Robin Hood Leverages Common Ground’s Supportive Housing Mission
Robin Hood (www.robinhood.org), a New York City-based foundation, works to fight poverty in the city by applying investment principles to philanthropy. As part of its Survival program area, Robin Hood supports Common Ground’s (www.commonground.org) work to solve homelessness through preventive programs and through initiatives that place homeless people directly in permanent housing. In Common Ground’s supportive housing, formerly 
homeless people, many of whom have mental illness or AIDS, live in settings that provide social services on site such as mental health and substance abuse counseling, and job training. Common Ground has developed and currently manages seven buildings that house over 1,700 people in permanent and temporary residences.
Common Ground’s goal is to build 4,000 additional units of supportive housing in New York City by 2015. However, Common Ground has been unable to compete with private developers for development sites to build supportive housing in New York’s booming real estate market. Although there was sufficient long-term permanent public sector financing for Common Ground, the organization did not have the flexible, early stage capital it needed to acquire a site and cover its “soft” costs, that is for design and professional consulting fees, not for tangible materials.
To address this capital gap, Common Ground worked with a group of philanthropic and private sector investors to structure a $10 million pre-development and acquisition fund consisting of $2 million of higher-risk, subordinated debt from philanthropic investors and $8 million of senior commercial financing. The senior commercial lenders looked to the philanthropic capital as security for their loans. Robin Hood structured its participation in the $2 million philanthropic loan as a guarantee in the form of a stand-by letter of credit. Through this guarantee structure, Robin Hood was able to support Common Ground’s expansion without using its scarce grant resources.
Reprinted with permission from Rockefeller Philanthropy Advisor's publication, "Philanthropy's New Passing Gear: Mission-Related Investing, A Policy and Implementation Guide for Foundation Trustees," February 2008.
