A national housing nonprofit has, in just over a month, found itself with vastly more resources to take on the housing crisis.
Amazon gave a $19 million grant and $20 million loan to the National Housing Trust through its $2 billion Housing Equity Fund, the company announced Wednesday. It was the second notable recent contribution to the group. The trust, which gives grants and makes loans for affordable housing and also owns 4,000 housing units, announced on July 31 that it had received $10 million from MacKenzie Scott’s Yield Giving.
Priya Jayachandran, CEO of the trust, screamed when she got the phone call informing her of the Yield gift. The group had $2.2 million in contributions in 2021 so the $10 million donation was many times its annual budget. The group is still determining how best to spend the money. In the meantime, it invested the $10 million in Treasury bonds that pay the group $500,000 a year, more than it would get from grant makers without restrictions in a normal year.
“The most amazing part to me is that it literally was a gift. There was no grant agreement, no reporting,” she says. “For somebody sitting in my seat, that’s just like the golden ring.”
Since some big grant makers have pulled back on supporting affordable housing, she says, grants without restrictions on how they are spent are harder to find. More of the funding comes from big corporations that often specify exactly how funds should be spent.
Amazon is the most recent corporate donor to the group. The company has faced criticism in Seattle for its role in rapid gentrification there, and concerns about housing shadowed its hunt for a second headquarters location in 2018. It is one of several big tech firms, including Apple, Google, and Microsoft, that have dedicated money to address housing shortages.
Amazon’s $2 billion Housing Equity Fund was announced in January 2021 with the idea of creating or saving 20,000 units of affordable housing in the Puget Sound area, Nashville, and Washington, D.C. and Northern Virginia, where its second headquarters is being built.
The fund, in part, helps to finance the purchase of affordable buildings by those who will keep them affordable so they are not sold to new owners who will charge higher rents. It also helps finance the construction of new units. Since it launched, the fund has committed funds to create or save 14,000 units of affordable housing.
Amazon is giving the National Housing Trust $19 million for grants that it will make to organizations that develop property that those with lower incomes can purchase. The housing trust also will provide groups with support from the Grounded Solutions Network — which received $12 million from MacKenzie Scott’s Yield Giving earlier this month — to help those organizations expand their work.
Amazon is loaning the trust another $20 million that will be used as a revolving loan fund to help develop affordable housing that can also be purchased. It expects that the $20 million will help build 800 housing units.
It is rare that a group the size of the National Housing Trust sees such a quick influx of so much money. And it is taking a distinct approach in this particular effort: By promoting homeownership, it seeks to chip away not just at the housing crisis but at America’s vast and growing problem of wealth inequality.
Amazon’s Low-Income Homeownership Experiment
Homeownership is the primary way that Americans achieve and maintain wealth, explains the National Housing Trust’s Jayachandran. Helping those with lower incomes purchase and hold on to homes can help them build wealth.
“It’s a way of entering the market that they wouldn’t have otherwise had. It can be a steppingstone,” Jayachandran says. “It’s one way of trying to reduce the barriers of entry and make it more accessible to become homeowners.”
Amazon has already spent $1.7 billion of its fund so far. But it has not previously focused on homeownership. It is using these grants to the trust as a way to pilot this approach, says Alice Shobe, global director of Amazon in the Community, the company’s social-responsibility arm, which includes the housing fund.
Amazon chose the National Housing Trust because of its reputation and the results it has produced, says Shobe. The Housing Trust “brings this national perspective to homeownership and can also help guide us.”
One of the ways the trust works to make homeownership more affordable is through a community land-trust model. A land trust, for example, could acquire land and then build homes on it. It then would sell the homes but not the land they sit on, significantly decreasing the price of the homes, making them affordable to lower-income buyers.
The trust might hold the land in perpetuity so even when one owner sells, it’s just the building that’s being sold, not the land. That keeps the price low for another buyer.
Shared equity is another approach: A nonprofit provides a buyer with a subsidy to help purchase the home, and when the buyer sells, any appreciation in value is shared with the groups that subsidized the purchase.
In expensive and densely populated areas like Washington, D.C., and Northern Virginia, land is far more costly than the buildings that sit on it, says Derek Hyra a professor in the Department of Public Administration and Policy at American University, who is also a planning commissioner in Falls Church, Va., a Washington suburb. Taking the land cost out of owning a home opens up homeownership to a new group of people who had been shut out of the market, he says.
The Housing Trust has been pushing for this approach for years. “What we’re excited about is that somebody listened and believed in us and is funding this two-part program where we are providing grant support to these organizations to help them scale their operations and then providing that low-cost loan capital to support the actual real estate development,” Jayachandran says.
Housing, but Not for the Neediest
Amazon’s Housing Equity Fund has had some significant successes in an area where progress can be slow. In Bellevue, Wash., Amazon increased affordable housing by 20 percent. In Arlington, VA, it went up by 22 percent, says Shobe.
“Families are living really close to the edge, and there will be a job loss or health emergency or something that will tip them out of stability into some crisis with homelessness,” she says. “Making sure that communities have this range of housing is super important.”
However, much of the housing that Amazon has created and saved is too expensive for the poorest residents, says American University’s Hyra. Amazon has given out $1.6 billion in loans and only $100,000 in grants, according to the company. Loans, even those that are at below market interest rates like these, still require repayment, says Hyra. That puts more pressure on developers to make a return on their investment and deters them from serving those at the lowest income levels.
According to the company, in 2021 only 4 percent of the affordable housing units it helped to fund were for those earning less than 60 percent of area median income — a government measure of income in a community. The rest of the units were for those making 60 to 80 percent of area median income. In Washington, D.C., 80 percent of AMI is $121,000 for a family of four.
The company has been improving. In 2022, 31 percent of the units it helped to fund were for those earning below 60 percent of AMI.
The fund is designed to primarily help those who are at that higher end of the low-income scale, like nursery school teachers and security guards, who often earn too much to receive government aid but not enough to afford to live in the areas where they work, Amazon’s Shobe says. But Hyra points out that those who earn less often pay a larger percentage of their income for housing and face long waits for public housing.
Amazon’s support of the Housing Trust will also benefit those at the upper end of the lower-income scale — Jayachandran says that grantees will determine the targets, but the trust’s homeownership programs generally aim for those earning 60 percent to 120 percent of AMI.
But it is also crucial to help people who have been priced out of the housing market purchase homes, says Hyra. “The land-trust model is an important one,” he says. “And the fact that Amazon is deploying funds to a very reputable national organization is important, significant, and will probably lead to some production and quality affordable housing.”
