As a nonprofit affordable housing developer for the creative sector, Artspace has a 40+-year history of being responsive to the needs of communities, often partnering with those that have traditionally been underrepresented—including Indigenous, low-wealth, and rural communities, and communities of color. Yet, during these unprecedented times, more is needed. In response to the deepening affordable housing crisis and the social, racial, and economic inequities made even more apparent by the pandemic, there is increased urgency to advance equity and opportunity at every level of our community development work. Toward that end, Artspace is building a $15 million Impact Fund to advance more opportunity, increase equity, and ensure sustainability in our work.
The Impact Fund blends sources including foundation grants, Artspace investments, and debt through Program-Related Investments known as PRIs. A PRI is a loan made by a foundation in pursuit of its charitable mission. Rather than making loans to generate income, PRI loans are made with the explicit expectation that they will earn below-market financial returns. Most foundations are required by law to distribute five percent of the value of investment assets each year to charitable and administrative purposes. Impact investing through PRIs is an opportunity for foundations to leverage the other 95 percent, beyond grant dollars, to advance equity and social solutions.
PRI investments often also attract additional capital into projects. One factor in the success of Artspace’s business model has been our ability to leverage public and private funds. Artspace’s private to public ratio is an impressive 1:17, meaning that for every $1 dollar of private funds Artspace brings in, we have been able to leverage $17 dollars in public funds. PRIs are an important strategy in our ability to build the Impact Fund to generate significant working capital and leverage additional investment. Ongoing fundraising, paired with Artspace’s own investment into the fund, are part of the long-term strategy of PRI repayment and the continued growth of the Impact Fund.
For more than a decade, Artspace has had foundation partners who have provided PRI investments in recognition of Artspace’s commitment to social change. The Ford Foundation led the way in 1968 by petitioning Congress to approve the use of PRIs, and in 2008, the foundation provided Artspace with a $3 million PRI specifically for work in culturally distinct and underserved communities. Artspace utilized that initial investment to leverage $245 million more in both public and private funding, supporting the development of a dozen projects over eight years. These 12 new buildings delivered 547 units of safe, affordable live/workspace, and more than 500,000 square feet of affordable space for cultural organizations and community amenities. Further Artspace PRI investment partners include The Erich & Hannah Sachs Family Foundation, Calvert Foundation, and The Bush Foundation. In 2020, we were very pleased to add the McKnight Foundation and the Doris Duke Charitable Philanthropies as impact investors in our work.
PRI investments have been deployed into Artspace projects to develop affordable housing and cultural facilities in traditionally underrepresented communities making possible projects such as the Oglala Lakota Artspace arts and cultural center on the Pine Ridge Reservation in South Dakota; the Bell Artspace Campus in the Tremé neighborhood of New Orleans; the South Main Artspace Lofts in Memphis; the Ola Ka ‘Ilima Artspace Lofts and the PA’I Arts and Culture Center housed within the Ola Ka ‘Ilima Artspace development in Honolulu; El Barrio’s Artspace PS109 in East Harlem, New York; and the Northrup King Building in Northeast Minneapolis; among many others. In each of these projects, the PRI fund attracted much needed catalytic capital to complete the project and ensure PRI redeployment or repayment.
The new Artspace Impact Fund, which includes PRIs in addition to grants, donations, and earned income, will be a much-needed source of flexible and available capital. The Impact Fund will increase our ability to be more responsive and have a greater impact on the lives of people who live and work in Artspace communities. Over the coming months, we will continue to share more information about the Impact Fund; and provide examples of how access to capital is creating demonstratable progress toward more opportunity, equity, and sustainability in our work.