Elizabeth Funk Is Determined to Provide a Dignified Solution to the Homeless Crisis
By Stacey Lindsay
Elizabeth Funk has been determined to prove that purpose and profit can coexist since she took a trip to India in the early 2000s. Funk traveled there to see microfinance in action. When she met with the borrowers, their pain was harrowing. Many were mothers living in extreme poverty, often having to choose which of their children they could afford to feed that night. “I came home determined,” Funk says of her drive to scale those microfinance endeavors. “I just had this vision that we should do this for-profit.”
At the time, proof of concept for microfinance and impact investing was hard to come by. So Funk relied on her gumption and the support of friends and family to help her raise funds. There was a lot of “scratching heads” and education, she admits. But she persevered, and in 2004 she founded Dignity Fund, one of the first for-profit funds that mobilizes investment dollars for microfinance.
This all unspooled into a successful impact career for Funk, one that spans across multiple industries, sectors, and continents. She is the founder and CEO of multi-hyphenate fund Dignity Capital, which propels impact investment funds to help solve issues that plague humanity, including poverty and hunger. She is also the Senior General Partner at Dev Equity which offers venture-style investment funding to social enterprises in Latin America.
Most recently, Funk teamed up with numerous impact-focused individuals to create a “homelessness task force” called DignityMoves, which focuses on providing interim supportive housing as a solution to the severe and growing issue of individuals living unsheltered along the West Coast. Using modular prefabricated housing, DignityMoves creates communities that offer every person a place of their own—with a locking door—to call home while they build the confidence to create a life off the streets.
Recently over Zoom, Funk offered insight into the economic, emotional, and social benefit of focusing on more interim housing rather than shelters, her pioneering impact investing days, and how the vast world of merging profits with purpose has wildly evolved.
A Conversation with Elizabeth Funk
It’s been more than 15 years since you started Dignity Fund, which was during a time when the concept of investing for both profit and purpose was still peripheral. How have you seen the microfinance and impact investing landscape evolve?
The big beauty of it is that it's no longer proof of concept. As of several years ago, the majority of the money flowing into the microfinance industry is for profit. It’s been a total sea change. A couple of the big microfinance organizations went public, and it forced the conversation to come to a head, which is that many investors got really rich. So the ethics question really had to come front and center, which is: Is it okay that people make money as a by-product of being able to do more good and do it more robustly? And is it evil that a by-product of that process is that people make money? I feel firmly that if people can get rich solving the world's problems, they're much more likely to get solved. As long as you're not out to get that return at the expense of doing right by the clients. The fact that I returned their money with a return is something that I feel really good about—because it means more money flows into the industry.
The big thing that has changed in the last 15 years is that this is no longer a marginal on-the-side concept. It is now so mainstream and quite frankly, you're seeing both money and also social entrepreneurs running into the space. We're also starting to become smarter about the fact that it isn't binary. It's not just maximize returns or maximize impact. Rather, there is lots of room in the middle for different types of investments and different types of investors.
Technology and Silicon Valley is baked into your history, as you were an early employee at Microsoft and Yahoo. How do you see technology today playing a role in microfinance and impact investing?
Technology has played a massive role. In microfinance specifically, being able to do microfinance with digital payments means that your cost structure can go way down. That is because the vast cost structure in the microfinance industry entailed paying a loan officer to get on a bicycle and bike up to a village to collect $3 in interest. If you could do that digitally, that is a big driver.
Another way technology has made an impact is through the democratization of impact investing. It used to be something that was just the super wealthy who were accredited investors and could invest in funds that had access to these deals. I feel like there were a lot of ideas that needed to be funded and a lot of money wanting to flow into it and there was a pinch point in the middle. Technology has been able to open that up so that more investors, even unaccredited investors, can get access to impactful investments. It also helps make it easier to access capital if you're a social entrepreneur.
Let’s dig into DignityMoves. You’ve gathered with CEOs, impact investors, and other business leaders to look at the homeless situation and what can provide effective help in the right direction. Take us through the methodology and inception.
As you mentioned, it was a group of business leaders who are all CEOs or presidents of their companies. We were all members of the Young Presidents Organization. And we came together as a task force to say, “What can we do to address this? Because it is really unacceptable in our society.” As we looked at the situation, we started with some analysis and we found that the vast majority of money and attention was being spent on building permanent housing. And even as a policy, the dollars the governments had put towards homelessness was all dedicated to permanent housing. It was heresy to spend money on shelter. This is a parallel back to my days in microfinance. When somebody says “no, you can't do it that way” a light goes on for me and I think, let's challenge that assumption!
It isn’t a waste of money to invest in what we're calling interim housing. We call it interim housing rather than shelter. To me, shelter means a big warehouse with a bunch of bunk beds. Those were not safe before, and they're definitely not safe now. So we needed to redefine shelter where everyone has their own room. And as you look at it, we find that when you get people into interim housing, once they're stabilized, meaning they're no longer in survival mode and they can actually start to self-actualize and think about what's next in their life, there are lots of different exits that happen. About a third of them get reunited with family and friends and don't need an apartment of their own. Maybe about a third of them can have the wherewithal to think about moving away to somewhere less expensive and finding a job there. And really only about a third of them need permanent housing in that community. So for a government to invest in that interim stage is a really fiscally responsible investment.
