Positive Social Purpose Lending Program Celebrates 20 Years of Financial and Social Returns

The General Board of Pension and Health Benefits (General Board) launched its Positive Social Purpose (PSP) Lending Program in 1990 to support affordable housing. Since then, the General Board has financed approximately $1.5 billion in projects throughout the U.S. and in developing nations around the world. During the past several years, the General Board has expanded the scope of the PSP Lending program to include the financing of health care facilities, homeless and transitional housing, community centers, charter schools and microfinance institutions. Our current portfolio includes approximately $800 million in positive social purpose loans.

Goals of the PSP Lending Program

The PSP Lending Program was created to improve the lives of low- and moderate-income individuals while simultaneously achieving competitive, risk-adjusted rates of return. The United Methodist Church has been a proponent of—and a leader in—affordable housing for many years. The Social Principles clearly state that equal access to housing is a basic right and that one of the responsibilities of governments is to guarantee the rights to adequate food, clothing, shelter, education and health care. (¶162 and 164, The Book of Discipline 2008).

Adequate housing remains a critical need, out of reach for many people. The percentage of U.S. households spending more than half of their monthly income for housing (including utilities) increased from 14% in 2005 to 15% in 2008, according to the Center for Housing Policy. Of the 15% with severe housing cost burdens, roughly half, or about 8.5 million, were renters.

Affordable Housing Successes

In 2009, the General Board funded over $75 million in positive social purpose loans, which helped create or renovate approximately 2,200 housing units affordable to renters earning no more than 60% of area median family income. Since 1990, the General Board has helped approximately 200,000 low- and moderate-income individuals obtain affordable housing in their communities.

In addition to assisting low- and moderate-income people, the PSP Lending Program also provides economic benefits to communities through job creation and additional tax revenues generated by the funded programs. The National Association of Homebuilders estimates that about 1.2 jobs are created and approximately $33,500 in local, state and federal tax revenue is generated with the creation of each rental housing unit. The General Board estimates that the PSP Lending Program has helped create more than 41,000 jobs and generate more than $1 billion in tax revenue in the last 20 years.

Charter School Successes

A few years ago, the PSP Lending Program began financing the construction and renovation of charter schools. These are public schools with operating budgets financed by public funds. However, they rely heavily on private financing for building and other capital costs, and they generally operate independently of the local school board. School management is responsible for hiring teachers, formulating curricula and managing budgets, while meeting state educational standards. The General Board’s 2009 loan purchases helped provide educational opportunities for almost 2,000 students. In the past three years, the General Board has invested approximately $54 million in charter schools. Click here to read an article about one of these charter schools.

The PSP Lending Program is succeeding in achieving social and financial returns—significantly improving the lives of underprivileged people while earning competitive, risk-adjusted rates of return.