In the second blog of this three-part series, Executive Director of Community Solutions Deb Markley provides guidance on establishing a Place-Based Investment Strategy. If you missed the first part of the series, be sure and read it here.
Every journey has a starting point, and for Locus’ Place-Based Investment Strategy (PBIS), that starting point was Virginia. It made sense to begin where our networks and relationships ran deepest. By working with close partners, we could test our Theory of Change, finetune our new approach to community partnerships, and build the internal muscle we need to work as an impact-first, integrated community development organization.
Our first step was to identify a region of the commonwealth where our partners had experience with Locus that extended beyond financial services. We selected Southside and began a discovery process to better understand (1) the region’s shared priorities around issues such as housing, community infrastructure, support for small business, agriculture, and the regional food system; (2) the pipeline of investment opportunities; and (3) the support ecosystem that was helping – or hindering – investments from being realized. We drew on our understanding of the Center for Community Investment’s work to help us frame our discovery process.
With our geographic focus in place, we gathered intel by looking at secondary data, reviewing regional and community plans, and assessing our past lending in the region. We used our networks and staff on the ground in the broader Southside and Southwest regions to identify key partners who could help us gain insight into the opportunities and challenges the region faces. Starting in Summer 2023, we connected with public, private, nonprofit, and philanthropic leaders across the region. Our goal was to learn from these partners, identify themes, and consider ways that Locus could be a stronger partner in Southside. We captured our community investment insights in a reflections piece shared first with those who offered their insights and now here. We built on our prior work supporting the Harvest Foundation to become a local impact investor, our long standing partnership supporting the Danville Regional Foundation’s entrepreneurship small business development, and our lending activity with public and private sector actors across the region.
Some of the community-identified priorities we uncovered are clearly mission and capacity aligned with Locus – affordable housing, downtown revitalization (mixed use), and food system projects. For example, as part of this discovery process, we are building a stronger partnership with the Harvest Foundation and are moving at least one high-priority Uptown housing project forward together. Other community-identified gaps or opportunities may require us to partner with others in the ecosystem or across the commonwealth to help identify solutions in Southside that create a stronger, more equitable investment ecosystem. For example, we see an opportunity to take an ecosystem approach to creating equitable capital access for Southside businesses, working with philanthropic and financial institution partners both in and outside the region. What is quite clear is that the outcomes we seek are in alignment with those desired by our community partners – a robust, equitable investment ecosystem that is responsive to community needs and opportunities and ultimately supports the social, economic, health, and environmental conditions needed to promote well-being for all.
This discovery process also highlighted how Locus may need to work differently in place. We have begun to reflect on a number of these themes:
- While we identified a need for financial capital, investments that deliver community impact along with financial return often require multiple forms of capital to advance – development expertise, research and feasibility studies, grants for pre-development work, debt, and equity. Putting together this capital stack is often one of the greatest challenges to getting projects off the ground in a community. Success may depend on how well the ecosystem partners are working together to advance high-impact, high-priority investments in place. What role, if any, do we play in this “ecosystem coordination”? How do we use our connections to agencies or philanthropic partners to identify additional resources for the region? While we have taken on this role in our food system work, we are just starting to consider how that model translates to PBIS.
- Part of our approach with PBIS is to be responsive to community-identified opportunities for impact. But what if those priorities identify the need for lending products that others can provide more effectively than Locus can? We are committed to collaborating with new partners to address these opportunities with the hope that each partner can do what they do best for the benefit of the region.
- It is also clear that at least some of these investment opportunities may create significant impact but come with higher risk. If there were no challenges with the project, the capital would be flowing to it. Fortunately, Locus has begun to address aligned questions that emerged as part of our strategic planning process – how do we evolve our systems and tools to be a responsible lending partner? How do we balance risk, return, and impact in our lending decisions? To be successful, we are learning that collaboration extends to our internal teams. We have begun meeting regularly across teams – lending, community solutions, impact, investor relations – to talk about opportunities and to brainstorm ways that the most impactful projects can get done.
- With our ongoing commitment to centering equity in everything we do, we are reflecting on the discovery process we used in Southside. We recognize that working through our existing networks and relationships must be a starting point, not the culmination of our efforts. We need to make sure that we are forming new relationships and expanding our networks so that they reflect the racial, socioeconomic, and geographic diversity of Southside – and other regions in which we work. We want to make sure that a diversity of voices informs the way we understand and respond to regional opportunities.
These past months have helped the Locus team become clearer on the “how” of PBIS. We are creating a recipe for having greater place-based impact that includes equal parts of our approach to the work and our combined financial and non-financial tools. We are ready to advance partnerships that will achieve place-based impact, first in Southside and across Virginia. We are looking forward to sharing some of those impact stories in the months ahead.