1. Social Impact Investing and the
Healthy Futures Fund
Nov. 18, 2015
Hosted by:
Federal Reserve Bank of Dallas
Local Initiatives Support Corporation
The Kresge Foundation
Morgan Stanley
Elizabeth introduces the webinar and the presenters – just names/organizations. Each presenter will introduce themselves in more detail if they choose to when they speak for the first time.

2. Health of our Nation, Health of our Economy
Why health matters
Community health
Partnership-driven models
Elizabeth:
Make the case for investments that influence health.
Community partnerships as part of the solutions.
Cross-sector collaborations/ breaking down silos

3. Health is an Asset Health Income Education Elizabeth:
Shared successes and failures
Income
Education

4. ZIP Code Matters
“Across America, babies born just a few miles apart have dramatic differences in life expectancy.
To improve health we need to improve people’s opportunities to make healthy choices— in the places where they live, learn, work and play.”
Elizabeth:
Where to collaborate?
At neighborhood level
Zip code tends to be a more accurate predictor of how long someone lives than genetic code
DISPARITIES in Social determinants of health translate into DISPARITIES of longevity
why they matter for families with young children
Robert Wood Johnson Foundation Commission to Build a Healthier America,
city-maps.html

5. SOCIAL DETERMINANTS OF HEALTH
Elizabeth:
collaborating across silos is essential to ensuring that everyone has the chance to thrive
County Health Rankings and Roadmaps, a Robert Wood Johnson Foundation Program,

6. The Community and Economic Development Industries:
The ZIP Code
Improvement Business
The Community and Economic Development Industries:
Build high‐quality, service‐enriched affordable housing
Support small businesses and entrepreneurship
Finance community facilities (e.g., child care centers, charter schools, grocery stores, shelters, community centers, health clinics)
Helping individuals build and repair their credit and access quality financial products and services
Elizabeth:
WHO WORKS IN THE ZIP CODE IMPROVEMENT BUSINESS?
“We partner with a community development corporation (list name of CDC) that builds housing that fits the budget of working households that are low- and moderate-income. Members of these households would otherwise have few options for safe and affordable housing. …”
We provide financial support (list dollar amount in specific time period) to entities that provide financial products and/or services to LMI microbusinesses and small businesses. These entities are…(list the organizations, such as Prestamos, Accion, Multibank Community Development Corporation (CDC), Small Business Development Centers (SBDCs), a local community development financial institution
(CDFI).”
Income

7. Investing for social impact
Morgan Stanley – Investing through Community Development
Kresge Foundation – Social Investment and program alignment
Elizabeth transitions in Kimberlee and Lindy – Posing the question to our first round investors – what does social impact investing mean? Why did your organization choose to invest in the formation of the Healthy Futures Fund?
Kimberlee responds for Kresge Foundation – creation of the social investment practice to bolster impact of grants-driven program The Kresge Foundation
Lindy responds for Morgan Stanley - Morgan Stanley has two areas of focus under our Global  Sustainable  Finance umbrella.  One team focuses on social impact investing across our businesses and the other drives our Community Development lending and Investment business. I work on this effort and lead that effort with Community Development Financial institution (CDFI) partners. from the Community Development team. Interesting to me is that the Social Impact Investing team has created a wealth management platform within Morgan Stanley Wealth Management, the world’s largest wealth management firm, to provide solutions for our clients who want double bottom line results. Our firm works across our business to deliver both financial returns and at the same time, create social impact.

8. Healthy Futures Fund: The Founders
Launched in early 2013, capitalized with $100 million in resources
Founding Partners: Morgan Stanley, The Kresge Foundation, LISC
Fund Manager: New Markets Support Company (a LISC subsidiary)
Emily walks the audience through the formation of the Fund and founding partners/roles.
LISC and NMSC manages the Fund execution; primary on deal sourcing; delivers technical assistance
Morgan Stanley – equity investor, lender
The Kresge Foundation – lender, philanthropic support and mission

9. LISC Overview
Formed in 1980, the Local Initiatives Support Corporation is the largest community development institution in the country
Building Sustainable Communities platform for investment includes housing, family income and wealth building, economic development, health and education.
Emily:
Formed in 1980 with lead investments from the Ford Foundation, LISC was created to organize community development efforts to transform distressed communities into good places to live.
In 2008, LISC reframed its work in the Building Sustainable Communities model, focusing its grants and investment activities in 5 core areas.
In 2014, LISC’s research team published a report that concludes comprehensive investment models like BSC has a positive impact. The economic and income indicators improve.

