that the following core functions are required to absorb capital and make effective community investments.

These functions do not predetermine what a successful community investment ecosystem looks like or the specific actors involved. Certain functions may be best performed by local, regional, or national actors; institutions not conventionally understood as community investors may be best placed to achieve specific goals. Further, there is potential for new technologies or innovative collaborations to deliver functions more effectively.