Social Impact Investing: Beyond blankets, handbags and laundriesEnding Homelessness Together, National Homelessness Conference 2018

Professor Kristy Muir, CEO, Centre for Social Impact@kristymuir2

https://www.ahuri.edu.au/research/final-reports/288 and www.csi.edu.au/ahuri

A huge problem: a snapshot of housing issues

• Cost of housing is up Median mortgage and rent up far beyond median household income

• Housing stress >1 million households

• Long waiting lists >194,000: public -154,000, Indigenous -8,000; community- 43,000. 1 in 4 in greatest “in greatest need”

Sources: AIHW 2017, ACOSS 2015, CSI ASP

Drivers

Financial stress and/or housing crisis primary reason

Domestic violence Mental health issues Disability Over 55s, including disadvantaged single women

Sources: Flatau et al, 2018, Zhu, 2015; CSI’s http://amplify.csi.edu.au/pulse/, 2017; AIHW, 2017.

Lifting our gaze

Homelessness

Emergency / Crisis

Social housing

Community housing

Affordable housing

Rent / own

Could Social Impact Investment help?

(1) Intentionality – intends to achieve social objectives

(2) Return expectations – expects a financial and a social return

(3) Measurement – the social impact can and is measured

(4) Additionality – outcome is beyond what would have been

achieved without the investment

Social impact investment market

*Different finance instruments: social impact bonds, private capital, mutual funds, bond aggregator, social impact loans (See Muir et al., Heaney et al.)

Suppliers of capital*- Institutional investors- Govt- Private investors- Individuals

Users of capital- Providers of assets (e.g. property)- Service providers

(e.g. specialist housing support)

- CHPs, SEs People who use

the goods/ services

Intermediaries

Govt

Deals done are around:1. Assets Property for long term affordable private rental, and community housing (e.g. key workers, vulnerable, low-income)2. Organisations Social enterprises who aim to improve tenancy stability, education and/or employment outcomes3. PeopleAffordable loans for low income residents (e.g. key workers) OR interventions for vulnerable people / groups

Australian Impact Investor Market (Dec ‘17) $5.8bn

investor commitments

51 products

Source: RIAA, 2018

Source: RIAA, 2018

Conditions for success1. Government support critical as a market

builder, steward and participant2. Effective infrastructure3. Blended capital4. Acceptance of risk5. Understanding between stakeholders of

needs, priorities, constraints and risks

Key challenges, barriers, risks1. The problem: structural nature & scale of the problem2. Funding

Small pool of concessional capital currently available Finance gap: 4-8% return

3. Disconnects Between investors, projects & legal forms of NFPs Investors expectations re returns and risks and possibilities

4. Infrastructure and stability required Infrastructure not ready (e.g. outcomes measurement systems not yet developed) Policy stability required for users of capital, investors & beneficiaries

5. Harm To beneficiaries NFPs: high transaction costs, risks to business models, cash flow & debt servicing

Summary & key considerations for the future

1. It’s not a panacea2. There are significant opportunities, esp. increasing supply of

affordable housing3. Government hold many of the levers for increasing SII4. It’s critical to match the right funding to the right problems & solutions 5. We need to lift our gaze and ask ethical and philosophical questions

re unintended consequences & beneficiaries

Contact & reportsProfessor Kristy Muir: k.muir@unsw.edu.au

Research team: UNSW, Swinburne, RMIT and University of Western Australia

Four reports found at: www.csi.edu.au/ahuriReports based on: Critical analysis of 158 publications: literature, policy, case studies Workshop of 32 expert diverse stakeholders* to map the system In-depth semi-structure interviews with 20 key stakeholders* Online survey with 72 people* across the financial, housing and SII sectors *Stakeholders from: federal & state govt, NFPs, foundations, finance institutions (banks, super funds), social enterprises, advocacy groups, lawyers, research, formerly homeless.