National Association of Local Housing Finance Agencies Conference

April 19, 2007
Remarks by Katie Hong, interim director, Pacific Northwest initiative

Thank you, Adrienne, for such a kind and generous introduction. I’m glad to be here this morning. It’s a true privilege to be here among such esteemed colleagues and friends.

I’d like to echo the Mayor’s remarks and welcome you all to Seattle. The Mayor is fond of reminding us all of how Seattle is a city of true innovation. It’s home to groundbreaking companies like Microsoft, Amazon, Boeing and Costco. It’s a city that convinced the world that it was necessary to spend $3/cup for good coffee. So, it seems fitting that your conference, focused on the theme of Creating Livable Communities: Smart, Sustainable and Innovative, is gathering in a city that so values creativity and innovation.

I’m particularly honored to be here representing the Bill & Melinda Gates Foundation. It’s been an exciting time at the foundation and in the world of philanthropy. Warren Buffet’s remarkable gift to us has effectively doubled our giving, inspiring us not only to work harder but also inspiring others to give selflessly. Shortly after Mr. Buffet’s announcement, we received phone calls and mail from ordinary citizens who asked how they could give more to us and other foundations and work with us to help solve the world’s seemingly intractable problems. It was a humbling demonstration of the power of optimism. The foundation’s goal is to reduce inequity in the United States and around the world. Governments, corporations, and common people have responded with “Let us work with you.”

In my brief time with you this morning, I would like to share with you what we as a foundation do and how we work. But I would like to start by emphasizing that everything we do is rooted in a profound and pragmatic optimism. It’s an optimism that seeks to see our society’s problems clearly in working towards solutions. This isn’t always easy to do—as the issue areas we care about are often difficult to address. For example, as vibrant as our economy is in Seattle, we struggle along with other communities with stark socio-economic disparities that threaten the lives and wellbeing of hundreds of thousands of individuals and families. Consider:

1. Every night, thousands of families are homeless in Washington state;
   
   
2. A third of our 9th grade high school students, many of them poor and students of color, fail to graduate;
   
   
3. Half of our state’s kindergarten children fail to enter school ready to learn—basic abilities, like being able to recognize letters, or shapes, or listen to instructions—are beyond their grasp.

As my boss Bill Gates Sr. is fond of saying: “Things simply aren’t as they ought to be.”

A passionate and pragmatic optimism cannot and will not ignore the size and extent of a problem as seemingly insurmountable as national and global poverty. Such optimism does, however, demand that if we can identify these problems, if we may have even contributed to these problems, then we can also solve these problems.

All of you who are in the business of creating affordable housing, and I would argue, creating more livable communities, are no strangers to being optimists. We live in a country that is increasingly becoming more segregated by socio-economic class. Very few neighborhoods are places where people of different income and wealth can live side by side. Instead, we see more gated communities—poverty is becoming more concentrated in key geographic areas. Yet in the face of this, you are optimistic about creating a different future. I remember when I first became director of Seattle’s Office of Housing and I got to walk through a neighborhood (not too far from here) to take a look at some of our affordable housing investments. I saw affordable housing developments that were built next door to market rate condominiums. When I walk through our Seattle Housing Authority’s HOPE VI developments like New Holly or High Point, I become more hopeful that we won’t always be separated by class—that we can still have strong communities where relationships and friendships can be formed and developed, despite our differences. It’s a powerful reminder to me that optimism is a pre-requisite to change. In fact, without it—we fail to act and make changes that are within our grasp. Of course, the “we” to which I’m referring is the collective “we,” which is larger and more powerful than any foundation can ever be.

Our CEO, Patty Stonesifer, is fond of an African saying: “If you want to go fast, go alone. If you want to go farther, go together.” Since Warren Buffett’s generous gift, many have asked “with your wealth, doesn’t it mean you can go fast and alone?” The answer is no. Because in fact, our foundation’s endowment and that of any foundation pales in comparison to the resources of government and business. For example, the cost of running the schools in one large state—California—for one year is greater than all the assets of the Gates Foundation. If we spent every penny we have, we’d still be short funding in 49 states. And next year, California would be back where it started. In fact, even with Warren Buffett’s recent contribution, the Gates Foundation only accounts for about 1 percent of all American charitable giving.

Believe it or not, that’s cause for celebration and opportunity. What it means is that for any meaningful change to take place, we must all work together. Optimism cannot be nurtured and solutions cannot be sustained unless we employ our individual and collective strengths. That’s why the Gates Foundation believes so firmly in partnerships. When we work in harmony with the public sector and the private market, we take optimism and put it into practice.

