UPSIDE

According to a recent call to action from the United Nations, 1.6 billion people have inadequate housing. 

In the U.S. alone, we have a shortage of 4 to 7 million housing units. In January 2024, housing starts dropped unexpectedly by more than 14%, worsening a terrible trajectory for improving supply.

There is a painful misalignment between those who produce housing and those who live in and next door to it. While capital is global, life is local.  

Among the causes of the housing shortage is a distinct lack of local support or NIMBYism (Not In My Back Yard) (Recent headlines: “NIMBYism is a Huge Affordable Housing Problem Fed official says”). NIMBYism comes not only from middle and upper class owners who worry about inconvenience and property values (“Miami Beach Votes Down Big Real Estate Projects”), but also from renters, low income households and housing advocates who worry about displacement, housing as a human right, and social justice. (“South Shore Voters to Weigh Need for Protection From Gentrification Sparked by Obama Presidential Center”). Anti-development sentiment is urban and rural, and across the political spectrum (“The Bipartisan Cry of 'Not in My Backyard'”). NIMBYism is an attempt to assert or regain power over the local experience. Coupled with a growing backlash to institutional ownership of housing (e.g., Berlin referendum to expropriate corporate ownership), today’s NIMBYism is a call for financial inclusion and civic power.

 Weather, capital, supply chain disruptions, labor efficiency, regulatory requirements and NIMBYism are just some of the risks housing developers face. Of these, NIMBYism is the least predictable and most pernicious. Developers need to leverage capital in order to construct housing but they find themselves without willing capital partners when projects have yet to get locally approved to start construction. While the capital markets are huge – over $611B in U.S. multifamily loans (2023) – entitlement-risk is a huge blocker. A recent study of $2.7B invested by pension funds in affordable multifamily found that $0 went into new development-focused efforts. 

There are over 15,000 U.S. housing developers and all are beholden to capital. Few capital providers require specific, local social impacts and only a tiny percentage can claim to know what is locally desired. Locally, governments can exert influence through political, legal and budgeting processes but none directly addresses the NIMBY’s call. Conventional approaches create long and risky timelines, cede power to the noisiest and most able, and circumscribe the community’s capital in the long term, all while increasing the bureaucratic “red tape”. Newer shared equity approaches that rely on crowdfunding or cooperative decision-making are exciting and part of the solution, but are appealing to only a small subset of stakeholders, especially the developers. Even impact capital requires risk-adjusted returns and in some cases is more tentative than other capital to wade into complex social contexts.

We do not have sufficient tools to shift NIMBYs to YIMBYs, without which we can’t get over the first capital hurdle to build housing.

Upside Collab Co addresses NIMBYism by inserting communities into the ownership of an asset with complete power to reinvest profits locally over the long term while allowing the developer to retain power over the day-to-day business of real estate. We offer a simplified way to deliver on community-centered values without impeding or adding risk to needed real estate development.

At its most basic, the Upside model is a legal and financial framework for community ownership combined with an AI-assisted social governance app that supports a community budgeting and democratic voting process for reinvesting funds locally. 

We have a set of options and a distinct process for introducing community ownership into the capital stack, including defining community boundaries. We provide rigor for the foundation of the UPSIDE in order to enable flexibility and community-led decisions long-term.

We remove as many barriers as possible for local residents to determine what their community needs are, and how to solve them. Our approach does not require households to contribute financially. Simply by residing in the UPSIDE neighborhood, each resident gets equal power to decide what to do with the community profits. 

UPSIDE neighborhoods could include thousands of voters. These voters have a relationship of proximity but are unlikely to be a singularly unified community; they have different educational backgrounds, amounts of free time, social and political capital, and priorities. The Upside app is a tool with a predictable set of modules for proposing uses for the community’s real estate proceeds, developing those proposals and voting on them. It centers the social network while providing an asynchronous tool for each voter to participate and be heard.

