By Paul Hackett, director of the Smith Institute
Wealthy individuals in Victorian Britain gave generously to improving housing for the working poor. Indeed, thousands of people still live in homes endowed by those charitable investments. But who is today’s George Peabody, the builder of extensive housing developments for London’s poor, and why are modern philanthropists not sponsoring model communities in the way that Joseph Rowntree, Edward Cecil Guinness and Octavia Hill did more than a century ago?
The world has of course fundamentally changed since the days of the poor laws, and few people today would countenance the paternalism and enlightened self-interest of George Cadbury or Lord Leverhulme. The state became the housing provider of last resort and home ownership became a realisable tenure of choice. Philanthropists meanwhile looked elsewhere, towards medical research and education. Today about £800m of charitable donations (8% of the total) goes to the homeless each year, compared with £1.6bn (16% of the total) to helping animals.
Although housing and philanthropy still retain similar social purposes (both aim to invest for a social return) and housing associations have become significant charitable givers themselves, the two sectors have steadily grown apart. The separation seems, however, to be more by default than design. According to Theresa Lloyd, a leading philanthropy expert, “the lessons of success in generating major donations and philanthropic investment in other sectors such as higher education and the arts have not been learned and transferred to housing”.
The Smith Institute’s latest report – Rebuilding the relationship between affordable housing and philanthropy – argues that “there is a pressing rationale for closer collaboration and learning from each other”. Although the report makes clear that philanthropy on its own can’t hope to solve the crisis in affordable housing, it calls for the two sectors to work together on new ways of funding social housing and community investment.
One initiative might be for the National Housing Federation (with the support of Peabody and other housing associations) and New Philanthropy Capital to set up working groups on new approaches to social investment, perhaps learning from the experience in the United States where charitable lending and grant giving is more advanced. Such co-operation could include opportunities for cheap loans, equity stakes, equity housing trusts, donations of land, and other innovations, such as “crowd funding”, to support housing-related programmes that boost local employment, enterprise and skills.
The report suggests that the philanthropy model can work for affordable housing (and the case has been proven by organisations such as the Dolphin Square Foundation in central London), but the business model has to be watertight.
There may also be opportunities for philanthropy investment in smaller scale projects, such as providing equipment and buildings to community groups, resources to enable wraparound provision in children’s centres or funding to facilitate work to tackle isolation among older people.
Any new partnership has to be a two-way street, and housing associations will need to go the extra mile to develop an attractive offer to philanthropists who demand a clear social return on their investment. This will take time and real commitment. The government may want to foster such collaboration by extra tax breaks or matched funding.
The relationship between philanthropy and housing needs to be nurtured and supported. As Vicki Prout from New Philanthropy Capital comments in the report, “even if philanthropic money can only nibble around the edges of this huge and deeply entrenched housing problem, surely this work is worth doing”.
A PDF version of the report is available here
This article was first published by the Guardian’s Housing Network