So, what is the Gates Foundation’s approach to philanthropy?

Bill and Melinda Gates have set two guiding principles for us:

1. We believe all lives have equal value;
   
   
2. To whom much is given, much is expected.

These two principles lead us to one overarching goal: reduce inequity here in the United States and around the world. At first blush these principles might seem like lofty abstractions, but treated literally—as we do—they challenge us to tackle some of the world’s most vexing dilemmas. Science, technology, and knowledge have changed the playing field in recent decades. Opportunities for vast improvements to people’s lives exist like in no other time in history. Our charge is to harness this rapid pace of innovation and ensure it benefits the poor and most disadvantaged among us.

And so we have chosen to focus our giving within three strategic categories:

1. Global Development – where we focus on reducing poverty and hunger and increasing opportunity in the developing world
   
   
2. Global Health – where we focus on improving and saving lives among the world’s poorest citizens.
   
   
3. United States – where we have a threefold mandate:

a. Improving our nation’s school system to ensure that all students graduate from high school ready for college, work, and citizenship;

b. Improving the lives of at-risk families in the Northwest;

c. Increasing access to technology through our nation’s libraries.

And of course any good optimist is a stickler for results. At the Gates Foundation, we don’t just give money and hope for the best. We hold ourselves and our grantees accountable and demand progress towards measurable results. We use internal reviews and outside evaluators to measure results and make changes to our strategies based on those findings.

And although we’re a young foundation, we’re encouraged by early results. Working with hundreds of partners from around the world, we have:

• Helped vaccinate more than one million people in the developing world
  
  
• Added the Internet to more than 11,000 libraries
  
  
• Supported the creation of more than 1,600 high-quality high schools in 40 states and the District of Columbia.

Let me give you an example of how we are presently tackling one of the most difficult societal issues right here in our own community: family homelessness. On any given night in Washington state, more than 9,000 families are homeless. And according to recent estimates, more than 250,000 children in Washington now live below the poverty line. The number of children ages five and younger living in poverty has increased sharply in the past few years. About seven years ago, Melinda Gates challenged a small group at our foundation to think bigger and more strategically about addressing the needs of low-income families in transition in the greater Seattle area.

From that question, experts were gathered, concept papers were written, and eventually a strategy called the Sound Families Initiative began: create 1,500 new housing units linked with support services for homeless families, or families in danger of becoming homeless, in the three-county area in and around Seattle. The Gates Foundation pledged $40 million to form a one-of-a-kind public-private partnership to triple the capacity of service-enriched housing in the Puget Sound region.

The program helps homeless families in numerous ways beyond putting a roof over their heads. Support services such as job training, domestic violence counseling, and substance abuse recovery programs are linked on-site with safe and stable housing to keep families together while creating a tangible path toward self-sufficiency.

We’re particularly proud of this investment, and I’d like to share three brief reasons why.

First, as I’ve said from the beginning, we’re stronger when we partner with others. Our best days at the foundation are when we see partners from the private and public sectors join our friends from the world of academia, science, and public policy to forge a new way of solving the world’s toughest problems. The Sound Families program is a collaboration between the Gates Foundation, three counties, local cities, plus the state and federal government through the regional housing authorities. Together we set policy for the partnership, make funding decisions, and provide guidance to our outside evaluators.

And as each of you here know, tackling homelessness at the local level is some of the most challenging work around. We’re so fortunate here in Seattle to count the City of Seattle’s Office of Housing as one of our lead partners in our Sound Families program, as well as our regional housing authorities. Together these public sector partners have provided us with a tremendous amount of innovation and creativity as we’ve developed this initiative, and we’re deeply grateful for that.

Of course, even the best partnerships are destined to fail if there isn’t a strong commitment to measure our work. And so my second observation is that robust evaluations are essential to effective grantmaking. It probably doesn’t come as a surprise to you that our co-chairs Bill and Melinda Gates want to see results, and we approach every program with a dedicated commitment to carefully measure the outcomes of our investments.

And here again, Sound Families has proven to be a positive example. Our partners at the University of Washington School of Social Work are engaged in one of the most comprehensive programs to collect information on how homeless families in Washington state benefit from housing with services—researchers are staying in touch with families for as long as three years after exiting the program. This evaluation is helping public and private funders as well as housing and service providers in the quest to end homelessness.

Today more than 1,100 Sound Families units have been funded. Over 1,000 adults and more than 1,500 children have been served in Sound Families transitional housing units.

