Building Equitable Investment Ecosystems
An Updated Framework
Over the past decade, community development practitioners have used the Capital Absorption Framework—developed at Living Cities by Robin Hacke (co-founder of CCI) and partners to help underinvested places attract and deploy investment. Despite the framework's continued relevance, disinvestment in Black and Latino-majority neighborhoods remains a significant challenge. National policy efforts have often fallen short, and promising pipelines remain fragmented as community-led projects continue to face systemic barriers to accessing capital.
Compounding the problem is the presence of what researchers now call "CDFI deserts"—regions with high economic distress and minimal historical lending. These deserts exist in both rural and urban contexts, often overlapping with federal economic investments such as the EDA Tech Hub initiative. These conditions create a dangerous mismatch: capital flows in, but communities lack the infrastructure to absorb and redistribute it effectively.
In response, the framework now calls for a fourth pillar: Ecosystem Stewardship Capacity—the local leadership, institutional infrastructure, and connective tissue required to translate capital flows into sustainable impact.
Why Do Capital Flows Remain Stuck?
The original framework addressed a fundamental question: Why do some communities struggle to absorb available development capital? Their research revealed that isolated investments are insufficient—meaningful change requires three elements:
Shared Priorities – A common agenda for investment
Investment Pipeline – A coordinated portfolio of investable projects
Enabling Environment – Policies, partnerships, and norms supporting action
This approach requires public, private, and nonprofit actors to unite around common goals (such as equitable housing or business growth), co-develop projects that advance these goals, and supplement supportive policies with data, networks, relationships, and skills needed to turn planning into tangible improvement. Applications of this model—including Living Cities' Integration Initiative in Detroit and Newark—revealed that while grant funds could be readily utilized, deploying investment capital proved challenging without fully realized supportive conditions. Specifically, the best tools to evaluate the environment's strengths and gaps and improve stakeholder alignment fail if coordination capacity does not exist. The ability to adapt, align, and lead cross-sector investment efforts is often the missing link—and without it, even well-funded plans can stall.
I propose a fourth pillar to the framework:
Ecosystem Stewardship Capacity – The cross-sector leadership, decision-making infrastructure, and adaptive management mechanisms that ensure alignment, continuity, and long-term equity.
This fourth element is especially critical in CDFI deserts where limited financial intermediaries exist. Without targeted support to connect public intent with private execution, promising federal and philanthropic dollars can stall or bypass the communities they aim to serve.
Evolving the Model in Practice
Tech Hub cities along the I-90 corridor exemplify a perfect storm: transformative economic potential colliding with fragile capital infrastructure and limited local absorption capacity. A CDFI Desert is defined as any place in the U.S. where at least 50% of the census tracts are economically distressed, and CDFI lending since 2005 is less than 80% of the per capita national average. Unsurprisingly, as we discussed in the Risk Reimagined series, these areas often coincide with decades of disinvestment and structural inequities. A major concern is that even with targeted investment, creating lasting positive effects for all residents and sustaining growth in small business ecosystems remains challenging. A prime example of this capital ecosystem challenge and new opportunity is the NY SMART I-Corridor Tech Hub in Buffalo, Rochester, and Syracuse, where integrating new opportunities equitably and sustainably will be crucial for the region’s future.
In the coming months, my colleagues will apply their expertise in social and financial ecosystem stewardship with stakeholders representing public and private expertise, blending deep local and national experience in infrastructure, policy, ground-level implementation, and community voice. As my team supports these efforts, we'll apply lessons from across our national network—surfacing insights, refining tools, and sharing strategies for building the institutional backbone communities need to fully take advantage of the current opportunity. In the coming months, I'll share what we learn, including new resources and actionable takeaways to help you assess and strengthen your own ecosystem's readiness for investment.