London Community News
By Sean Meyer/London Community News/Twitter: Newswriter22
Even as various city councillors were looking to cut social housing reserves during last year’s budget deliberations, members of London Community Foundation (LCF) were working to see how they might fill the gap.
With that in mind, LCF is launching its community loan fund, which will offer $500,000 loans — repayable in up to five years — to charitable and non-profit groups who are working to create options in the area of affordable housing. With a large investment base of roughly $50 million, LCF has typically invested its money in the stock market, purchasing bonds and equities.
These new loans, however, are a way for LCF to invest more directly in the community and its affordable housing needs.
Andrew Chunilall, LCF director of finance, said the organization has been work for the past couple of years to bring together a loan system that would help charitable groups reach their goals.
“If you think about a normal for-profit business, could be Google, could be Facebook, they all have easier access to capital. They can go to a bank. Charities can’t do that; we have to fundraise to further our missions,” Chunilall said. “If charities have access to capital, if not-for-profits have access to capital, they can further their mission quicker and more effectively. And ultimately, deliver much needed service to the community.”
In the presentation made to the LCF board for final approval of the loans program it was stated that at up to $145,000 per unit and 3,005 families on the wait list, it would cost over $400 million to meet London's affordable housing need.
Chunilall describes London as a “vibrant, strong community, but one that has also had challenges over the last few years.” And because of that, Chunilall said there is more pressure on the charitable sector than maybe ever before.
That is the reason, Chunilall said, LCF figured out a way to get more money into the community by making loans to other charities so they don’t have to continually fundraise. And the LCF’s familiarity with the charitable sector is one reason Chunilall expects the loans to be in demand as not only can they lower interest rates than a bank would, they also have a “much better understanding” of their business better than a bank does.
“Our objective is a social good; it isn’t about generating profits. It is about generating positive social impact in our community,” Chunilall said. “But at the same time, it is an investment. It is a loan; it will be paid back, re-circulated into other charities and other organizations who are looking for capital to further their missions.”
Although Chunilall said the focus of the loans may change in the future, to begin with, it made sense to focus on affordable housing. With that in mind, Chunilall said, the importance of providing someone with a home they can actually afford was the perfect place for LCF to begin its loans program.
“Housing is such a key thing. It is hard to have stability if you don’t have a home. It isn’t that people can’t find a home, they can’t find decent housing at an affordable price,” Chunilall said. “We want to help them find housing that is clean, is decent, is affordable. Without good housing, you can’t focus on other things. It is the base, the foundation for moving yourself in a positive direction.”
In that same report to the LCF board, it is stated London is currently on track to build 500 units of its 1,200 unit goal over the next four years. In a municipal context, the average affordable housing wait list is 8.2 years, and those on the fast-track list wait 1.3 years.
“We are far from being able to make ‘housing first’ a reality and are knowingly working in a sub-optimal system trying to deal with complex health and social needs for people who do not have housing stability.”
The loans, Chunilall said, not only have to make sense from a business perspective, but they also must satisfy the ideals LCF has put in place around providing positive social change. Those points are included in the application process that will be put in place.
Organizations will have to go through that process and provide details around the program they are proposing.
And while $500,000 is a lot of money, Chunilall said LCF knows it might not be the big part of some multi-million dollar project. However, it could very well prove to be the final piece of someone’s financial puzzle.
“We want to be a secondary financer on these projects. These are projects where another organization is providing capital, but they don’t want to take the full risk, they want to diversify,” Chunilall said. “So we would come in as a partner. I mean $500,000 is a lot of money, but when it comes to housing it suddenly isn’t as much as you thought it was.”
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