Mission, Money & Markets: Gnarly problems like generational poverty require new approaches
By Aaron Seybert
The problems we’re trying to solve with social investments here in the U.S. aren’t unique to our country.
At The Kresge Foundation, we work to improve opportunity for low-income people in cities through grantmaking and social investing. We work across the United States, with one international initiative through our Education team in South Africa.
But just because we’re mainly U.S. focused doesn’t mean we can’t learn from community development work happening in foreign places.
THE VIEW FROM FRANCE
Earlier this year, I spent a month traveling through Europe as a German Marshall Memorial Fellow, looking for relevant takeaways to bring back to Kresge and specifically to my work on our Social Investment Practice. Kresge’s Social Investment Practice works to use non-grant forms of capital like program-related investments to generate both a social and a financial return to the foundation. On our team, I focus mainly on two tracks: building our impact investing portfolio in the foundation’s hometown of Detroit and advancing the use and understanding of mixed-use, mixed-income developments in cities across the country.
My final stop in Europe was Le Blanc-Mesnil, a suburb of Paris established in 1792. Originally a farming community, it experienced significant growth following the great wars as a center of industry and manufacturing. Immigrants from former French colonies came to Le Blanc-Mesnil as economic refugees seeking a better future. Le Blanc-Mesnil grew prosperous through the mid-1960s, when its industrial base began to contract, leading to growing unemployment.
During the deindustrialization of the region, average household income in Le Blanc-Mesnil fell. Unemployment doubled the national average at 20 percent. Nearly 40 percent of the housing stock was social housing, and a full 50 percent of the population fell below the poverty line. Sound familiar yet?
Today, those problems persist in Le Blanc-Mesnil. Migrants from northern Africa come to Le Blanc-Mesnil seeking a better future, and housing conditions continue to deteriorate due to a lack of public investment. As a mostly black and brown Muslim suburb, the community faces stigmatization and marginalization.
Like many post-industrial cities, however, there is a small but growing group of passionate people determined to make a better future for their city. Some grew up in social housing in Le Blanc-Mesnil, left, and have returned. Many more never left and have been working tirelessly to improve their city. This community of activists has embarked on an ambitious agenda to change how Le Blanc-Mesnil serves citizens.
The centerpiece of this transformation is an ambitious plan to deconcentrate poverty in social housing by building new mixed-income communities. The goal is to fight the stigma surrounding these housing developments, create more social cohesion, improve the tax base of the city, and create a more diverse and economically resilient community. In total, the city seeks to replace approximately 3,000 units of social housing – all funded through the French government – one-for-one with integrated, mixed-income buildings where not more than 50 percent of the units are market rate.
Like the U.S. Hope IV and Choice programs, this program is ambitious. People aspire for it to be the key to solving very complex social issues that have evolved over decades. The hypothesis is by simple integrating higher income tenants with lower income tenants, the ills of poverty will decrease.
But is this true? What have we learned here in the U.S. that the French could take into consideration?
BEYOND FIXING CONDITIONS
The answer is: We’ve learned a few things, but also have more to discover.
We know that housing is fundamental to social mobility. And we’re aware of how destructive bad housing policy (for instance, building huge, poorly maintained public housing developments where low-income citizens are isolated from the rest of the city) can be to social cohesion.
What we don’t yet know is whether housing policy is the full solution to those same ills. Think of poverty as a disease. Our systems have created the ideal conditions for this disease to spread through a population. We can change the conditions and stop the disease from spreading, but the population there is still sick. No amount of improvement in external condition will change that fact, and if left untreated, the disease spreads through generations.
My theory is that it’s only when we combine a change in conditions with a population intervention that we see lasting results. Societies need to invest in education, health, childcare, nutrition and more in coordination with investments in housing if we want to see real improvements in social mobility. I am actively working to back up this theory with data through evaluations tied to our social investments.
Le Blanc-Mesnil, like Detroit in my own region and other former industrial cities, is reinventing itself. At Kresge, we’re investing in places that want to create a new future through inclusive development that goes deeper into how they think about pairing housing work with other interventions. We’ve made these types of investments in Cincinnati, Baltimore, Chicago and other places, and more are to come. We call it “Mixed-Income, Mixed-Use with HEART,” which means we’re looking for investments that integrate health, equity, adaptability and resiliency in climate change and transit solutions.
These pairings, I believe, have the power to move past the solutions of yesterday and truly get to the root issues of poverty. We hope places near and far agree.
Aaron Seybert, Social Investment Officer for the Kresge Foundation, is a Spring 2017 Marshall Memorial Fellow. This piece is adapted from one previously published here.