We reached that conclusion and decided that interim supportive housing was what we were going to focus on. And we worked with a building materials manufacturer to develop units where everybody gets their own room. You do it for $10,000 as opposed to over $500,000 a door, which is what it's costing to build permanent housing. Then the next constraint is land. And so we designed these to be portable, so we can put them on land that may only be available for a few years, perhaps land where developers have a project tied up in entitlements or that has been postponed. We should be taking advantage of that vacant land in the meantime. So the combination of inexpensive building materials with a dignified place where people are willing to come, we felt like we were on to something.
There is so much that is misunderstood around homelessness and people in transition. One aspect of your research pinpoints that there is chronic homelessness and then more transitional homelessness. Also, the majority of people living on the streets in downtown Los Angeles, for instance, have a record of employment.
A lot of them do have jobs, just not enough to pay rent in these expensive communities. Another thing that drove my urgency on this is that when the eviction moratoriums expire, you're going to have working poor who do still have jobs but just not enough to pay that back rent that they own. These will be first-time homeless, people who are not hardened to the street. There's going to be a huge number of those folks.
What we also find is the longer you're on the street, there is trauma associated with that—plus the likelihood of rape or on one cold night someone offers you drugs and you’re hooked. It doesn’t take much for someone already fragile to develop chronic problems that are much harder to solve. If we intercept that early and get people into stable housing immediately, it's an investment that’s really worth making for the long haul. Unfortunately the way our system works right now is that the waiting list for permanent housing, and even for shelter, prioritizes people who are the most severe cases. And by definition that means they've got to be on the streets for at least six months. If you're less than six months you have no shot to be qualified for permanent housing.Six months on the street—people may never recover from that.
Is there an educational component to DignityMoves wherein the public learns more about the issue of homelessness?
There is. To some extent, there is going to be a big surge with the new homelessness, and unfortunately that itself will provide a lot of education about homelessness. Because it's going to be your kindergarten teacher. It's going to be the person who drops off your packages. You’re going to know them. So I think there will be an awareness because these are not all “crazy” drug-addicts. These are hardworking, well-meaning people who just fell on bad luck. We need to lose the stereotype around these people.
What does the word “dignity” mean to you in terms of how it is such an important ingredient in the work that you're doing?
I did call my first fund the Dignity Fund because I felt that for people having the dignity to start their own business and build their own way out of poverty, they didn't want handouts. They're not looking for donations, they're looking for that chance so they can build their own way out. That pride that comes from that entrepreneurial spirit and doing it yourself-- dignity is an incredibly powerful motivator for people.
When I was thinking about the homelessness problem, carrying that word forward to this new endeavor makes a lot of sense When we treat people as humans, and you don't shoo them away from park benches and tell them they're not welcome anywhere, but to say, “Look you fell on hard times, so let's help you help yourself. Let's get you somewhere safe so you can get out of survival mode.” The dignity that comes with that is powerful. When you believe in someone, and they feel someone believes in them and that's going to be the encouragement that they need to believe in themselves, that is powerful.
I am told over and over again that the most important thing that the services agencies give is that their case manager believes in them. And that's the thing that is the difference. And of course the dignity of having your own room and your own space. It means so much to be able to stand up all straight when you pull your jeans on. It’s the little things that make you feel human. It also creates a sense of obligation to try and improve, when you invest in someone and you give them a safe place to be.
Will DignityMoves stay focused on the West Coast or will it expand?
It will be growing. So far I've been the only full-time person on this so there's a limit to what we can accomplish. We have projects underway in San Francisco, Santa Barbara, and we’re having great conversations in Los Angeles and Oakland for the first time. Now cities are hearing about us and calling us to come talk to us about doing this in their city. We do anticipate expanding, certainly across the West Coast and ultimately nationally. I say the West Coast because on the East Coast governments have a very different strategy because of the weather. They have invested heavily in shelter. Granted, those are big old-fashioned shelters that I don't think are dignified, but they don't have the unsheltered crisis that we have on the West Coast.
How can people support your work?
As a diehard impact investor, I am working on an impact investment model. This will entail our investors investing in the units and then us leasing them back to the cities, counties, or nonprofits. So eventually, my answer would be to be willing to invest in these sites.
At the moment, we would love philanthropic support. Also, we would love to hear from you if your city or county is interested in doing a project like this. And we would love to hear from you. We bring a lot to the table, not only help with fundraising, but we also help find land that's suitable, hire the general contractor, and pick the right service provider, sort of like a project manager.
And we’re always looking for land to borrow. If developers have land that is tied up and is in or near any major city that's got a homelessness problem, and close to public transportation, we would love to borrow it for a few years.
To learn more about DignityMoves visit dignitymoves.org. And to learn more about Elizabeth Funk visit dignitycapital.com.
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