The Upside app supports non-experts to participate in governance decisions.  We use AI to enable anyone to develop feasible proposals, providing immediate and useful feedback including flagging potential feasibility issues, providing rough cost estimates, and helping to craft the writing of proposals for completeness and readability. We provide a structure for annual or bi-annual decision-making, from the initial social testing of “sticky notes” through to a ballot for ranked choice voting. The app combines the familiar UI of social media apps with an engaging mechanism for social governance. 

The Upside framework and app is for unorganized groups to work together. It is designed to be a plug-and-play tool for real estate developers, improving their access to capital without introducing the typical complications of shared ownership. It offers a new way for government and philanthropic dollars to be deployed for impact, effectively seeding a community-centered endowment funded through on-going real estate proceeds. Rather than relying on intermediaries to study issues, request proposals, and direct funds, the endowment relies on the expert self-knowledge inherent in the community for delivering what is needed. Local entities, including merchants, politicians and non-profits can all find opportunities to participate in the UPSIDE by providing expert advice and carrying out the winning proposals. 

Upside supports civic engagement, hyperlocal reinvestment, and a neighborhood safety net.

UPSIDE is an ecosystem solution, bridging gaps between community residents, developers and capital providers. We are a tool for local control over the impacts of global capital and restoring faith in local democratic governance. With UPSIDE, we can propel cities toward the level of housing production needed without sacrificing local control. (Our solution can also be applied to building solar grids and other types of infrastructure.)

While an ecosystem, we center the community residents in our solution. The people living in a community are the ones who create and maintain its value. Real estate has long been used as a tool for social engineering, typically directed top-down by an elite group unrepresentative of the communities they impact. While those in power may desire to have a positive impact on the communities and even seek input, they have rarely, if ever, been willing to give the power to communities to decide over the long-term. 

To do so is nearly unthinkable in the conventional ways of managing a community process, in which the loudest, the richest or the most present voices are those that win the day. But today we have the potential of technological solutions to level the playing field for expressing desires and making plain what is needed. 

The primary beneficiary of our approach are community residents, increasing civic participation and generating new economic opportunities. Our customers are the housing developer and capital providers, the former who wants capital and local approvals and the latter who wants derisked investment and/or social impacts of more inclusive and stable economic development.

Community residents

Our solution is best geared towards disinvested or rapidly gentrifying neighborhoods with a large proportion of residents being low-income, with disproportionate representation of Black, Indigenous and other racialized and equity-deserving communities. These are the communities with the lowest voting turn-out, the least demographic representation in the top echelons of private, public and non-profit sectors, and so the least power. Disinvested and rapidly gentrifying neighborhoods are those where global capital is most likely to manifest change and most likely to extract rather than reinvest capital. 

Developers

While our solution is agnostic to asset types and developer mission, housing developers are our first customer constituency. There is enormous pressure to build housing to address the global housing shortage. Being able to move projects forward will unlock hundreds of thousands of housing units and keep housing development businesses viable.

Capital providers

Impact capital is awakening to the lack of rigor around the “S” in ESG. While carbon has become the watch-word for “E”, the Social impacts have hit an unsatisfactory plateau currently focused only on the production of rent and income restricted housing, construction labor and contracting benefits, and charitable donations. In philanthropy, there is a call to “decolonize” giving. Wealthy benefactors like McKenzie Scott and Marlene Englehorn are moving toward unrestricted grants. Yet these efforts are nascent and lack sufficient tools to transfer wealth in a meaningful and rigorous way, while centering the locals’ expert knowledge of their own needs.

Our team has a track record of deep innovation and thought leadership in housing, inclusive economies and tech. Each of us has been working for 15-20 years on the problems we are trying to help solve. 

Our CEO is a woman who has been successful despite odds in the white, and male-dominated industry of real estate. She has used her position and understanding of barriers to change practices and outcomes in her firm to be more sustainable and more equitable, including through the real estate she has built. 

Our Head of Impact is a queer, gender subversive, parent in a world not built for queer families, and a world that is becoming increasingly hostile to LGBTQ+ folks. Her life’s work has been about building equitable systems and approaches in LGBTQ+ movements, mental health, economic development, tech, and real estate development, including Indigenous land rights.

