Abstract
In recent years, the role of not-for-profit (NFP) organisations in the development, financing and delivery of social and affordable housing has been expanding in Australia, emulating international trends over the past two decades. This study is the first in Australia to examine strategic positioning and decision making among leading NFP housing providers (sometimes called third sector providers), from an organisational rather than housing policy perspective. Using a methodology that has been developed for similar studies of third sector organisations in other countries, the research provides an 'insider' perspective on how the organisations are responding to their opportunities and responsibilities as growing providers of a range of affordable housing options. The result of recent developments in this sector has been the first blush of a social enterprise model for the provision of affordable housing, combining the logic of business with a social mission to expand housing opportunities and choices for lower income households not being served by either the public sector or the private market. The research investigated how organisations develop a social enterprise model, reconciling social mission with commercial practice through what is sometimes called organisational hybridity (see Chapter 2). Research methods and coverage: The research used a modified Delphi survey methodology developed and applied to earlier studies of change and decision making in third sector housing organisations in England, Northern Ireland, Ireland and the Netherlands. Professor David Mullins (University of Birmingham), who first adapted the methodology to research organisational dynamics in this sector, has acted as a mentor for the study. The Delphi methodology is a way of exploring decision making and change through an iterative, multi-method approach. It seeks to harness the views of a panel of experts on specific issues, using a combination of scaled survey questions and qualitative interviews. In-depth discussions with each panel member are used to elicit perspectives on the aggregate results of the survey concerning the issues and challenges facing their sector as a whole, as well as to tease out their individual positioning on these matters. This is intended as a way of discerning not only shared but also divergent views within the sector. Sampling of housing NFPs for this study was restricted to those organisations in Australia that were exhibiting hybridity and social enterprise (see Chapter 2) and had been established for at least three years. These were organisations that had relatively large operations (in the Australian context) involving housing development and investment, and tenancy and property management. The chief executive officers (CEOs) of 14 organisations (of an estimated population of around 30 larger, diversified organisations) were approached and all agreed to participate, and comprised the panel of experts for the study. Collectively, the 14 organisations owned or managed over 22 000 dwellings, just under a half of those held in the total sector in 2010 (AIHW 2011). They owned assets (mainly dwellings) valued at $2.6 billion against which they held liabilities of $764 million (mostly loans secured against properties), and their combined annual rent revenue (their main income source) amounted to $132 million in 2010-11 (see Chapter 1, Tables 1 and 2). All had experienced rapid growth in their resources and business scale over the last three years, through a variety of strategies, which were explored in detail in the research. The research findings presented in Chapters 3 to 6 are based on an analysis of the survey of the sampled organisations, information gathered in interviews, including verbatim quotations from panel members, and other documentary evidence concerning the organisations studied and the policy and regulatory environment in which they operate. This analysis explored five key themes: 1. The key external environmental factors that have driven recent changes in organisations (Chapter 3). 2. The views of CEOs about key values of their organisations and how these have influenced their decision making (Chapter 3). 3. Changes in strategic positioning over the last three years (Chapter 4). 4. Changes in governance, structure, capacity and culture that have resulted from expansion and business development over the last three years (Chapter 5). 5. The most important strategic decisions that are facing organisations over the next five years and their potential significance (Chapter 6). Key findings under each of these themes are summarised below. Research findings: External drivers: Developments in housing policy, funding and regulatory environments have been the main drivers of recent opportunities for Australia's housing third sector to up-scale, commercialise and diversify. The most significant government-led changes that have driven expansion have included the Australian Government's Social Housing Initiative (SHI) and the joint Australian and state government National Rental Affordability Scheme (NRAS). Other recent housing policy changes and requirements of governments have included (to a varying extent across jurisdictions) new specialised regulatory arrangements applying to NFP housing providers, transfers of increasing numbers of former government owned and/or managed stock to this sector in return for leveraging the resources (cash flows and security) that come with such transfers, and a range of other policy changes that have been favourable to the sector, especially restructuring of social housing rents to capture Commonwealth Rent Assistance to improve rent revenue. Over the three years preceding the research (2008/09-2011/12), housing and finance market conditions had a mixed influence on the business operations of organisations in the sample. While land and construction costs remain high in Australia and conditions for lending into the sector had deteriorated since the global financial crisis (GFC), overall the post-GFC market environment and government stimulus had improved the competitiveness of these NFPs and had helped them to generate new relationships with private sector organisations, especially bank lenders and development partners. The last three years have also seen renewed interest at the national level in the future role, shape and efficiency of the wider third sector in Australia, particularly as a key contributor to the Australian government's agenda to promote social inclusion. Reforms broadly aimed at streamlining regulatory and taxation settings applying to the sector, improving governance and accountability, and channelling capital investment into the sector have been under consideration. While there are expectations that many positive changes may result, continuing uncertainty associated with the process of reform has made future planning in the sector more difficult and added to risk associated with taking on new business ventures. Organisational values: In discussions with panel members about the values underpinning their organisations, claims to social purpose emerged as a very strong internal driver of decision making and strategic positioning for all organisations. Organisations in the sample were founded to provide social housing and other welfare services to very low income households, the homeless and those with special needs, largely by utilising government funds. The study found interesting differences in the views of the panellists about how social mission is best achieved as organisations adopted more commercial practices. While some expressed a view that social purpose should never be compromised by business drivers, others appeared to have a greater appetite to innovate and take on business risks to advance social goals, emphasising that having a business ethos was critical to optimising social outcomes.Other values widely acknowledged as important attributes of modern third sector organisations were largely shared across panel members. These included having a professional approach, being entrepreneurial, being geographically diverse (to a varying extent among this sample), having the means to set one's own priorities and adopting a private sector ethos. Strategic positioning: Major shifts in strategic positioning over the last three years (Chapter 4) centre on organisations: →Broadening their service remit to include both low and moderate income households. →Acquiring and using property assets to develop their businesses. →Securing larger tranches of private finance for housing development. →Extending the geographic area of their operations across regions, state borders or nationally. Whilst these were general trends, there were clear differences in how organisations currently operated. For instance, there were differences in the extent to which they were prepared to enter into more commercial activities-such as mixed tenure developments, higher rental products, market sales, for-profit activities and asset realisation-to seek out financial return and drive their business expansion. At one end of the spectrum, some organisations had already leveraged assets to a considerable extent and had trialled cross-subsidy approaches, mixed tenure projects and partnering with the private sector with the overall aim of generating more housing for low income groups as well as providing services to current residents. In the foreseeable future they were planning to pursue a wide range of activities for both low and moderate income households, subject to financial feasibility. Others were more cautious about, or constrained in pursuing, additional activities and expansion, such as higher-cost rental products and operating in additional locations.
Original language | English |
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Journal | AHURI Final Report |
Issue number | 204 |
Publication status | Published - 1 Apr 2013 |
Bibliographical note
Publisher Copyright:© 2013, Australian Housing and Urban Research Institute. All rights reserved.
Keywords
- Housing
- Leadership
- Not-for-profit
- Organisational dynamics
- Strategy
ASJC Scopus subject areas
- Development
- Urban Studies
- Public Administration