DEI and the End of The World.

DEI makes us better.??DEI is good for people.? DEI is good for our communities. DEI makes our organizations stronger.

If you read these four sentences and the world did not explode, then it is safe to assume that it is ok to say DEI.??

At its core, Diversity, Equity and Inclusion is a business concept that makes sense.? It helps organizations attract larger talent pools of potential job applicants.?It increases productivity, drives competition, and fosters new and innovative ideas.?And it helps business owners – especially those in the multifamily sector – build closer connections with their customers and the communities in which they operate.

And that is why DEI is a core principle of the Multifamily Impact Framework?.

WHY DOES IT MATTER?

Incorporating Diversity, Equity, and Inclusion (DEI) initiatives in multifamily properties fosters a more inclusive, harmonious, and thriving community for residents.

• Creates A Welcoming Environment: DEI initiatives help create a welcoming atmosphere where all residents, regardless of their background, feel valued and included. This promotes mutual respect, reduces conflicts, and fosters a sense of belonging among residents.?? It is part of what makes an apartment a home.
• Strengthens Social Networks: A focus on diversity and inclusion encourages interaction and collaboration among residents from different cultural, racial, and socioeconomic backgrounds. These interactions can lead to stronger social networks, which enhance community support and resilience.
• Builds Cultural Awareness: DEI initiatives often include cultural awareness programs and events that celebrate the diverse backgrounds of residents. These activities enrich the community by exposing residents to different cultures, traditions, and perspectives, fostering greater understanding and appreciation.

HOW DOES IT IMPROVE THE BOTTOM LINE?

An intentional approach to DEI enables organizations to improve the financial performance of their properties and reap the benefits of improved staff retention and an expanded talent pool of potential new hires.

• Improves Renter Trust and Satisfaction: DEI initiatives contribute to a more inclusive and welcoming community, where residents feel heard, valued and respected. This sense of belonging increases tenant satisfaction, leading to higher lease renewal rates and reduced turnover. Lower turnover means fewer costs associated with marketing vacant units, processing new leases, and preparing units for new residents.
• Drives Longer Lengths of Stay: A focus on equity and inclusion often results in longer tenancies, as residents are more likely to stay in an environment where they feel accepted and supported. This stability reduces the frequency of unit turnovers and the associated expenses, such as cleaning, repairs, and administrative costs.
• Mitigates Legal Risks: DEI initiatives help ensure compliance with fair housing laws and reduce the risk of discrimination claims. Proactively addressing equity and inclusion reduces the likelihood of costly legal disputes, fines, or penalties, which can have a significant impact on operating expenses.
• Attracts a Broader Talent Base: A focus on DEI not only benefits residents but also improves the work environment for property management staff. A diverse and inclusive workplace is more likely to attract and retain top talent, reducing recruitment and training costs.
• Reduces Employee Turnover: Lower employee turnover, driven by an inclusive work environment, leads to cost savings in recruitment, training, and lost productivity during transitions. Consistent and experienced staff contribute to smoother operations and more effective management, ultimately reducing operating expenses.

WHAT IS THE MINIMUM THRESHOLD FOR IMPACT?

Establishing a consistent industry minimum standard for DEI helps property owners set clear impact-driven goals across their portfolio and makes it easier for investors to assess affordable multifamily housing investment opportunities.

The Multifamily Impact Framework? minimum impact threshold for Diversity, Equity and Inclusion requires that property owners and investors develop impact plans and investment strategies that quantify the current levels of diversity in the workforce and take steps to increase diversity across all layers of their organization.? ?Where applicable, corporate impact plans and investment strategies should also include actions and initiatives that invest in women and minority- owned developers/entrepreneurs (MWBE).

HOW DO YOU MEASURE THE IMPACT?

To quantify and assess the impact and outcomes of their DEI strategy, the Multifamily Impact Framework? recommends that investors and property owners be able to:

1. Affirm that their organization has a DEI policy and whether it has a formal process in place to inform internal practices such as investment decisions, hiring processes, pay equity, employee development, Board engagement, and supplier diversification, and
2. Track and report on diversity levels across their organization – including the management and senior management level.???

A WORK IN PROGRESS:

The concept of being intentional in promoting a more diverse, equitable and inclusive workforce is relatively new for most organizations.? So, we are still trying to figure out the best way to move forward. That means sometimes a DEI initiative may not work out.?? This does not mean that the underlying concept is wrong.? It just means that the specific initiative did not work.? When these initiatives go sideways, it is critical that we resist the urge to go back and instead apply an objective lens that enables us to learn from our mistakes and keep moving forward.

We also need to study, emulate, and support the DEI initiatives that have achieved success.

One such example is Project Destined, a non-profit social impact organization that was founded to address the lack of diversity in the real estate industry by equipping young people, particularly from minority backgrounds, with the skills, knowledge, and networks needed to succeed in real estate careers. ???Since their inception, Project Destined has connected more than 250 commercial real estate firms with more than 8,000 students from schools across the United States.

As we continue to experiment and improve our work in this area, it is important to remember that DEI represents an opportunity to make our organizations better equipped to manage through change and uncertainty.?? After all, the more stagnant and monolithic an organization’s culture gets, the more likely it is to make mistakes – especially when it comes to large and complex problems.

There are few issues larger or more complex than addressing our urgent need for more affordable and sustainable rental homes in the United States. To be successful, we will need all of the fresh perspectives, ideas and energy that a more diverse, equitable and inclusive workforce can provide.

If you are interested in learning more about DEI and other multifamily impact investing standards, please feel free to download the Multifamily Impact Framework?.

Bob Simpson is a nationally recognized expert in affordable, green and healthy housing with more than 25 years of experience working at the highest levels of housing finance and public policy. He is the CEO and Founder of the Multifamily Impact Council, a non-profit organization focused on creating industry standards for impact investing that help increase the flow of capital to support affordable and sustainable multifamily rental housing properties in the United States.

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