“We are inspired by the potential for philanthropy to unlock impact investment opportunities. We enjoy working with not for profit leaders who are trying to create new solutions, for example, through layered investment.”
Sefa and LMCF joined forces in 2015 to establish the Affordable Housing Loan Fund. LMCF invested $3 million, for disbursement to selected affordable housing development projects throughout Victoria. Habitat for Humanity, Victoria received the first loan distributed from the Fund. The loan assisted with the construction of 13 new homes for low-income families in Greater Melbourne. The loan helps Habitat for Humanity increase the pace of construction, and to build more homes for low income families. It also provides Habitat a pathway to financial sustainability and makes them less reliant on grants to fulfil their mission.
In 2017 we collaborated on The Affordable Housing Challenge, to encourage creative solutions to providing affordable housing. The First Challenge was run with local government land partners who could make suitable land available at no cost (by title transfer or 50-year lease). The Foundation committed to provide a $1 million grant and an impact investment opportunity for developers to apply for a loan for up to $2 million, managed by Sefa.
The 2020 Challenge is focused on eligible not-for-profits who wish to use their land holding, including vacant land, strata or redevelopment of existing buildings, to increase the supply of affordable housing in Melbourne. Feasibility and capital works grants are available.
Sefa and LMCF have facilitated a series of roundtables with leaders from the philanthropic sector to raise awareness of impact investing, upskill decision makers in Foundations about blended finance opportunities, and contribute to a deeper conversation about social impact. This is an important contribution to the growth of the impact investing ecosystem in Australia and one way to reach new sources of finance to address the affordable housing challenge.
LMCF has engaged Sefa to conduct a research project on the best models to use for philanthropic capital in the affordable housing market.
The project will include a review of domestic and international research on the financing of affordable housing developments. It will consider how investment can be layered so that each element of the capital structure is deployed most effectively, particularly considering philanthropy’s role.
A high-level comparison of innovative housing models will be undertaken to provide insights about the costs, benefits and scalability of various approaches. The findings will be publicly available and provide a starting point for foundation investors as they think about their role in financing affordable housing. At a time when affordable housing has the attention of state and federal governments this contribution has the potential to drive innovation and systemic change.
