It’s clear to most people that, despite an overwhelming shortage of affordable housing in the U.S., not enough is being done on a systemic level to close the gap. As this blog has previously discussed, there are ample reasons to invest in affordable housing, but large-scale investment is still very much the exception than the rule.

That said, many large corporations are keen to make large announcements about dedicating funding for affordable housing initiatives. Take Amazon, for example. In March, the e-commerce giant pledged to invest $124.4 million to build affordable housing in the Puget Sound region and near its HQ2 development in Arlington, Va. Then in mid-April, health insurance provider Humana announced a $25 million investment to improve affordability, boasting of impacts “in the states of Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Ohio, Oklahoma, South Carolina, Virginia, and Wisconsin.”

Will Corporate Funded Affordable Housing Have an Impact?

Now, on its surface, more investment in affordable housing is, of course, a good thing. But will it actually have a measurable impact?

Let’s take a magnifying glass to Amazon’s latest commitment. The $124.4 million investment will create 1,060 affordable homes, the company says. Broken down, that’s a little under $120,000 per unit. Considering the fund will be deployed in two of the most expensive multifamily markets in the country, this amount doesn’t seem to be able to do what it promises, on the surface.

To its credit, Amazon has committed far more than this most recent announcement, with a total of approximately $2 billion earmarked to affordability issues. The Amazon Housing Equity Fund’s 2022 impact report, released in March, gives a clear view of the fund’s priority. While all $1 billion of the announcements so far have indeed focused on what would traditionally be considered some form of affordable housing — namely those families earning 80% or less than area median income — the investments are heavily skewed toward the upper cohort in this bracket. Again, this investment is a net good, but it does little to nothing to provide for those at the very bottom of the totem pole: those families earning 30% or less than AMI. To date, 0.3% of Amazon’s fund focuses on this group. And yet, this group is one of the most in need, with a reported shortage of 6.8 million units across the country last year, as the National Low Income Housing Coalition reported in 2021.

Should Corporations Do More in the Affordable housing Sector?

The $2 billion investment sounds like a lot — and it is — but many argue the company has a responsibility to do more. With profits nearly doubling this past holiday season compared to 2020, and a reputation for paying far less than its fair share in taxes, $2 billion is barely a drop in the bucket for one of the world’s largest and most profitable corporations. A Quartz article from late March dug into an interesting aside, as Mackenzie Scott, Jeff Bezos’ ex-wife, donated $436 million to Habitat for Humanity to finance low-income housing. That’s about one-fourth Amazon’s commitment, despite Scott possessing a 4% stake in the company.

Of course, this only draws Humana’s $25 million investment across 11 states into sharper relief. Part of a larger, $50 million commitment, one does wonder what impact such a fund could possibly have across such a large area. Consider a 2020 report put out by the Terner Center for Housing Innovation at UC Berkeley. The article states that affordable housing construction costs came to about $425,000 per unit in California in 2016 — and that’s before the massive spike in construction costs hit. Now, while California is one of the most expensive states for multifamily development, even assuming an average cost of half that figure, $50 million on its own pencils out to about 235 units — across 11 states.

The Bottom Line

While it’s clear these affordable housing initiatives will help some people — even if it’s just a few thousand out of millions in need — it’s just as clear that more could and should be done to multiply impacts. And, in fairness, it’s easy to point to companies like these who are offering token commitments which provide significantly greater PR returns. Apple, Google, Microsoft, Bank of America, and many, many others, too, have jumped into the fray, with commitments as high as $500 million to $2.5 billion.

These numbers sound large, but the true way to measure if a company is being socially responsible is in results, not contributions. As many large employers play a significant role in driving up property values and renter demand near their offices, this has a sizable impact on local communities, often effectively forcing residents to search for cheaper places much, much further afield — even if they still need to commute back to their overpriced neighborhoods to work each day.