Partners not supplicants

I started my career in housing, and now work in philanthropy, so I was delighted to be at a roundtable that brought these two world’s together. Affordable housing providers, funders and philanthropy experts, with speakers including NatFed’s David Orr, John Hocking from the Joseph Rowntree Housing Trust and  Chief Executive of Commonweal Ashley Horsey were all assembled at NPC’s offices. As a charity think tank and consultancy, NPC is probably best known for its origins in City philanthropy, and its work across the spectrum of charity funders. In September last year, along with the Smith Institute and Peabody, we published a paper called ‘Rebuilding the relationship between affordable housing and philanthropy’ and it was good to have the opportunity to take stock.

The title of the paper speaks for itself. We wanted to explore the role housing associations can play in delivering social outcomes at a time of acute need—an interest shared by our housing colleagues (though I suspect the opportunity to get a larger slice of the philanthropy pie also factored in; after all, that’s how many housing associations started out). So what are the opportunities for these two worlds to come together?

For obvious reasons, providing genuinely affordable housing is the number one priority for housing associations. Philanthropists are unlikely to disagree that housing is a major social issue, though they may not always fully understand its dynamics, but their appetite for involvement is limited and probably with good reason. The problem is that the scale of philanthropic funds is dwarfed by the size of the problem and the hike in supply that’s required. Furthermore housing associations have been proficient at accessing mainstream finance on decent terms from the markets. Philanthropy does—and will continue to—have a role in funding innovative models, but I do not think the supply of affordable housing is where the obvious opportunity lies.

More fertile territory is housing associations’ ‘community investment’ activity, of which there is a great deal.  Associations spend roughly half a billion a year of their own money on community investment, and lever in an additional £200m of other people’s money on top. By way of comparison, the Big Lottery Fund—the largest single funder of charities in the UK—gives £600m a year. Housing associations, in other words, are significant players when it comes to funding community services. And consider the assets they have in this context:

• good information about the disadvantaged and vulnerable people they house, and the ability to access groups that are often hard to reach;
• infrastructure to scale up successful interventions—something many funders want to see happening more; and
• £500m a year of their own money already being spent to achieve social outcomes.

Accessing philanthropic money holds obvious appeal—it could make that £200m of leveraged funds bigger, or reduce the £500m that associations put in themselves, freeing up money for development.

But there’s a problem. Philanthropists simply do not receive compelling proposals from housing associations; indeed, they hardly get proposals of any kind. And some of the conversations I have had or heard with housing associations do not bode well. There is an assumption in some quarters that philanthropic money is an easy way of getting extra cash for existing community investment activity, and I would be amazed if that’s true. Philanthropists have been getting more sophisticated and often want good answers to questions like: What is the evidence of need? What is the track-record of the service you’re providing? And why should it be you that delivers, rather than the charity down the road that does nothing else, and can demonstrate they get results?

Some housing associations can provide convincing answers to those questions, but many can’t.

My strong conviction is that the housing associations who will be successful in raising significant sums from philanthropists will frame things entirely differently. Rather than just pitching for more money, they will look for opportunities to do deals and form partnerships. Housing associations and philanthropists often share the same objectives: to see vulnerable people maintain tenancies, young people sustain employment, isolated older people engage with their communities…the list is long. And associations bring a lot to the table, not least the ability for philanthropists to leverage their funds, as well as the other way around.

Seen from this perspective, partnership proposals to jointly address social problems, things start to look very compelling indeed—to both parties. I know housing associations, including Peabody, who are already thinking in this way, seeing themselves as partners not supplicants, deal-makers not passive recipients of funding, and I believe they have a good chance of making it work.

But if housing associations aren’t thinking hard about who is best to deliver those services (and it may not be them), the ask becomes a lot harder.

This article was originally published by Inside Housing.