10. LISC By the Numbers TOTAL SINCE 1980
$14.7 billion invested leveraging $44.1 billion in total development
330,000 affordable homes and apartments
53 million square feet of commercial, retail & community space including:
194 early childhood centers serving 20,730 children
192 schools financed serving 77,000 students
292 playing fields renovated for 584,000 kids
55 health centers
63 grocery stores and food markets
Emily:
Since 1980, LISC has invested $14.7 billion in low-income communities nationwide;
The National Equity Fund, LISC’s tax credit syndicator arm, has invested in over 140,000 affordable housing units, generally over 170,000 jobs
In 2014, LISC’s research team published a report that concludes comprehensive investment models like BSC has a positive impact. The economic and income indicators improve.

11. LISC Footprint
Emily:
Today, LISC has 32 offices nationwide, a dedicated Rural LISC program
and two affiliates that deploy and manages our Low-Income Housing Tax Credit (National Equity Fund) and New Markets Tax Credit resources (New Markets Support Company).
For LISC, mission and social impact drives every investment.
Reflect on LISC’s mission
HFF at the core of LISC’s health work
The partnership with Morgan Stanley and The Kresge Foundation
Public health approach to community development

12. The Kresge Foundation: Overview
Founded in 1924, The Kresge Foundation is a $3.5 billion private, national foundation that works to expand opportunities for low-income people
Areas of investments include arts and culture, education, environment, health, human services and community development
Social Investment Practice at The Kresge Foundation
Kimberlee:
Background for Kresge
Walks through areas of investments
Kresge established its Social Investment Practice in 2007 to bolster the Foundation’s impact in its 7 core program areas;
In September 2015, the Kresge Board of Directors approved a $350 million pool of funding that will be invested by 2020, enabling a variety of investment tools to enhance opportunities in low-income communities.
At the end of 2014, the Practice managed 37 active commitments representing $73.3 million in program-related investments.

13. Social Investment @ Kresge
Healthy Futures Fund (overview)
Other investment highlight
Kimberlee:
In 2008 and 2009, The Kresge Foundation’s health program made a series of grants to Federally Qualified Health Centers. Recognizing FQHCs as the backbone of the health care delivery system in the U.S. for many lower-income people.
The implementation of Affordable Care Act creates more demand for services. Private investments were necessary to complement the public resources available to health centers.
The loans and grants Kresge provided enabled the Fund to launch at scale, bringing $100 million in resources to low-income communities nationwide in just 36 months.
Kresge provided loans and grants to support the Healthy Futures Fund. For HFF 2.0, Kresge will be a part of the credit enhancement structure and provide grant support LISC and HFF projects and programs.
Building off of knowledge gained from the implementation of the first $100 million in resources, the Kresge Foundation looks forward to working with a new class of health centers that are taking on ambitious projects and partnerships to improve health through community development.

14. Community Development @ Morgan Stanley
Healthy communities
Equitable transit-oriented development
Small businesses
Public sector support and partnerships are critical
Morgan Stanley is committed to creating innovative, long-term sustainable business models that strengthen communities, advance economic opportunity and protect the environment
Our work focuses on financing affordable housing and other vital elements of successful communities, such as healthcare and economic development, utilizing public-private partnership programs (e.g., Small Business Administration, LIHTC and NMTC investment).
We leverage Morgan Stanley’s position as an investment bank to bring “Wall Street to Main Street” through innovative and responsive products, programs and initiatives, also benefiting from the Firm’s distinctive Community Reinvestment Act (CRA) structure
Since 2010, Morgan Stanley has invested, throughout the nation, more than $9.2 Billion to fund the development of more than 58,000 affordable housing units, creating or retaining nearly 52,800 jobs
We have a small team of community development specialists who operate nationwide and deliver Morgan Stanley capital (debt and equity) for
affordable housing
community facilities and
small business lending
Incorporated in this activity is a focus on equitable Transit Oriented Development work – by that we mean financing that provides affordable housing close to transit hubs so that people can get to work easily and economically giving families more time at home.