We have all experienced poverty and housing insecurity in our lives, which is part of what drives us to contribute to solutions.  

We are also three white people - with some intersecting identities from historically excluded groups, granted - but three white people nonetheless. We believe the burden of solving the problems created by historically racist policies and practices in real estate and development should not fall solely on the shoulders of the Black, Indigenous, racialized and other marginalized communities who have been disproportionately impacted. As white people who have been beneficiaries of an inequitable system, we see our role as helping to change the system, not on behalf of others but in partnership. We believe the policies and practices of the past - and in some cases, the present - hurt everyone, and an equitable future is the only way forward.

Our entire solution is about handing decision-making power over real estate profits to communities. The UPSIDE platform is just a tool. However, in order to integrate equity into our business model, product and practices we are always transparent, acknowledging our role in systemic racism. We partner with local organizations that reflect the communities in which we work, we have built an equitable business model where UPSIDE communities are shareholders in our business, and we earn trust through action, not words. Finally, as our team grows we will hire non-white leaders.

Through our pilot work in Chicago we worked with local Black real estate development and community leaders, and Black youth to design and execute the pilot, and conducted in-depth participant interviews with additional Black youth to inform our custom-built app design.

We completed a round of pilot work in 2023, funded by the Chicago Community Trust. The Trust also allocated funds to seed the pilot community benefit treasuries. Three BIPOC-led community-based organizations with developments on the South and West sides of Chicago signed on. Two pilot partners dropped out for circumstances beyond our control. The third continued through a successful pilot.  

All three pilot partners helped test and iterate on the financial and legal structuring, as well as on-boarding process for community users.

The completed pilot had a target audience of ~1000 neighborhood residents aged 14-24. The developer determined that youthful age range to build the next generation’s civic muscles. The pilot resulted in 42 community members submitting ideas, 4 teams developing feasible proposals, and 72 people voting to spend the $30,000 in the treasury to provide food, clothes, socks and shoes to people experiencing homelessness. 

The pilot used a combination of off-the-shelf tech products due to timing and funding constraints, however additional client conversations have made it clear that scaled adoption relies on a high quality purpose-built app. In tandem with our 2023 pilot work we built a working app prototype, and now have three developers - two in new jurisdictions - interested in a pilot with a launch-ready app.

Upside Collaboration Company would take advantage of all that Solve has to offer. 

– Maximize Our Collaboration and Help Us Grow

While we are seasoned professionals capable of running a small company, we are newly teamed together and working on an extremely complex problem. We each bring complementary skills and experiences to our collaboration and yet there are gaps in our knowledge and abilities. We would look to Solve to help us maximize the potential between the three of us and help us determine which gaps we most urgently need to fill as we build out a larger team, whether through employment offers, contract work or partnerships. We believe the capacity workshops, leadership coaching, possibly pro bono legal services, and certainly the network of inspiring peers would support this work. 

– Build our Impact Measurement Practice

We firmly believe that our success relies heavily on our impact measurement practice. Not only does reflecting on our impact and service delivery to our primary constituency matter for us to meet our ethical obligations and maintain an operating endeavor, but we will need to rely heavily on our impacts to attract new users into our ecosystem. 

We are believers in the joint power of data and narrative. The numbers of people who engage with us, the dollars that flow to reinvestment, the speed with which real estate projects can begin, the number of votes cast and the voter turn-out in our solution – and in civic life more generally – are data we seek to collect. We also need to understand the nuances of how that engagement and reinvestment is impacting people most and in their words, which we will do by collecting story and other qualitative data. Particularly in real-estate-as-economic-development the data and the story have been limited to rent-restricted, income-restricted Affordable housing, labor employment diversity, and to green building paradigms. Our work is to show how we can use the lens of community wealth and local power to broaden how real estate is approached and viewed by all stakeholders in the ecosystem.

We  look to Solve to help us with the building of our impact measurement practice, to our peers and network of impact-minded leaders to debate and elevate best practices. 

