Over the past two years, IFF has developed a financing program to improve access to fresh, healthy food in low-income communities.

While some Americans celebrate Thanksgiving with feasts of turkey, stuffing and pumpkin pie, it’s important to acknowledge than many low-income Americans have limited access to food and food security this holiday season. As Thanksgiving approaches, we’re looking back at some of Living Cities past work on our food system as a lever for economic opportunity. This post originally appeared on August 15, 2012.

IFF, a Community Development Financial Institution (CDFI) based in the Midwest, is a former grantee of the Living Cities’ Green Economy Working Group as well as a current borrower of Living Cities’ Catalyst Fund debt capital. The $3 million Catalyst Fund loan supports the CDFI’s Healthy Food Access Program, a lending program that provides capital to support fresh food outlets in food deserts. The grant supported the community engagement aspect of IFF’s food access program.*

Over the past two years, IFF has developed a financing program to improve access to fresh, healthy food in low-income communities. IFF aims to improve fresh food access by lending to full-service grocery stores that are opening or expanding in low-income communities that lack healthy food options. The Healthy Food Access Program is in all of IFF’s states – Indiana, Iowa, Illinois, Missouri and Wisconsin – and IFF also manages the state-funded Illinois Fresh Food Fund.

Grocers must propose community engagement activities that involve nonprofits and community institutions that share a commitment to nutrition and health education…

Still, opening a grocery store alone will not change the eating habits of low-income communities where there are high rates of diet-related diseases such as obesity and diabetes. To that end, the Illinois Fresh Food Fund and IFF’s Healthy Food Access Program require formalized partnerships between the grocer and nonprofits serving the surrounding community. While Illinois is one of a few states that have fresh food financing initiatives, it is the only one that emphasizes community engagement. Grocers must propose community engagement activities that involve nonprofits and community institutions that share a commitment to nutrition and health education – it is through these community partnerships that lasting change can occur.

What does community engagement look like? Each neighborhood grocery will have a different plan. For example in downtown St. Louis, IFF made a $1.7 million loan to a developer converting a vacant grocery store and adjacent building into a retail center that includes a Save-A-Lot grocery store. Save-A-Lot has partnered with a local nonprofit, Casa de Salud’s Despensa de Salud (Healthy Pantry) program, where participants learn how to cook traditional dishes using healthier ingredients, how to read product labels for nutrition information, and how to incorporate healthier ingredients into their daily diets. Save-A-Lot provides food for the cooking classes and gift certificates for students to purchase ingredients in their store. Save-A-Lot will also partner with local health organizations to provide nutritional education information and menu planning ideas at mobile health fairs around the community.

New Developments

$1.7 Million In St.Louis, A $1.7 million IFF loan will fund development of vacant property into a retail center that includes a Save-A-Lot grocery store.

Like any new program, IFF has learned valuable lessons along the way. As a community development financial institution with 25 years of experience financing nonprofit corporations, the Healthy Food Access Program is the first initiative that targets for-profit borrowers. This has required IFF to learn a new industry and build relationships with a new audience, all of which takes time and a strategic approach to adapting organizational messaging and marketing. The grocery industry has many well-established operators who have spent years building relationships with lending institutions and are still in the process of getting to know and understand IFF. The grocery industry is a competitive business and IFF has spent a lot of time helping grocers understand our motivation and the flexible financing tools we offer.

Grocery operators may hesitate to locate in a low-income community because they are concerned about their already low margins.

In addition, grocery operators may hesitate to locate in a low-income community because they are concerned about their already low margins. This insight into the grocery industry helped us tailor our message and marketing in a way that addressed the needs and concerns of operators. Lending to for-profit businesses has also required IFF to adapt our nonprofit-focused underwriting process. IFF has partnered with Capital Impact Partners who is helping IFF to customize appropriately structured financing and will underwrite as well as service the loans. Capital Impact Partners has over 25 years of experience financing retail grocery stores and food cooperatives. As for the community engagement component, finding the “right” grocer is essential. There is a lot of flexibility in how a grocer engages in the surrounding community, but without their commitment and enthusiasm, the connections built with community institutions will not last or lead to improvements in eating and shopping habits.

IFF’s Healthy Food Access Program represents a community development approach to increasing access to healthy foods in neighborhoods where full-service grocery stores are rare by ensuring that experienced grocers are committed to engaging their surrounding community and helping residents make healthy choices about eating and shopping.