Impact investment in England and Denmark

A second very topical issue being addressed at Urbanpromo Social Housing in Turin, Italy, was Impact investment in social housing. The session was introduced by Marco Camoletto, who described that impact investment in social housing is still in a preliminary phase, it has only been applied by a very limited group of financers. At ‘UbanPromo social housing’ participants want to learn from experiences abroad and see how impact investment can be applied better. Here are two examples of impact investment that were presented at the conference.

Impact investment is investing earlier to prevent failure.

One of the experts that got flewn in was Jane Newman of non profit organization ‘Social Finance’ from the UK. She shared how her organization developed a social impact model almost by coincidence. They wanted to solve a recurring problem in many of their projects: underinvestment in prevention. So they were curious how to prevent things from going wrong by prediction future events better, calculate possible costs of failure  and asking funders to invest earlier to prevent these.

This principle that worked out very well in a project to prevent ex-offenders to end in prison again and  was also applied in social projects more closely related to housing, like helping vulnerable groups like homeless, care-leavers, elderly. Key factors for success were: flexibility, rigor, strong partnerships, client-centered, early intervention and innovation.

Impact investment is realizing test projects to set a new standard of housing.

The approach of Hendrik Mahncke of investment fund Realdania is totally different. This fund’s mission is improving the quality of life of people by improving the built environment. The fund does this by actively involving other investors, quite often private investors like pension funds. This results in the situation that the projects that have been initiated by Realdania are for only 10% self-funded, the remaining 90% is funded by others.

One example is a project that RealDania developed to fight loneliness amongst elderly. As loneliness is affecting  the quality of life dramatically, they started looking for ways to develop homes for elderly that have less money to spend on their homes and don’t need permanent health care.

After involving anthropologists and architects they developed a housing project with both private apartments and big collective spaces for all residents.  Once designed, private investors stepped in and invested in the individual units. RealDania just invested in the collective spaces, without expecting revenues in return.

The project turned out to be successful and is currently being repeated by Realdania in 6 other projects across Denmark. And developers recognize the importance and copied this mix of individual and shared space in their own projects, which Realdania sees as a sign of success. With their investment in an innovative project the impact was that they changed the attitude of housing developers regarding loneliness and elderly housing.

Conclusion

Social Impact investment can be applied both to solve problems in an early stage to become more efficient and to create test projects that due to risks of failure would not be realized by mainstream housing developers or providers.  It appears that projects need to be very specific before a fund will pre-invest.

Read more articles about the UrbanPromo Social Housing conference, 5-6 October 2017 in Turin, Italy.

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