And while our final outcome report won’t be released until the end of the year, to date:

• 86 percent of families report living in permanent housing a year after exiting the Sound Families program;
  
  
• 89 percent continued to reside in permanent housing six months after leaving the program;
  
  
• Three times the number of parents report being employed full time a year after exit;
  
  
• The percent of families relying on welfare declined from 58 percent to 29 percent one year after exit.

These are very promising outcomes. But what really encourages me—and what keeps me an optimist—are the stories behind those numbers. I first met Kathy shortly after I started working at the foundation. She’d once been a suburban “soccer mom,” who worried most about how to manage the household and the busy schedules of her two children. Her world fell apart when her eight-year old daughter finally told her that Kathy’s husband had been sneaking into her room at night and sexually abusing her.

Kathy knew she had to take her kids out of there immediately. But she also knew that she had no job, no income, and no home. She was terrified. At first, her family stayed with friends but they couldn’t stay at these places long term. They wound up in an emergency shelter in a YWCA program in Snohomish County working in partnership with the Housing Authority of Snohomish County. Her case manager at the shelter helped her find her way to a Sound Families funded housing unit.

Once stably housed, she got the needed counseling and assistance for her and her children to deal with the trauma. Her children enrolled in school. Kathy learned job training skills and is now working in an office, full time. She is feeling hopeful again and can sleep through the night now, knowing that her kids are safe and in stable housing. But unfortunately, there are thousands of families in WA state, who like Kathy, two years ago, don’t have a place to call home each night.

And so this leads me to my third observation: sustainability is why we’re here. We’re interested in results that will have a transformative effect within our society.

The great news is that we’ve already seen some of this momentum in action – three years ago a few of our state’s legislators and leaders gave an initial Sound Families evaluation a careful read and made the courageous decision to establish a new financial resource for organizations that provide social services to homeless families in Washington. Soon after, private philanthropy—foundations and businesses alike—stepped up and contributed as well. Today, the Washington Families Fund has received more than $9 million in combined public and private sector contributions—again a one-of-a-kind resource for service providers to tap into a steady, reliable funding source to pay for important services for homeless families. This is a strong step toward sustainability.

Hearing all of this, you might conclude that we’ve cracked the code on homelessness and we’re now on to the next thing. Not quite. The fact is that our evaluation has also revealed some troubling trends: incomes for vulnerable families are rising, but not nearly enough to keep pace with our local housing market. And upwards of 20 percent of families served in transitional supportive housing are asked to leave early or are evicted, most of whom likely cycle back into homelessness. These are some of the hardest to serve families with problems like mental illness and chronic substance abuse hampering efforts at making lasting positive change. We still have much learn.

As our Sound Families funding concludes this year, we are looking ahead and asking ourselves how we can build on our existing work and how we can work with partners to significantly reduce or end family homelessness. What’s guiding our planning work now is our foundation’s shared belief that there’s never been a more important window of opportunity to significantly decrease family homelessness in Washington state. We hope what we learn here will inspire other communities to end homelessness through innovative approaches as well.

At the Bill & Melinda Gates Foundation, we’re particularly proud of the fact that we’re not shy about taking on the hardest issues with the longest odds. But we only approach those risks if we’re serious about collaborating with others to promote lasting, catalytic results. Our best days at the foundation are when we can form partnerships that allow our work to begin in earnest.

And today the bets we’re making have never been more important. Consider:

• Two billion households around the world live on less than $2 a day.
  
  
• Three in ten US high school students won’t graduate this year—that means every 26 seconds a high school student drops out of school.

The problems we see don’t discourage us from acting, but rather inspire us to do even more. Each of you here today is poised to play an important role in all of this in your own communities. We’re grateful that the National Association of Local Housing Finance Agencies is putting its expertise to work to open up new avenues of affordable housing throughout our country, creating strong, sustainable and livable communities, and just as important, advocating for change on the national level. Indeed, now is the time for optimism and our hope is that optimism becomes a bit more contagious.

Less than 100 years ago, our country was divided along racial lines and we had laws in place that prevented immigration for families who looked like mine. Families like mine were prevented from owning property. Progress happened through the dedication of smart optimists, who tackled these problems from the ground up, created new laws and systems that ensured that families like mine could raise their children to be optimists for the next generation.

And so like the great optimists who have gone before us, we know that creating lasting, positive change is not only possible, it’s a moral imperative. As I conclude my remarks, I would like to leave you with this final thought: our collective challenge is to join together, play to our strengths, and reject outright the very notion of unsolvable problems. Regardless of whether we work in the public or private sector, we each have a role...and we can only go farther if we go together.

Thank you and I wish you a successful conference.