15. Morgan Stanley Investments
Since 2010, over $9Bn to develop more than 58,000 affordable housing units and creating or retaining nearly 52,800 jobs
Collaboration with partners, like LISC and Kresge, key element
Our approach is “Housing Plus”
Footprint is national +
We can’t do this work alone; we rely on trusted partners like LISC & Kresge
Morgan Stanley has a dedicated practice of lending to and investing through intermediaries to help deliver our capital to benefit low and moderate income neighborhoods and families
We believe that bringing capital into our communities in innovative and focused ways will help bring positive social outcomes to those communities and families and the most fragile individuals
Our mission starts with decent, safe affordable housing
Yet the desired outcome is more than shelter
Access to health care and social services is just as important
Followed by job creation and access to employment
It is about whether childcare is close to home and employment centers
It is delivering funds through trusted partners
It is innovating and finding new ways to upgrade life quality for everyone in our community
We also rely on public sector capital and partnerships – we typically lend to or invest in a community or a project with evident public sector support, such as through LIHTC or NMTC or other forms of public sector permanent financing or guarantees financing
Getting back to the fact that we can’t do this alone, our partners play many key roles
As Emily mentioned, LISC is on the ground in 32 places across the country
Their offices are actually community development leaders in each of those markets and their influence spreads regionally
The bring public/private collaboration to the table to make community development projects feasible
I see Kresge as the eyes and ears and the catalyst in Community Development work
Kimberlee and her colleagues are focused on positive social and economic change in our communities; they are in the market, learning what is needed to bring change and they are constantly innovating ways to bring change to bear
These partnerships allow us to be effective collaborators – they both challenge and enable us to be better and to deliver more, and deliver it effectively, every day
We have a presence and an interest in New York and Salt Lake City, but the focus of the team is much broader and national
We take our capital to places where it is not so naturally attracted – by that I mean that we explore other geographies and other products that distinguish our work from others

16. Morgan Stanley and HFF Focus on impact Trusted partners
Efficient deal execution and delivery
Reason #1 – Focus on impact
Morgan Stanley maintains a strong focus on being responsive to community needs
The fund is well aligned with our “Housing Plus” approach – housing in conjunction with access to critical community services (first major venture into community healthcare for the Firm)
Reason #2 - Our trusted partners
We have worked with both LISC and Kresge for many years and we have a great deal of respect for them
Knowledgeable
Capable
Aligned in purpose and values
Reason #3 – Delivers an Efficient Execution
In developing the fund with our partners, we recognized the value and opportunity to bring a more financially efficient approach to financing this critically important work – a goal to reduce costs of delivery and legal expenses, while building a strong understanding of the marketplace to deliver a differentiated financing product
Why we co-invested again
As mentioned, we have built a deep, trusted partnership with those involved – the dedicated LISC team, credit support from Kresge, consulting expertise of Capital Link. This enabled us to be comfortable with making another large commitment to the fund
With 2.0, we are further leveraging the strengths of each of the capital providers
The Kresge source transformed from subordinate capital to a guarantee credit enhancement – really speaks to leveraging their ability to provide specific and meaningful support to the transactions
The LISC capital will have more lending capital involved than last time, with greater flexibility
The Morgan Stanley capital is coming in with a bit more exposure, although still well protected
$50MM LIHTC
$20MM NMTC
$30MM leverage lending

17. Healthy Futures Fund: Goals
Expand Primary Care Access in underserved low-income communities nationwide
Incentivize Cross-Sector Collaboration to improve the health of low-income individuals and families
Provide New Capital to Federally Qualified Health Centers (FQHCs) at a time of significant patient growth
Promote More Efficient Execution for New Markets Tax Credits to finance health centers, in an effort to reduce transaction costs & better leverage capital from investors
Weave “health” into the fabric of LISC’s work nationwide
Emily start walking through first two bullet points:
Discuss the fund’s genesis within a social impact investing frame. The health statistics in low-income communities are staggering with an obvious link between poverty and poor health. The fund takes a public health approach to community development investing. The goal is ultimately to improve community health.
Kimberlee:
The Fund targets projects that address the broad array of social determinants of health, with a focus on the alignment of healthcare and affordable housing. Examples are a health center that is co-located with affordable housing and job training opportunities; an affordable housing project co-locates with primary care and urgent care services.
Lindy takes the capital and efficiency bullets:
Morgan Stanley’s significant investment through the Healthy Futures Fund.
The Fund execution was designed with efficiency in mind. There is a way to reduce transaction costs through a streamlined process so more resources can remain with the project to support services.

18. $100 million Capital and Resources
Healthy Futures Fund:
$100 million Capital and Resources
Low Income Housing Tax Credit equity for affordable housing developments incorporating health care programs and services
New Markets Tax Credit financing for health center construction and permanent financing
Predevelopment financing for health center and affordable housing projects
Grants and credit enhancements supporting Healthy Futures Fund projects
Human capital and expertise to support innovation and execution of program
Emily:
By combining highly beneficial financing with grants and targeted technical assistance, the Fund incentivizes innovative community projects.

