Over the past several years, impact-driven multifamily housing has seen increased interest from investors—including pension funds, sovereign wealth funds, endowments, and family offices—looking to diversify their real estate strategies, meet their fiduciary responsibilities, and do good.
These investments include affordable housing and other multifamily properties that are operated sustainably from both an environmental and social perspective, which have demonstrated superior performance compared with other investment products.
For example, affordable housing has proven highly resilient through market cycles, with a recent Nuveen report stating that it yielded an average annual income of 4.8% in 2011 through 2023—compared with 2.6% for U.S. investment grade bonds, 2% for equities, and 1% for Treasury bills. The Pension Real Estate Association also reported that affordable housing investments offer competitive financial returns, often with lower volatility compared with investments in mid-market and least-affordable multifamily properties. Steady income streams and resilience during economic downturns have contributed to affordable housing’s superior long-term performance for investors, despite slower rent growth. In fact, from the first quarter of 2008 through the first quarter of 2024, the compound annual growth rate in net operating income per unit for the most-affordable multifamily properties was 5.2%, versus only 0.67% for conventional Class A market-rate assets.
Beyond affordability, impact-driven investments in sustainable initiatives like those that conserve energy and water, such as utility upgrades and efficiency benchmarking, or those that support the financial health and stability of renters, like wealth and credit-building platforms, will drive stronger long-term financial returns as well. Whether an investor is motivated by purpose, profit, or both, they are all based on one fundamental truth: A multifamily property’s ability to generate stable revenue depends on a resident base that can afford to pay rent on time, and on a property owner’s ability to keep operating expenses down. When renters do well and apartments operate efficiently, investors make money. The fundamental principle of a good multifamily impact investment also just happens to be the underlying principle of a good real estate investment.
That said, because impact has historically lacked a shared context and common language, it can still be difficult for owners, operators, and institutional investors to consistently track, evaluate, and communicate how their impact-driven strategies improve lives, strengthen communities, and deliver financial returns. If we are to be successful in expanding our investor base and attracting more capital to make rental housing more affordable to more working-class families across the United States, we must maintain a credible framework of common-sense industry standards and reporting guidelines for multifamily impact investing.
It was for this reason that we created the Multifamily Impact Council. As a nonprofit membership organization, the MIC’s sole purpose is to make it easier for public and private capital to invest in multifamily properties that improve lives, strengthen communities, and deliver competitive, risk-adjusted returns. To support that mission, we created the Multifamily Impact Framework— the industry’s first and only common set of evidence-based impact standards and reporting guidelines designed specifically for the multifamily sector.
Since its introduction two years ago, the Multifamily Impact Framework has been downloaded by over 500 organizations across the industry that are using it to enhance their impact investment strategies. The framework is updated annually based on user feedback and academic research to ensure it remains relevant, credible, and easy to use. Importantly, it will always be made available for free to ensure equal access and broad adoption across the industry. We invite anyone to download it, use it, and ask us for help in making it work for their organization.
One early adopter, Kayne Anderson Real Estate, has incorporated the framework into its impact investment platform to set clear investment goals and track their progress. Amanda Nunnink, senior managing director of attainable housing at Kayne Anderson, told us: “The guidance provided by the Multifamily Impact Framework’s seven principles has been instrumental in helping me and my team align our efforts with a clear, measurable strategy for investing in and managing our attainable housing properties.”
Other organizations, like the Low Income Investment Fund (LIIF), have built the framework into their impact scorecards to ensure their capital is advancing community-driven outcomes in affordable housing. “By aligning with this national standard, we are strengthening the way we measure outcomes in affordable housing and ensuring our capital is advancing community-driven impact,” said Monica Magalhaes, impact capital initiatives officer at LIIF.
These are just two of many examples of property owners, investors, and service providers of all sizes who are using the framework to support their efforts to deliver real and tangible impact to their renters and long-term sustainable value to their investors. And, as the list of organizations who use the framework continues to grow, so too will our ability, as an industry, to attract more capital, create more impact, and establish impact-driven multifamily properties as a credible and distinct asset class for investors across the globe.