What can social impact investing do for housing and homelessness in Australia?
AHURI research examines opportunities of social impact investment for housing and homelessness
21 August 2017
Social Impact Investments (SII), which fund solutions to complex social problems including housing and homelessness policy, were worth an estimated A$2 billion in 2013 and could grow to as much as A$32 billion in the 2020s.
New research from AHURI, The opportunities, risks and possibilities of social impact investment for housing and homelessness, and led by the Centre for Social Impact (CSI) at UNSW, reveals that SII, although in its infancy in Australia, has the potential to:
- significantly increase the supply of affordable housing with attractive attributes
- significantly increase the supply of fit-for-purpose social housing and support other positive outcomes
- act as an incubator for government to trial innovative and new ways of providing services that effectively deliver desired outcomes.
The very definition of a social impact investment is one that intentionally aims to achieve social impact along with a financial return, while measuring the achievement of both.
Social impact investment aims to achieve both a social and financial return. Through collaboration between service providers, investors and governments SII can untap new sources of capital (through different types of investors) and enhance the return on government investment.
The research examines three primary models of SII:
- Investment funds that finance property (e.g. the bond aggregator model, low income housing tax credits)
- Social enterprises which generate a profit to reinvest in affordable housing or homelessness support services (e.g. some community housing providers)
- Social impact bonds which are a pay-for-performance instrument where government pays on the basis of outcomes achieved.
The report finds that combining different financial models may help reduce the investment risk for potential investors.
Report author and study lead, Centre for Social Impact CEO Professor Kristy Muir said that the opportunities and benefits were exciting and needed further exploring, but it was important not to treat it as a panacea as there are also numerous risks.
‘The very definition of a social impact investment is one that intentionally aims to achieve social impact along with a financial return, while measuring the achievement of both. It’s an appealing model. But it’s important to remember that we are dealing with people’s lives,’ said Professor Muir. ‘Our most vulnerable have complex needs, and we need to be careful we’re not paving the way for future harm if the investments don’t work out. This is one of the key reasons why government has an important role.’