Deploying Community Wealth Building Strategies

Historically, community real estate has been extractive. For example, a property is purchased by an individual or entity from outside the neighborhood, the property is completed or stabilized with sufficient appreciation, and then the property is sold to another owner/investor with the majority of the proceeds benefiting only the original owners or investors. In most cases, there was not a clearly defined community benefit at the start of the project and there will most likely not be a future benefit provided by subsequent owners or investors. To break these traditional cycles, a number of innovative community wealth building models have been developed to ensure a direct community benefit from the onset of the project through exit. 

These models help to ensure that impact delivered over the life of a project can be retained long-term or even in perpetuity. In most cases, these are best contemplated early in the development process to ensure legal and financial structures can and will support a seamless transition of ownership at exit.

There are a few considerations when contemplating these structures. There are myriad ways to combine these structures/criteria to meet community and project needs which are outlined in the case studies below.

Economic Upside

Who ultimately invests in and benefits from this vehicle? Options here include the following, which can also be combined to create a diverse capital stack:

  1. Allow investments only from accredited investors which can exclude community members from participating
  2. Allow investments from non-accredited investors to accommodate smaller, community investment amounts
  3. Allocate appreciation and cash flow to assets and projects that provide direct benefit to communities

Governance Control

Who ultimately controls the assets? Options here include:

  1. The community has a majority position on the board allowing them to determine who they take money from, how they spend/invest, if they buy/sell assets, and even who they lease to/partner with.
  2. The fund manager, general partnership, and/or investors could control the majority position. This could include community governance if there is direct community ownership but the community does not have a majority position.
  3. In some models, all stakeholder groups are equally represented in governance. For example, a third could represent funders or experts, a third could represent community tenants (contractual relationship with project), and a third could represent community residents (no contractual relationship with the project).

Legal Entity Structure

What is the legal entity structure of the vehicle? Options include: 

  1. Non-profit with typical IRS compliance around charitable purpose
  2. For-purpose such as a community-designed purpose with pre-defined obligations to investors, but not the duty to maximize shareholder gains
  3. For-profit where there is a fiduciary duty to maximize shareholder value

Timeframe of Investment

What is the time period of the investment? Sample options here include:

  1. Fixed term where liquidity is contingent on a sale or recapitalization
  2. Evergreen which allows investors to buy-in and sell-out so the entity cannot be sold for the benefit of any single generation
  3. Some structures will have multiple tranches of minimum investment periods to accommodate shorter-term and longer-term investments

Additional Resources

These models are constantly evolving and new community-driven models are developing at a staggering pace. Transform Finance recently published GRASSROOTS COMMUNITY ENGAGED INVESTMENT: Redistributing power over investment processes as the key to fostering equitable outcomes which introduces several of these models and provides detailed case studies of where they are being utilized around the United States. 

There are several providers that currently assist with the structuring and implementation of these models. Here are a few providers that provide direct service.

Purpose, a group of nonprofit and for-purpose organizations developing the ecosystem of knowledge, resources, support, and capital necessary to make transitioning to steward/community-ownership and raising capital on aligned terms easier for organizations, is in the process of further detailing the nuances of these models and implementing them in several markets nationally. Later in 2021, they will be publishing the full inventory of models with detailed summaries and case studies of each. If you are interested in support in developing and implementing one of these models in your community, please contact them here. If you are interested in exploring existing models that the Purpose team has helped to build, you can visit Trust Neighborhood’s Mixed Income Neighborhood Trust or the Kensington Corridor Trust.

ROC USA is a non-profit social venture scaling resident ownership of manufactured home communities since 2008. Together with ROC USA ® Network, a group of 12 regional non-profit affiliates, and ROC USA ® Capital, a CDFI lending subsidiary, they work with 270 resident-owned communities in 18 states (and growing) to help democratic co-ops purchase and manage their manufactured home communities, with three primary goals in mind: 1. Preserve and improve affordable communities; 2. Build individual assets; and 3. Foster healthy, mutually supportive communities and leaders. ROC USA ® is interested in collaborative partnerships in the areas of community development, education, and training, such as creating and delivering online education to resident owners, service-learning projects, and community leadership initiatives. If interested in exploring how you can partner with them to contribute to their mission to make resident ownership viable and successful and to expand economic opportunities for home owners in manufactured (mobile) home communities (MHCs), please contact them here.

Community Investment Trust can work with your team to conduct a feasibility study to determine if a Community Investment Trust is right for your community. For a summary of their engagement, and insight into their toolkit, you can review the CIT Vision for Replication.

Sample Capitalization Structure

Community Investment Trust East Portland CIT

For Community Investment Trust’s East Portland CIT, they leveraged several different funding sources to not only support the operating entity but also acquire and renovate the real estate.

  • Banks provided a long-term real estate loan, a letter of credit, and curriculum development and training.
  • Foundations provided funding for operational support (staff, technology, etc), curriculum translation and training, and capacity building.
  • Impact Investors provided program related investments (PRIs) in the form of initial equity and subordinated debt.
  • Private Donors provided operating support for investor training and capacity building. 

To see the specific capitalization, including investors, rates, sources, and uses, please see the full detailed case study.

Related Case Studies

Case Western Reserve in Cleveland

Cleveland, OH

Similarities: Deploying Community Wealth Strategies

The Greater University Circle Initiative coordinates three large anchor institutions located in Cleveland’s University Circle area—about one-square mile of educational, cultural, and health institutions. Through this initiative, the Cleveland Clinic, University Hospitals, and Case Western Reserve University networked and deployed their resources in a powerful challenge to the persistent poverty and disinvestment in seven surrounding neighborhoods.


Rutgers University – Newark

Newark, NJ

Similarities: Deploying Community Wealth Strategies

The Center for Urban Entrepreneurship & Economic Development (CUEED) at RU-N is one of the first centers of its kind to integrate scholarly works with private capital, government, and non-profit sectors to develop citywide resources and bring renewed economic growth and vitality through urban entrepreneurship.


University of Memphis

Memphis, TN

Similarities: Deploying Community Wealth Strategies

University Neighborhoods Development Corporation works to build and enrich campus and community environment by investing in surrounding neighborhoods. UNDC is a partnership between University of Memphis, University District Business Alliance, University District, Inc., Shelby County Division of Planning and Development, and Economic Development Growth Engine. Opportunity zones are one of their main initiatives. Their Work Local program is designed to improve the community through job access and blight reduction by providing job-seeking panhandlers with a day’s wages and a meal to clean-up sites, where they work to reduce urban blight.


University of Pennsylvania

Philadelphia, PA

Similarities: Deploying Community Wealth Strategies

Between 1996 and 2003, the University of Pennsylvania tripled the dollar amount of goods and services purchased from West Philadelphia businesses through their Economic Inclusion Initiative. They continue to focus on local purchasing and aim to award 20 percent of all construction contracts to minority or women-owned businesses.


University of Washington

Seattle, WA

Similarities: Deploying Community Wealth Strategies

Livable City Year program is a partnership between cities in Washington state and UW’s faculty and students from various disciplines to strategize solutions to the specific community’s needs. Since 2016, this university program has produced numerous projects for the cities of Auburn, Tacoma, and Bellevue including enhancing Startup 425, a program that provides value-adding services to local startups and neighborhood planning projects.