There’s no denying Kids Company, the charity run by the iconic Camila Batmanghelidjh, did great things to help inner city children during its 20 years.
But serious financial and governance problems caused it to close its doors; and it’s perhaps the most famous example that doing good, in the end, wasn’t good enough.
Housing associations are charitable, which means they’re not-for-profit, no shareholders expecting a return on their money, and any profits are put back into new homes and services. Housing associations are well known for providing homes for those in housing need, investing in services that help their residents get on in life, and working to build great places to live.
They’re officially public sector bodies right now too, but later this year, they’ll be deregulated by government.
Deregulation will bring new freedoms to a sector that has been tied closely to national and local government for so long. And with increasing control over its own destiny, pressure and expectations for it to deliver – both for its residents as well as building much-needed new homes – can only increase with it.
So, in this new world as private, commercial organisations, will doing good be good enough? Or, like Kids Company, can they carry on doing good if their businesses are not good enough?
A balancing act
There’s always been a need for housing associations to balance three interlinked but sometimes conflicting pressures. What’s best for the business? What’s best for current and future residents? What’s best for society?
Government policy – rent reductions, benefit changes, an unerring focus on homeownership – will continue to pile on the pressure on housing associations to deliver, threatening to unsettle this delicate balancing act.
So, associations, particularly at Board level, will need to be alive to this, and not allow commercial objectives overshadow the social purpose – and vice versa.
Getting the governance right
Just like at Kids Company, Boards have such a crucial role to the success of their organisation.
There are some excellent chairs and Board members from associations large and small, who bring substantial experience and a range of skills, from housing and other industries.
But these Boards will be tested in a deregulated world, and collectively they will need to ensure they have the right skills and experience round the table as the world continues to change around them.
They also have to lead, setting and scrutinising an appropriate strategy, making sure the business is strong and stable enough to navigate difficult waters, achieving commercial and financial success alongside demonstrable social impact.
Given the pressure to increase homeownership and the financial benefits of an expanding private rent portfolio, they must also act as the guardians of the homes our communities need for an affordable rent (with a very deliberate lower case).
Keeping the money coming
Deregulation will obviously move housing associations away from the financial safety of the government and its Treasury. They’ll still be sound places for investment, but lenders may well be more wary.
Government grant has all but dried up for affordable homes and when you add in the rent reduction, which devalues a housing associations assets, lenders might lose their appetite for housing or at the very least impact the low interest rates the sector has enjoyed for so long.
When I’ve met funders who’ve supported housing associations, they wanted to see that healthy surplus and strong balance sheet – but they also wanted to see that social ethos too. It is that balancing act again.
It’s certainly time for new partnerships. After a rocky start a working relationship is forming with government – housing associations can be the answer to the conundrum of how to build one million new homes. But there’s also a need to redefine the way they work with local government. This historically close relationship is under strain as they try to balance the books while meeting the needs of their communities.
Ultimately we share similar values and objectives and can help each other, but it needs to be an equal and open relationship. We’ll need to work closely to make housing developments viable and affordable.
And, of course, true joint ventures with housebuilders will get more homes built, share risk and provide benefits for all partners and the community at large.
But what about doing good?
Expectations on a deregulated housing association sector will certainly continue to rise. Government wants them to build, build, build. Local authorities want them to meet their local housing needs. Lenders want a safe return on their investment. Residents, rightly, demand a decent home and a service to match.
Ultimately new freedoms will give housing associations more control over their destiny. Freeing them to build more and do more. They’ll have to behave like a business and think like a charity.
I know there’s some concerns over the so-called ‘mega mergers’, but as long as the starting point for discussions is whether they can do more good and provide decent services by becoming stronger businesses, then it should be encouraged.
In the end, what makes housing associations different is that every decision is a balancing act at all; they’re social businesses in the truest sense. Each decision should continue to balance the benefits to current and future residents and wider society, as well as the commercial gain.
So this social ethos will be tested when the sector gets hold of its new freedoms and flexibilities, but I’m sure that doing good, but doing it even better, will remain central to their purpose.