Philanthropy – at home in housing?
23 January 2014 3 minute read
‘Philanthropy never solved the housing problem—and it never will.’ There are nods of agreement. The two sectors may have grown apart, but funders and housing professionals at our roundtable on ‘rebuilding the relationship between affordable housing and philanthropy’ seem to agree on this one basic fact.
The scale of the UK’s current housing crisis is vast, with one in twelve families in England now on a housing waiting list. David Orr, Chief Executive of the National Housing Federation, writes ‘the crisis is crossing demographic boundaries, impacting an entire generation of young people and extending its reach beyond the very poorest.’
Philanthropy cannot hope to solve the crisis on its own—building enough new affordable homes will require concerted government action. But as last year’s report argues, there is pressing rationale for closer collaboration and learning between the two.
Don’t wait, innovate
Private funding often finds a role in funding innovative—and risky—projects where public money is unavailable. In housing, organisations like Joseph Rowntree Foundation Housing Trust and Commonweal test new models of housing to tackle problems of social injustice, a goal shared by many funders. Such small scale pilots may directly benefit only a few dozen tenants, but the development and testing of new ‘role model’ housing developments can have a wider impact. A promising example is JRHT’s Derwenthorpe development, testing new zero-carbon housing models and working to promote community cohesion and eco-friendly behaviour.
The point of low returns
There are also opportunities to fund housing and support services for specific groups. Some vulnerable social housing tenants may require additional support and services, including those struggling with addiction or complex mental and physical health needs. High levels of support are expensive, reducing potential financial returns that may be needed for housing providers to acquire funds through conventional means. Philanthropic funding that demands little or no financial return can help to plug the gaps where the need is greatest.
Good money, or money for good?
The UK is beginning to witness the rise and rise of social investment. Currently estimated at £200m, the market is forecast to reach £1bn over the next two years, and appeals to investors who want to ‘recycle’ their money to generate a repeated social, and often financial, return.
Housing associations are pessimistic about its potential: interest rates may be higher than other funding sources, such as bonds, and additional social impact requirements make this kind of money unattractive. However, demands for evidence of social impact may be beneficial for housing providers and their clients, encouraging best practice and scrutiny of processes to ensure social goals, such as community cohesion, employment and poverty reduction, are met.
At our roundtable, there was a lot of discussion about how philanthropists could give differently—for example, by underwriting property investment. But one of the biggest challenges for the housing sector—and a significant opportunity for philanthropists to contribute—is the high cost of land for property development. As one participant noted, land-owning philanthropists could contribute to the housing sector in one simple way: by making this land available for affordable homes.
Communication, communication, communication
The door is not closed for philanthropists looking to make a difference in the housing sector. Some key problems can be mitigated by intelligent funding, which can only be achieved through education and collaboration on both sides. For philanthropists, collaboration with other funders can boost collective impact and share knowledge. Yet more important is relationship-building and conversations across the fence: while funders may ask how housing associations work, those in the housing sector may need advice on charitable objectives and pitching to different types of philanthropic funders.
Given our mission to improve the sector, it’s also NPC’s job to learn and collaborate—something I’ll certainly keep in mind as I take over as our new housing lead.