– Connect, Join, Gain, Give

We recognize the importance of constantly connecting with others who are likewise electing to work for more sustainable and equitable solutions to humanity’s challenges. The support and insight of this group of peers is not to be understated. Joining in person and online with impact-minded leaders from across sectors will strengthen our ability to answer queries about our approach, while giving us hope that breakthroughs are possible. We look to the Solve community as a place of “Yes, And”. “Yes, you’ve got a great approach AND you need to…” We’re excited to be collaborators for other Solvers. 

– Funding

Access to funding is always appealing to a start-up!

UPSIDE is a tool unlike any other available at the intersection of real estate, community and technology. 

• Our solution focuses on the operational phase of real estate; the steady state that lasts decades. 

There is tremendous pressure on the pre-construction period to cement community-centered deliverables or “wins”. Developers market decisions around conventional wins (e.g., affordable housing, labor, procurement and green space), through consultative meetings to gain approval while limiting negotiation. Though important, rarely do conventional wins impact more than a fraction of neighborhood residents. As residents’ needs change over decades, the decisions made in pre-construction are fixed and the asset’s continued gains in value are extracted from the neighborhood.

By focusing on the long-term, we shift the dynamic between developers and communities away from limited and limiting ideas about “wins” and negotiation.

• Our solution is intentionally low barrier to entry and democratic.

We take the gains of virtual meetings (260%+ increase in diverse attendance) a step further by using AI to provide meaningful and immediate feedback, enabling asynchronous collaborative work, and most of all by enabling one person, one vote. The loudest, most available and connected people can’t dominate the UPSIDE.

By focusing on direct democracy supported by technological innovation, we reduce the barriers to public process (e.g., educational, language, and availability–time away from paid work, dependent care, etc). 

We do not take money from local residents to participate. Our research shows inequities abound for a scalable approach that requires cash investment. Our solution is about deepening community ties, not a pay-to-play.

Residents have full control over the ideas and can be responsive to their actual and immediate desires and needs (i.e. there is not another authority like a government deciding what’s on the ballot for a participatory budgeting exercise). 

• Our solution errs on the side of joy.

We have a strong appreciation for public process and voter participation. The strength of community lies in relationships, which both require work and celebration.

• Our solution is easy for any real estate developer to adopt.

We understand the barriers to adoption for developers around ownership and decision-making. We created a solution that respects the developer’s needs alongside the community. Our solution can show greater local support, quicker approval timelines, fewer complaints/fines during construction, without upending the business process.

Because our solution does not require a mission-aligned developer, our approach is scalable. Wherever there is real estate development there can be an UPSIDE. UPSIDE can deliver on long-term community power and profits, while also getting developers to work producing much needed housing.

• Our solution is a new way for non-extractive capital to turbo-charge community impact.

UPSIDEs are designed for use by a broad spectrum of impact capital: public, philanthropic, risk-adjusted market returns, PRI, grants, etc. Through the UPSIDE, impact capital enables the real estate project to move forward as well as the creation of a means for the community to gain financial value from a successful project and reinvest it locally according to the community’s needs.

GOAL: REBALANCE LOCAL CONTROL OVER GLOBAL CAPITAL

We create alignment between those who use global capital as a tool for hard asset outcomes, such as the production of housing or renewable energy grids, and those who live alongside and within those hard assets. 

Our initial target is the U.S. housing crisis and the logjam between real estate developers and NIMBYs. We disrupt the logjam of preconstruction negotiation, prior to which global capital is unavailable or exorbitantly priced, by creating a clear mechanism to address the needs of three key stakeholders: community, developer, and capital.

Developers gain access to low cost impact capital for their capital stack. Impact capital gains a new and lasting dimension of impact without adding institutional overhead. Communities, and moreover, the individuals in communities, gain a governance process, tool, and cash resources to identify and service their own needs and desires. 

At its most basic, UPSIDE combines a community trust with an AI-supported digital governance app. Upside Collaboration Company provides the consultation services, template agreements and organizational structures, underwriting support, and other foundational requirements to stand-up the trust and insert it into the real estate ownership. We launch the democratic voting process and provide early strategic and tech support. Once the UPSIDE is established, our company reverts to providing software and tech support, access to a network of other UPSIDEs and part ownership in Upside Collaboration Company. 

