When funding models change and organisations are forced to rely more upon their own resources, commercial practice has to follow. How else can funding gaps be plugged?

The Social Housing sector is facing this challenge. Fewer grants are available for building and regenerating homes and there is downward pressure upon income as tenants struggle with increased rents, caps on benefits, and the rising costs of food and energy.

The fear as expressed by customers and staff is that Social Housing Landlords will embrace commercial activity in the search for ways to shore up their finances, but at the expense of their social purpose and core values. The anticipation is that Finance reports will influence management thinking far more than those about the value being added to peoples’ lives.

This doesn’t have to be the case. The point about commercial practice is that it helps to build financial strength. But social missions and core values are kept intact through sound governance and the effective stewardship of strategy.

Other organisations have successfully undergone similar transitions to that faced by Housing Associations. In 2012 British Waterways, which cared for and maintained 2,000 miles of historic waterways, ceased to exist in England and Wales. It was replaced by the Canal & River Trust. Prior to this there had been a long period of decline in the level of government funding – from over 60% of turnover to less than 25% today. Commercial activity has filled the gap.

Far from losing its way, the Trust has not only kept its mission intact but has placed it at the heart of every commercial activity within which it is engaged. You need only a quick look at their website for this to be apparent. It is precisely because their mission and core values are so clear that they have been able to attract income from multiple sources.

That said, Social Housing organisations have a hard task ahead. The idea that their assets i.e. social housing properties, should be thought of as money making enterprises will always be hard to accept. But, as anyone who has managed assets will know, the more that assets meet customer needs, the more sustainable will be the income from those assets. In other words, social housing properties that are affordable, inexpensive to maintain and have the characteristics that customers need are likely to make more money for Landlords than those that fall short of this ideal.

The organisations that will achieve this best will be those that remain totally focused upon their social purpose and listen carefully to their customers to understand how their needs are evolving. And they will have the information and operational practices in place for services to be delivered at the level of cost needed.

This sounds like good commercial practice, and it also sounds like what a number of Social Housing organisations have been trying to do all along.

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Paul Clarke
Director
Develin Consulting