Community ownership housing models — including community land trusts, resident-owned communities, cooperative housing, and innovative shared equity structures — are a growing engine of the emerging ownership economy.
Many of the ingredients for scale are in place, including strong buyer demand, proven models, and significant potential for wealth creation.
Yet, what is missing is a financing ecosystem that can match the size of the opportunity. Without shared definitions, standardized products, and accessible capital pathways, innovative approaches remain underfunded. Building that market infrastructure is the essential next step.
Why has community ownership been slow to scale?
Community ownership faces a collective action problem. Fund managers and other people with innovative ideas for deploying assets often develop ideas in the dark, juggling investors with divergent goals while trying to assemble a capital stack that makes sense. Most asset allocators, on the other hand, see the sector through their institutional filters or on a deal-by-deal basis, giving them an obscured view of the true opportunity.
Under these circumstances, assembling capital for community ownership deals—which involves coordinating stakeholders across philanthropy, impact investing, and institutional capital—takes much longer than it does for typical real estate ventures. This leaves impact-focused fund managers with the slim pickings after more nimble buyers (often private equity firms) acquire their fill of properties.
To tackle these barriers head-on, Grounded Solutions Network recently hosted an investor convening focused on community ownership, bringing together philanthropists, impact investors, banks, community development financial institutions, researchers, and field intermediaries to explore pathways toward significantly scaling investment.
The convening revealed real enthusiasm for innovative community ownership models, along with a clear set of challenges: the lack of shared language and definitions in the field; a need for greater clarity in communicating impact; an outsized perception of risk; lack of investment performance data; and difficulty coordinating complex capital stacks.
“We welcome the opportunity to invest more capital in community ownership housing funds with ambitious scaling goals,” said Neha Shah, head of community development lending at Charles Schwab Bank. “Better definitions, data on the track record of the industry, and well-supported fund managers with some early wins are all necessary to increasing the scale of our investment.”
From barriers to solutions: a path to market transformation
Even the best-designed community ownership models require some concessionary capital to keep a significant share of ownership in community hands. This isn’t a flaw — it’s the mechanism that enables shared prosperity. But the field could stretch those dollars further by scaling operations and tapping favorable market-rate tools such as fixed-income products, state revolving loan funds, and programs administered by government-sponsored enterprises.
Based on our observations and conversations with others in the field, we have identified a three-pronged approach to build a sustainable financing market for community ownership housing models.
1. Establish shared language and elevate storytelling
Practitioners rightly value experimentation and locally responsive solutions. But an unfortunate side effect is an alphabet soup of labels and terms: CLTs, LECs, ROCs, community stewardship trusts, community investment trusts, and so on. The lack of shared language and clear definitions hampers deal flow by leaving investors, lenders, and community members without a common understanding of project goals or return expectations.
Moreover, capital allocators often assume that “new to me” means entirely untested, even though many community ownership models have decades of performance history. That disconnect is a clear sign that the field needs to tell its story more effectively.
Clearer communication can bridge the gap between community development jargon and the hyperspecialized language of investors. The field needs simplified and standardized definitions, investment categories, and terms that make sense to community members and investors. Community ownership also needs a messaging campaign to promote consistent language and to lift up first-person stories that convey the benefits of community ownership. That’s how to appeal to the head and the heart.
2. Build a market intermediary infrastructure
“Community ownership isn’t just a financial structure; it’s a powerful tool to transform lives, expand opportunity and help more people build lasting wealth,” said Catherine Godshalk, chief investment officer at Calvert Impact. “Investors and communities alike can see the potential, but we need to ensure there is robust infrastructure that can carry that capital to people and places it wouldn’t otherwise reach.” Innovation in the following areas would help build the bridge to more scalable capital:
Standardized investment and financial products. Tools tailored to community ownership – including consistent underwriting methodologies and impact measurement — would simplify due diligence.
Reliable benchmarking data. Today, each transaction requires extensive education and awareness building to get to a deal. Collecting and publishing anonymized performance data – both financial and social – on accessible platforms would help investors compare opportunities.
Capital aggregation. Aggregating national opportunity pipelines, grouping opportunities with similar capital needs, and offering fewer, clearer investment lanes would streamline capital deployment. The field needs two different types of capital aggregation: bespoke approaches to support the more than 300 locally focused community ownership developers and an expanded capital pool for national portfolio funds with the greatest promise to scale.
Creating this infrastructure could even facilitate access to secondary markets and pilot programs for standardized securities structures like Calvert Impact’s Community Investment Note and Momentus Securities’ SBA 7(a) Loan Securitization.
Risk management and credit enhancement tools. The field needs a stronger risk-management ecosystem to attract institutional capital. That ecosystem includes service providers that can manage loan guarantee pools and offer advice to developers who want to use Equity Equivalent Investments or similar hybrid instruments to bridge the gap between market-rate debt and patient capital.
3. Design with the end in mind
Today, many community ownership models suffer from the perception that they are riskier than they really are. The result is a higher cost of capital that limits growth. If the field can develop reliable performance data and standardized financial products, it can attract the kind of institutional capital — particularly fixed income products — that will allow it to scale.
Field leaders should spend the next few years getting ready for that opportunity: developing policy frameworks for municipal bond issues that support community ownership; working with states to design revolving loan funds for community ownership models, like Colorado’s affordable housing loan fund; and collaborating with government-sponsored enterprises such as Fannie Mae and Freddie Mac to access better-priced capital.
Grounded Solutions Network, Integrated Purpose, and several field intermediaries are working to build this infrastructure. Putting all these pieces in place is a heavy lift, but other fields—charter schools and green banks come to mind—have done it. Community ownership advocates can do it too.
Building wealth for families and communities
Community Ownership Housing Models have already demonstrated remarkable potential to improve housing affordability, and newer initiatives — such as Grounded Solutions Network’s Homes for the Future Fund, Integrity Community Solutions’ resident-ownership approach, and Enterprise Community Partners’ Renter Wealth Creation Fund — could broaden access to community ownership for thousands of low-income families.
“The clarity that Grounded Solutions is striving for helps us better understand how we can take the baton from philanthropy to help emerging mission-driven fund managers scale and capitalize their growth to ultimately access the fixed income markets,” said Shah. “Connecting capital across scale helps investors and lenders at each tier deploy more capital and achieve greater access to impact.”
Much as the 30-year fixed-rate mortgage provided a pathway to wealth for Baby Boomers, and the Low-Income Housing Tax Credit built millions of affordable rental housing units, community ownership models could deliver a new wave of community wealth generation.
Devin Culbertson is the vice president of innovative finance at Grounded Solutions Network. Devin Murphy is the founder and principal at Integrated Purpose.