Our solution provides the programmatic approach and system for developers and impact capital, including agreement templates and underwriting support. We provide communities with services to establish the community trust, by-laws and other foundational requirements, and over the long-term we provide an AI-supported digital governance app. 

We make community wealth building a simple endeavor for real estate developers whose mission and focus may be elsewhere. While much of our early work is implementing the framework, our product is geared toward the successful deployment of capital to local needs over the long-term.

SHORT-TERM OUTPUTS

The short-term output of our work is an adaptation of conventional real estate transaction documents to include a community trust and the creation of the community trust following the requirements of the IRS and local supporters.

LONG-TERM OUTPUTS

The long-term output of our work is a 1-2x annual democratic voting process that utilizes commonly owned smart devices for participation. (We include ways to bridge digital divides.) The voting process and enactment of proposals is largely self-propelling.

All of our tools utilize best practices for privacy by design and equity by design. We are conscientious of shifting demographics in neighborhoods and allow for ways to acknowledge longtime residents versus newcomers, youth versus adults.

We also provide thoughtful means of wind-down should it be necessary for any community. 

OUTCOMES

The outcomes of our work are Community Connection and Vitality, Democratic Engagement and Individual Agency. These outcomes favorably overlap with Solve, the UN SDG, Canadian Index of Wellbeing and many other identified social impact goals.

Our goal is to unlock the production of societally-needed infrastructure (e.g., housing) while committing to and strengthening hyperlocal decision-making and reinvestment.   Our work is to show how we can use the lens of community wealth and local power to broaden how real estate is approached and viewed by all stakeholders in the ecosystem.

OUR GOALS

• Individual Agency:

  • Improve the quality of life for the residents of the neighborhood

  • Enable every (adult) resident of the UPSIDE area to have a voice in how investment happens. Do not leave it to the most powerful, the loudest, or those with the most free time. 

• Democratic Engagement:

  • Increase civic engagement

• Community Connection and Vitality

  • Increase community economic reinvestment / investment

  • Retain more of the economic value created in the neighborhood for the people who live in the neighborhood

UPSIDE DATA METRICS

We have identified and tested a set of qualitative and quantitative metrics that we would use to track impact. These metrics allow us to hear the stories and narratives of community members and track the level of engagement. We have not included metrics related directly to specific goals such as “better childcare”, “higher education”, “living wage employment”, because these are the sorts of specific goals we firmly believe each UPSIDE should set for itself. Our platform should not presuppose these goals. We trust in residents to know their priorities and where those priorities are not shared with their community-of-proximity, to find alignment in order to advance solutions.

• Each voting period, survey participants regarding quality of life and their experience participating in the UPSIDE

• Voter turnout for the voting period (increase)

• Number of residents on the platform versus total eligible residents

• Participation on platform is representative of neighborhood demographics

• Total dollar amounts paid to local individuals and/or businesses by the UPSIDE treasury

• <Resident selected metric>) - In each UPSIDE we ask the people themselves to indicate metrics that warrant measuring. We share our data metrics with them.

• Predevelopment / entitlement time and cost for real estate project approval and comparison with UPSIDE capital / ownership impact on overall project

NEIGHBORHOOD DATA METRICS 

We recognize that it would be difficult and not always desirable to see a direct connection between the UPSIDE and some neighborhood data metrics, however we have identified these metrics as worthwhile to track as related to community vitality and quantitative data.

• Voter turnout for government elections (increase)

• Number of new business licenses issued (increase)

• Sales tax collection (increase)

• Average household income (increase)

• Vacancy 

• New building permits and number of housing units permitted

Upside’s app integrates the user-friendly interface and functionalities commonly found in social media platforms with a sophisticated system for democratic self-governance. The app's core innovation lies in its utilization of advanced machine learning models (LLMs) to facilitate the democratic self-governance process. These LLMs are trained to analyze and understand natural language, allowing users to input proposals and engage in discussions using everyday language. Through the integration of LLM technology, the app streamlines the proposal development process, making it more accessible and inclusive to individuals from diverse backgrounds and levels of expertise.

