For discussion

Lucky by design:

Readiness to pounce depends on sound research

By Kate Wolford, The McKnight Foundation

Kate Wolford Kate Wolford is president of The McKnight Foundation, a Minnesota-based family foundation. In 2008, The McKnight Foundation had assets of approximately $1.6 billion and granted about $99 million; about 11 percent of funding went to increase family stability and link families to greater opportunity through support for affordable housing.

To outward appearances, the most clever investors are those who can seemingly turn on a dime to pounce on any golden opportunity. Behind the scenes, however, life's smartest investments are less about lucky turns, and more about carefully weighing odds using solid data.

In late April, the McKnight Foundation announced such an investment. McKnight has contributed $5 million each to growing loan funds administered by the Family Housing Fund (FHF) and Greater Minnesota Housing Fund (GMHF). McKnight's support is provided as program-related investments, through which foundations invest in activities that, unlike grants, offer a potential modest return of capital within an established time frame.

Between 2005 and 2008, Minnesota's foreclosure rates increased more than four-fold, threatening families and communities statewide. Through the loan funds, our partners will support trustworthy organizations to acquire vacant, boarded homes to repair and sell to responsible homeowners, and create new affordable housing opportunities for individuals and families. By investing in the funds, McKnight and other investors will help stabilize many communities impacted by the crisis. And by committing the funding as program-related investments, we are able to pursue this strategy without dipping into funds set aside for grantmaking in other programs.

While this may look like we're turning to pounce on a timely opportunity, our board's decision to invest was informed first and foremost by years of information-gathering.

Over the past quarter century, The McKnight Foundation has collaborated and learned with some of the country's most productive housing partners to help provide homes for more than 36,000 families. Today, FHF and GMHF are well positioned to respond to the foreclosure crisis because they have spent decades monitoring their efforts and those of others in the field -- learning what works and what doesn't, and where resources can best be targeted for maximum impact.

To ensure McKnight remains poised to take advantage of ongoing opportunities to serve, we are increasingly making a habit of tracking and analyzing reliable data over time. Specific to our efforts to provide housing for all Minnesotans, we recently collaborated with several longtime partners to develop a comprehensive evaluation framework to measure outcomes and indicators of progress.

To develop McKnight's housing evaluation framework, we commissioned HousingLink, a local information resource, to establish baseline measures. HousingLink's first related report, Minnesota Housing Baseline Measures, provides an initial set of data points for comparison. Ongoing data collection by HousingLink and partners such as Twin Cities Compass will help inform future investments of McKnight and others in the field, by laying the groundwork for us to track progress toward short- and long-term goals.

With limited resources and growing needs in many areas, the call has never been clearer for foundations and nonprofits to demonstrate our progress. In McKnight's ongoing search for useful data to do this, Twin Cities Compass will grow as a pivotal partner. Directly related to the housing field, Twin Cities Compass research has already compiled relevant indicators about cost-burdened households, the homeownership gap and homelessness.

"Luck" is sometimes described as the intersection of opportunity and preparation, and good preparation is almost always borne of information. Twin Cities Compass provides an invaluable resource for public and private investors looking for the smartest, soundest opportunities to maximize return on contributions. The initiative offers a means through which agencies can design their own good fortune through data-driven strategies tied to housing, the workforce, child development, education, public safety, transportation and other areas.

Data matters, as does the integrity of the methods used to collect it. McKnight and others are best positioned to seize on powerful opportunities like FHF and GMHF's loan funds when we have solid information on our side. Whether we are considering investments in programs, organizations, or entire communities, we are better able to assess risks vis a vis potential rewards when decisions are backed by hard data gained through trusted colleagues and partners, including Twin Cities Compass.