Affordable Housing Institute : US

[Continued from yesterday’s Part 1.]

 

Yesterday’s post, expositing on the theory of change that AHI received a $1,000,000 grant to explore, began with housing as the catalyst for improving urban environments, especially in the global south.

 

Housing is the world’s biggest property asset class.  In developed nations, it’s most people’s biggest investment, source of retirement savings, basis for equity for business formation or educating children.  In emerging nations, it’s the family’s haven, the place where children do most of their learning.

 

India: Mumbai, Dharavi: Home is where you do the laundry

 

Too little attention has been devoted to understanding smaller NGO entities as enterprises.  City development in the global south — housing and urban infrastructure — requires the emergence of many small and growing NGOs that are formed by and accountable to slum dwellers and those living in informal areas.  These NGOs provide financial and legal resources to assist informal communities in housing, finance, and other urbanization issues. Thus, the variable controlling the rate of successful urbanization in the global south is the rate by which these NGOs can emerge, establish themselves, propagate, and replicate themselves from city to city. 

 

Mahila Milan (Women Together) savings cooperative, Mumbai: can you spot the chair?

 

Meanwhile these NGOs, though they have a mission orientation, are in fact economic enterprises, subject to the same operational and financial imperatives of any other business.  The NGO is subject to the laws of economic gravity whether or not its leaders want to be in business, understand business principles, or document their procedures.  NGOs are enterprises:

 

Since submitting the grant proposal, I became so irritated with the malapropism NGO – which describes things only by negatives, not positives! – that I coined Mission Entrepreneurial Entities, or MEEs.  Though drawn into the space by a sense of mission, they are enterprises and subject to the normal business imperatives:

 

It’s got a mission, but it’s also a bank: SEWA in Ahmedabad, Gujarat, India

 

·        They need initial capital to set up the business. 

·        They generate revenue to sustain their operating costs (or reduce their costs to match their revenue).

·        They make ongoing capital investments whose payback is long-term — either hard costs like land sites or pilot schemes, or soft costs like political advocacy and the catchall phrase ‘capacity-building’. 

·        They hire and retire staff; manage and account for their capital; secure resources via negotiation; protect themselves against malfeasance and waste by their executives; handle organizational turnover; and manage organic growth and evolution as their business ages. 

 

In short, NGOs need business models.

 

All these problems are compounded because the entities tend to be short of classical business expertise and experience, despite their entrepreneurial approach to their missions.  Nor does the technical assistance that reaches them emphasize entrepreneurship. 

 

You have to bring the expertise to the customers, and you have to adapt what you know to what they need.  Portability and flexibility are important.

 

David being driven around Mumbai, laptop at the ready

If you read closely, it says, “International Urban Poor Fund”

 

Experience in the global north is directly relevant to the challenges faced by global south NGOs, both in demonstrated successes and ongoing challenges.  The UK and the US provide the most successful examples of NGOs in housing and urban development.  Some are quasi-governmental; many are purely private.  Most were seeded with donor capital.  Even today, most rely on annual donations from financially larger benefactors for a material part of their operating budget.

 

In the UK, non-profit housing associations are the dominant, almost exclusive provider of new affordable housing, and are the preferred growth sector for existing housing (via stock transfer, ALMOs, and PFI).  Some of them have been in existence for over 100 years (arising out of the UK’s almshouse and Quaker charity traditions).  Non-profits are the exclusive recipients of large government-funded capital grants for new affordable housing production.

 

Bathhouses, Brighton, UK

 

In the US, non-profit community development corporations (CDCs) are preferenced and advantaged in most resource awards; they benefit from three Congressionally-chartered support networks (LISC, Enterprise, and NeighborWorks) that receive several hundred million dollars annually [NNWA, 2007].

 

Yet, despite this rich financial and political infrastructure, the US and UK non-profit communities are by no means solved problems.  True professionalism has come to the US and UK NGO community very slowly, mostly in the last fifteen years. 

 

London, Lewisham: new construction affordable (Hyde Housing)

 

In the long run, affordable housing and community infrastructure are responsibilities of domestic government.  Only domestic government is able to harness national GDP, and redirect it into public-good activities at sufficient scale.  But in the short run, change happens locally, and informally.  One definition of a slum is a place where housing and habitation have outstripped infrastructure, or where demand has outstripped formal supply of homes (private sector) and infrastructure (government).

 

Sao Paulo: The houses came first, and then the streets and drainage

 

·        Exploratory Learning Topics.  We will research these areas:

 

o       Self-organized groups:  A great deal of bottom-up self-organized activity is occurring throughout the global south.  Much of this activity remains localized and unanalyzed because it is not written, not circulated, and not shared.  We propose to pursue learning and collection of this practice throughout the world.

 

o       Group-benefit micro-finance and meta-finance:  Available evidence indicates that there is a ‘basic model’ whereby the local government provides trunk infrastructure and the hard cost of most site infrastructure, with the community funding the ongoing operating costs.  We aim to discover where and how this basic model works, and whether other models can be developed. 

 

 

o       Slum Dwellers International:  Bottom-up, self-organized activity is coalescing around SDI, which recently received a $10,000,000 BMGF grant.  AHI has been selected as SDI’s financial advisor.  This work, which is not being funded through this proposed grant, will provide a valuable opportunity for exploring this progressive network.

 

o       Harvard Kennedy School of Government PAEs: Students working under AHI’s direction are preparing Policy Analysis Exercises (equivalent of a Master’s Thesis) on the countries of Brazil, Ghana, Korea, Mexico, and Morocco.  Parallel cross-learning is encouraged. The information gained through this research will be used to further discussion.

 

It’s an ambitious agenda.  To achieve it, we’re staffing up.  As I mentioned in part 1, we are hiring an Executive Director and a Research Director, both positions full-time and based in Boston. 

 

Want to work for AHI, changing the world?

 

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