19. Project Eligibility
For Federally Qualified Health Centers and Look-Alikes:
Project must be located in a New Markets Tax Credit qualified census tract.
Prioritize health centers that co-locate with or provide access to services such as affordable housing, nutrition and healthy food access, employment and job creation, education, physical activity and recreation.
The qualifying minimum loan size is $2MM.
For affordable housing projects using the Low Income Housing Tax Credit:
The proposed housing is co-located with a Federally Qualified Health Center or community health center.
The health care partner must enter into a minimum of a 5 year lease to provide services at the property.
The partners will agree to report on metrics to inform the benefits of the healthcare and housing linkage.
Emily will walk through eligibility requirements, touching on basic requirements.
Emphasis on innovation as the “tie-breaker” for investments.
NMTC is a highly sought after resource – coupled with grants and technical assistance – incentivizes innovation.
Aligning developments of housing and health centers require deliberate coordination. The financing mechanisms and funding cycles don’t line up, although it would be great if they did.

20. HFF Impact Invested in 10 projects total
Primary care capacity to serve 96,000 individuals in low-income communities
418 affordable housing units
13 community-based partnerships that address the broad social determinants of health
Saved over 50% in NMTC transaction costs for health centers through streamlined fund structure and documentation
Emily walks thru impact:
The Fund invested in projects in communities from coast to coast and in rural and urban areas, including Omak in Eastern Washington State or the Benning Heights neighborhood in Washington DC
The unique HFF fund structure supports long-term financial solvency for community health centers – significant interest cost savings as compared to typical CDFI or bank financing, 50% discount in NMTC transaction costs or $450,000 for projects from first Fund.
The collaborative HFF fund structure enables participation by other financing partners – NMTC allocation, sub-debt outside of the Fund structure.

21. HFF Project Highlight: Benning Road campus, Washington DC
Sponsor and Operator: So Others Might Eat and Unity Healthcare
Investment Highlights:
$90 million development project funded with $20 million HFF Low-Income Housing Tax Credit equity investment and $14 million HFF New Markets Tax Credit investment
$100,000 HFF grant to enhance health programming and access for housing residents
Community Impact:
Affordable housing units
On-site primary care
On-site employment training
Health-focused services and programming jointly provided by housing and health care partner.
Lindy shares SOME Transaction
The Fund provided approximately $34 million in LIHTC equity, NMTC equity and financing and grants to a mixed-use campus in Washington DC.
The resources included grants to enhance access to health services for campus residents.
Walk through on-site services, many in one site
Note Transit-Oriented Development
Also includes retail
All good things coming together to transform this neighborhood into vibrancy and a restored economic foothold for the community
MORE #s details if needed:
- affordable housing units – 182 units of supportive housing affordable to those at or below 40% Area Median Income (AMI) plus 20 unit of transitional housing
- primary care capacity – 37,000 SF clinic with capacity to serve 25,000, balance will consolidate administration

22. HFF Project Highlight:
Brockton Neighborhood Health Center, Brockton, MA
Sponsor and Operator: Brockton Neighborhood Health Center and Vicente’s Grocery
Investment Highlights:
$8 million development project 100% funded by HFF New Markets Tax Credit financing
$100,000 HFF grant supporting expanded health center services and collaborative programming with housing and grocer partners
Community Impact:
Primary care capacity to serve 6,700 new patients
Job creation
Nutrition programming and outreach with grocery and housing partners
Kimberlee walks through Brockton innovations:
Innovation – nutrition that brings together housing provider, health center and grocery store.
Improves access – health center has demonstration kitchen with full view from the waiting room and outside foot traffic.
Incentives to change behavior – rewards program linking prevention visits with cash points to spend at grocery store.
Integrating services – health center incorporates grocery store shopping trips into its chronic disease management program; grocery store put up special “nutrition” labels to help shoppers understand what they’re buying.