We are a team of three founders who also deliver on all pilot work. We have occasionally paid for contract work related to graphic design. We have paid for participation in user interviews.

Two of our team (Alison Novak and Chrystal Dean) have been working on this particular solution for 2 years, and our third founder (James Burns) has been working on it for 18 months.

We have an active and integrated equity and inclusion practice not just in representation, but through our business practices. Two thirds of our founding team are women (including the CEO), and one of our founders is a member of the LGBTQ community, and an Equity, Inclusion and Diversity expert. To date, our product has been developed in collaboration with communities of color, and designed as a tool to serve those most harmed by systemic racism in real estate. In partnership with those communities, we developed a Responsible Technology framework and policy. All community members we work with are paid fairly for their time and expertise. We believe as white people it is our responsibility and burden to actively change systemic racism in real estate. Our company philosophy is to share power and profits in our business; as we grow and are able to hire and expand our leadership, we will prioritize non-white team members especially in executive roles, and as our company makes profit, we plan to include community UPSIDEs as shareholders in our company, adding another revenue stream to the community benefit trust treasuries.

Our key stakeholders are developers and communities. Our product is designed to be attractive to impact capital but not require it. 

At its most basic, UPSIDE combines a community trust with an AI-supported digital governance app. Upside Collaboration Company provides the consultation services, template agreements and organizational structures, underwriting support, and other foundational requirements to stand-up the trust and insert it into the real estate ownership. We launch the democratic voting process and provide early strategic and tech support. Post-launch, Upside Collaboration Co’s presence diminishes to software and tech support provider, as well as access to a network of other UPSIDEs and part ownership in Upside Collaboration Company. 

Our initial customer is the developer who can integrate costs of our set-up services into a project development budget as a soft cost. We will have at least two offerings, one that is more plug-and-play (comes with predetermined by-laws, etc) and one that has the opportunity for co-creation with developer and community representatives. Pricing of the former will be based on project size and for the latter on specifically crafted criteria.

Post-launch, we will charge an affordable monthly fee for continued use of the platform. It is imperative that the fee be reasonable to align with our mission.

To date we have been funding our solution through consulting work, philanthropic grants, and our own money. We anticipate to continue all of these as needed and are seeking additional funding through investors in our product and company. These funding streams are necessary in the short term to establish pilots and continue development of the governance app. 

Longer term, we anticipate both fixed set-up fees and flexible consulting fees to establish UPSIDEs. These will most likely be paid by the developer from the project’s soft costs budget, but could also be paid for by philanthropy or government. Once the UPSIDE is established, we would charge an affordable monthly fee to maintain the digital platform. 

While our solution provides a new way for non-extractive capital (philanthropic, public subsidy) to “buy-into” the capital stack on behalf of the community, it is not required in order to establish a community trust as a limited partner in the capital stack. 

In 4Q2023, we ran a pilot in Englewood, on the South Side of Chicago which was generously supported by the Chicago Community Trust (CCT). The Trust has been a leader in Chicago and in philanthropy in community wealth building initiatives. Through CCT we were able to fund roughly 50% of our time in a 9-month pilot (including development and implementation), as well as provide grants to seed the treasuries of pilot partners and support on-the-ground community facilitation. The following are quotes from CCT, the real estate developer who was our first pilot partner, and youth participants in the voting process:

CCT: “Community wealth building  is where we need to go and philanthropy is leading the way. I would be shocked if you showed someone Upside and they didn’t say, ‘Yeah I want to do that.’ Long term, once we have demonstrated projects, there will be upward pressure for cities to require community ownership to approve new developments.”

Developer: “You made it much easier for us to do the work we want to do and provide a mechanism to support it. How can we keep working together?” 

Youth: “My voice has word in the community. I feel good because the youth really don’t get much say so in the community.”  “Younger kids usually get, like, stepped over, like nobody take the time to look at us.”