April 2, 2017
“It’s the role of philanthropy to drive social innovation and support organisations working to do things differently in order to make a difference.” – Natalie Elliott, Program Manager, William Buckland Foundation & Children and Young People Domain Lead, Equity Trustees.
At the 2017 Generosity Forum on Wednesday 29 March, Social Traders’ Head of Investment and Advisory, Libby Ward-Christie lead a panel discussion on philanthropy’s role in developing social enterprise with Natalie Elliott from the William Buckland Foundation and Jeanette Large from Women’s Property Initiatives.
In 2013, Jeanette Large, CEO of Women’s Property Initiatives (WPI), turned to developing a social enterprise business in an effort to continue the work of her not-for-profit in providing affordable housing to women and children at risk of homelessness. The aim of the social enterprise was to generate additional revenue to fund the construction of more housing.
“We offer long-term housing, there is low turnover. We faced no capital funding from government to provide housing stock, so how were we going to grow?” explains Large, “Buy a house and you can house one family, a social enterprise can create more sustainable social impact in the long term than spending $300k on one house.”
A full services real estate agency offered an attractive solution, leveraging the internal capability and knowledge within WPI of the housing market and with the market potential to generate substantial profit to support their housing development operations into the future.
After 12 months of rigorous planning, forecasting and business modelling with Social Traders, Property Initiatives Real Estate (PIRE) was developed as a fixed Trust with WPI being the sole beneficiary, with a funding target of $600k to cover set-up costs and their operating deficits until they were operating cash positive. Whilst anchor funding was initially supplied by WPI and Social Traders, WPI looked to philanthropy for a blend of grant funding and patient loan to begin to build the business.
“We considered other loan options but that included interest that we just couldn’t carry,” said Large, “We were very clear on what we needed and we knew we weren’t even going to break even for the first two years.”
For potential funder, the William Buckland Foundation (WBF), the PIRE proposal was a great proposition. Their social mission was well aligned with the Foundation’s funding focus for the Vulnerable Victorian’s program which seeks to support initiatives provide better housing and employment outcomes. Although funding a social enterprise was not a traditional grant approach, a pre-existing relationship with WPI and the rigorous assessment conducted around PIRE’s feasibility, also made it an easy proposition for WBF to support with confidence.
“The alignment for us came together nicely,” said Natalie Elliott, representing WBF, “The Foundation distributes approximately $6.5m each year in Victoria so we have the ability to support large requests, we had a previous relationship with WPI and knew their work and their cause, the Trustees had faith in Jeanette and the process [WPI] had been through with Social Traders and with the support they’d already received, this had the potential to be a highly impactful grant for the Foundation.”
Whilst traditional grant-making may focus on programmatic solutions, WBF saw assisting in the development of a social enterprise approach as an opportunity to fund sustainable, long term social outcomes.
During the conversation, the question of the perceived riskiness of granting for social enterprise development was discussed:
“If you’re about supporting organisational effectiveness and you’re looking at a charitable enterprise working to generate a portion of their own revenue, to contribute to ongoing improved social outcomes, how is that risky grant making?” said Elliott, “We see many requests for programmatic support, which is fine, but this proposal gave us the ability to swim upstream a bit and support change in a more systematic way. If this is considered ‘risky’ that’s ok, we are aspiring to be bold and brave with our grankmaking, we are focused on outcomes.”
The social outcomes of PIRE had also been given as much forward planning and consideration in their business proposal as the financials, setting clear expectations on the social and financial return for funders.
“The rigour around the impact forecasting is just as important as the financials,” said Ward-Christie, who worked on the testing and modelling of PIRE, “The amount of profit generated can be translated into how much impact will be made, it should be forecast out alongside the finances.”
PIRE successfully opened on 31st March 2015 after attracting financial and pro bono support from Social Traders, the William Buckland Foundation, the Alfred Felton Bequest and the first ever patient loan impact investment from RE Ross Trust.
They are now working through the development and building stage of the real estate business, building their property management portfolio and working to move into property sales. Current forecasts show the first house built from PIRE funds will be in year four of their operations.
The impact of the work of WPI has also so far has seen $11.07 social return for every dollar invested, with positive social impacts for women and children provided with housing measured in areas such as employment readiness, education, physical and mental health and wellbeing and breaking the generational cycle of poverty.
“The staff working at PIRE are really driven to make a profit because of where that profit is going,” said Large.
WATCH: Women’s Property Initiatives & Property Initiatives Real Estate