The longtime, successful model of Habitat for Humanity isn’t going anywhere… but the way the local organization thinks about its resources, partnerships and potential is changing.
Habitat for Humanity of Greater Fort Wayne CEO Andrew Gritzmaker explains that Habitat has always been an impact investor. “Before we had a title for it, the way in which we served our families was very focused on a sustainability in a way that would produce maximum results. With the traditional Habitat model, we take families into our program who are ‘un-bankable’ and don’t own a home. Once they’re accepted into the program, we’re going to take them through education courses to prepare them for that leap from renter to homeowner. They help to build the home, so they’re putting sweat equity into it as well,” he says. “Through fundraising efforts, we give the family a zero interest, 30-year mortgage and they start making monthly payments.”
The success of the program is demonstrated by very few mortgage defaults since the organization’s inception, which also increases their desirability as a potential investment opportunity.
The need for affordable housing in the region was recently demonstrated by the number of families who applied for homes through Habitat. In October, more than 750 families submitted applications to Habitat, but only a handful could be accepted. Over the last 34 years, Habitat has built 244 homes in Allen, Huntington and Wells counties, and touts a mortgage default rate near 5 percent.
The key to accomplishing increased housing production, Gritzmaker says, could be impact investing opportunities.
“The crux of impact investing is that we all want the same things,” says Kristin Giant, of Ambassador Enterprises and a local thought leader on the subject of impact investing. “We all want everyone who needs a home to be in a home. Fort Wayne is lucky, because someone in our backyard, an organization that we trust, is willing to pioneer a model. Habitat needs people to come alongside them and help to solve the problem. We don’t need to wait for someone to give us a bureaucratic solution to the problem. There are solutions that we can rapidly try right now because there’s so much to learn from trying.”
He says that Habitat model works and will continue to be used. The disadvantage to it is waiting 30 years to get the funds raised for the homeowners back in play to serve more area families in need.
“With impact investing, we could potentially gain access to capital more quickly and start the building process with another family by selling some of our higher value mortgages each year,” Gritzmaker says.
Habitat currently holds nearly $7 million in non-interest-bearing loans. The bank has agreed to purchase some of those mortgages – and more in the future – at a discounted rate to help infuse cash into Habitat’s annual build budget. In a recent example model, Habitat demonstrated how this system could potentially produce 105 new homes at a total cost of $2.9 million dollars without compromising the sustainability of Habitat, its homeowners or its partnerships. That equates to an investment amount of roughly $28,000 per home, simply by recycling funds through a mortgage leveraging strategy, until each dollar is exhausted.
Gritzmaker emphasizes that nothing changes for Habitat partner families. Essentially Habitat’s mortgage asset/liability becomes an asset/liability held by the bank instead. First Merchants has an opportunity to invest in Habitat in a philanthropically focused way that is also extremely sustainable. Discovering ways to produce any return on a charitable investment, even minimal return, ensures future resources are available and ready to deploy.
In addition, this example also positively impacts the bank’s Community Reinvestment Act (CRA) rating. According to the FDIC, the CRA is a law intended to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations. The bank can continue to meet the needs of the community in a sustainable, profitable and significant way.
“We are honored to partner with Habitat for Humanity of Greater Fort Wayne and collaborating nonprofits to make home ownership a reality for the underserved of our community. We are focused on making an impact in the communities we serve, specifically with safe and affordable housing for all,” shares Terri Cable, regional president at First Merchants Bank and Habitat Board Member.
The building model stays the same, but Habitat acquires funds faster and can build more homes in less time in many deserving neighborhoods.
Habitat shifted its building focus to southeast Allen County in 2019 for many reasons. Perhaps none greater than the opportunity to work with many outstanding community development organizations already established there. Housing is a significant component to creating stable neighborhoods, but not the only consideration. That’s why Habitat is seeking collaborative opportunities with those who know best how to meet the needs of their neighbors.
“Over the last year I’ve had the privilege to work with and learn from great local leaders like Javier Mondragon, pastor and CEO of Bridge of Grace Compassionate Ministries, and Cedric Walker, pastor and CEO of Joshua’s Hand and recently appointed Habitat board member,” says Gritzmaker. “Each has significantly impacted how I view the urgent need for affordable housing across our community and how best to approach community development as a whole.”
“For us (Bridge of Grace) affordable housing has always been about more than just bricks and mortar. The building of stable, vital, healthy communities that include services like child care, health care and educational opportunities has been the vision for breaking the cycle of poverty. It is a holistic approach that includes the promotion of stability, long-term homeownership through Habitat for Humanity and the provision of services to meet the needs of community residents,” shares Mondragon.
The wheels are in motion to implement the impact investing strategies shared, increase home production and the number of collaborations with other organizations to meet area housing needs like never before. “The issues we are all trying to solve are too complex to solve alone. We need to do a better job of leveraging each other’s networks and assets to create the change necessary in our community,” explains Walker.
“The easiest gateway to impact investing is real estate because it’s what makes most sense to people,” says Karen Eller, a local philanthropic strategist with the Impact Finance Center out of Denver, Colorado. “What we’re trying to do is make philanthropic capital more efficient and broaden people’s perspectives on what philanthropy can do. Philanthropy is an investment and all investments have impact.”
Gritzmaker and his staff want to share more on the topic of impact investing and are hosting a “Lunch and Learn” at noon on April 9 at the Habitat for Humanity ReStore on Lima Road in Fort Wayne. To sign up for the event, RSVP to email@example.com or call (260) 422-4828.
Address: 2020 E. Washington Blvd. Fort Wayne, Indiana 46803
Phone: (260) 422-4828