When the Albuquerque Integration Initiative team approached Living Cities for capital from the Blended Catalyst Fund to fund their InnovateABQ project, a mixed-use facility to serve as an innovation epicenter in the city, we saw a powerful example of how capital can be used to incite behavior change.

After gaining a holistic understanding of the project and the goals of the Albuquerque team, we provided a few key recommendations:

• We worked with the Albuquerque team to continue to take a detailed look at the financials behind the project and answer specific questions when doing so: Who were all of the potential financiers? What forms of capital matched the project dynamics? How would they repay any borrowed money? How long would it take to repay? What financing needs existed beyond the capacity of the cash flows to support repayment (i.e. grant dollars)?
• We encouraged the team to redouble its efforts in exploring Community Development Financial Institution (CDFI) funding, the New Market Tax Credit Program, and Community Reinvestment Act support in relation to their project given the financial projections.
• We urged them to explore potential funding relationships through Living Cities and our networks and provided the appropriate connections and introductions.

Through this feedback, the team expanded its comprehensive understanding of the financial ecosystem in which it was working – both its strengths and its needs. Notably, we reaffirmed that the presence of Community Development Financial Institutions (CDFIs) as financiers in the state was on the decline and that there were few CDFIs with the capacity to support a project of the scale needed.

Having honed in on these gaps, the team began re-engaging local, regional, and national financiers and connecting with new ones based on Living Cities’ recommendations and referrals. Recently, the team met with four different CDFIs that cover New Mexico. Each of these CDFIs left with a desire to continue conversations about future investment opportunities and the Albuquerque team now has a clearer understanding of the types of projects each of these organizations typically undertakes. Additionally, they have begun discussions with two national CDFIs interested in investing in the InnovateABQ project and in leveraging the NMTC program to do so.

These developments gave rise to an improved funding ecosystem with local financiers interested in increasing local investment and new national financial institutions interested in expanding their presence in the state. We foresee this leading to greater support for both existing and new entrepreneurs looking to access capital, while also catalyzing a cycle of increased engagement between the Albuquerque team and capital providers – banks, CDFIs, NMTC investors, etc. – going forward.

Just as the wolf acted as the catalyst in the trophic cascade that occurred in Yellowstone, capital (and its required conditions) was the catalyst in this exchange. Recall that the key influence of the wolf was not a massive purge of elk, but rather the new pressures that caused a change in behavior due solely to its reintroduction. We aim to use capital to incite behavior change among stakeholders and in institutions that have perpetuated a broken system. Using the power of our capital to encourage those seeking it to think and act in new ways is an essential step toward righting systems and closing disparities.

We see tremendous opportunity for banks, foundations, investment funds, and other financial institutions to be enablers of social change rather than inhibitors. Through the use of capital as a forcing mechanism for the systemic adoption of the new urban practice, which places the ideas of collective action, capital innovation, and public sector innovation at its core, we can redress the economic disparities that are stifling the progress of our country.

Capital is the wolf of social change – an essential tool that can require the norms needed to catalyze the creation of robust, equitable ecosystems where all people in US cities are economically secure and building wealth.