23. HFF 2.0 – What’s Next
$100 million in new resources to capitalize Healthy Futures Fund 2.0
Evaluation of the impact of the first Fund
Broadened investment scope to address the social determinants of health
New ways to expand and replicate model
Emily walks thru following bullets:
Kicking off new Fund with the closing of a $5 million investment in Houston where an affordable housing high-rise is co-located with primary care services on its ground floor. The Woodland Christian Towers is a 127-unit supportive and senior housing project located in the Northside/Northline neighborhood of Houston. The inclusion of a FQHC, Central Care Community Health Center, in a 6,400 SF space strengthens this model by providing access to health and behavioral health services, which reduces frequency of emergency room visits that often disrupts stability and self-sufficiency. Central Care will provide an array of mental health counseling, clinical and advocacy services that will play a vital role in the health and well-being of Woodland’s senior and disabled residents as well for the community.
More work needs to be done to ingrain the idea that health isn’t just about healthcare. According to a survey conducted by Capital Link, a Fund partner specializing in supporting the capital expansions for FQHCs, the focus of community partnerships remain focused on clinical care delivery.
The program evaluation will generate data necessary to advance the conversation. The impact is not hypothetical. With evidence, there is a higher potential for policy and funding alignments to improve community health.
With adjustments to the capital stack and introduction of new investment partners, the Fund now has enhanced ability to bring in new financing partners and also to replicate the model with local partners.
(Kimberlee provides emphasis on Dignity Health) - Partners remain the same but roles different – LISC as a lender, Kresge provides program grants and Dignity Health now capital provider.
(Lindy provides emphasis on replicability) - More control over debt allowing new capital partners to come into the deals.

24. Lessons Learned Lessons learned:
Community health centers are natural partners for a range of community development efforts, but require incentives and promptings to partner and take on debt to respond to market changes;
The Healthy Futures Fund is a powerful tool for collaboration among CDFIs, financing partners, FQHCs, and community development partners
Questions:
How can we best leverage the strong network of current Healthy Futures Fund partners to increase health center collaborations with community development partners and positively impact community health?
Can the benefits of improved primary care access and preventative care be quantified and monetized?
How can the partners further and deepen the integration of health into its work nationwide?
Emily speaks to FQHCs as natural partners for community development organizations;
Kimberlee prompts discussion regarding next steps – how can we incentivize alignment of public, private and philanthropic resources to deliver the strongest community impact? Speak to Kresge involvement in other social investment models.
Lindy speaks to other Morgan Stanley social investment projects.

25. Recommended Resources
Readings
“Healthy Communities: A Framework for Meeting CRA Obligations,”
Federal Reserve Bank of Dallas, March 2014
“Appendix: Experts in Healthy Communities (In Their Own Words),”
“Time to Act: Investing in the Health of Our Children and Communities,”
Robert Wood Johnson Foundation Commission to Build a Healthier America,
January 2014
“A Practitioners Guide for Advancing Health Equity,”
Centers for Disease Control and Prevention, Division of Community Health
“Building Sustainable Communities: Initial Research Results,”
Christopher Walker, LISC, October 2014
Websites
Healthy Futures Fund:
Federal Reserve System’s Community Development Resources: fedcommunities.org/
Build Healthy Places Network:
Global Impact Investing Network:
Elizabeth reviews the recommended resources.

26. Recommendations for Action
#1: Prepare your story by putting it in a “healthy communities” perspective
Inextricable link between education, income, health
b. Why ZIP code matters
How your work is fundamental to healthy communities (e.g., list which
healthy communities components are important to you and why)
d. Economic, financial, social, environmental value of your work
Elizabeth walks thru recommendations
Income
*For details, see
**For details, contact the Unite Way of Greater Dallas.
***For details, contact Children’s Health.

27. Recommendations for Action
#2: Reach out to “unusual suspects” among healthy communities experts (experts in built environment, employment, public/personal safety, social networks, etc.)
Learn their perspectives (goals, successes, challenges)
Identify their community and economic development priorities (activities, geographic markets)
Ask them about community collaborations that they’d recommend you joining
Invite them to participate in your community collaborations
#3: As you decide how to address health and safety issues, engage community entities and residents. Residents can tell you what will work, what won’t and what kind of change is meaningful to them.
Elizabeth walks thru recommendation #1
Income

28. Recommendations for Action
#4: Use your expertise to promote a culture of health. This could involve:
Writing an op-ed piece in the local newspaper
Sharing your research findings in public forums (e.g. with city council)
Sitting on boards of local nonprofits that address nonmedical issues that affect health and safety concerns (financial capacity, built environment, employment, public transportation, social networks, etc.)
#5: Define success not only as learning what works but learning what doesn’t work
Reward partners for sharing these learnings
Incorporate these learnings into the feedback loop.
This process of continual improvement is vital to
creating a culture of health.
Elizabeth uses final recommendation to close out the webinar and prompt for questions.
Income

29. Contacts CONTACTS Federal Reserve Bank of Dallas Elizabeth Sobel-Blum
Local Initiatives Support Corporation
Emily Chen
Morgan Stanley
Lindy Hahn
The Kresge Foundation
Kimberlee Cornett