Duncan Maclennan Derek Ballantyne Michael Lennon

1. The GFC and non-profits 2. What Are Priorities for Policy and Non-profits Now 3. Change and Finance: Possibilities

 Origins in below market rent, public housing  Old monopoly with state welfare culture begins to end after 1970s: Aus still  New financial regimes (UK), fiscally attractive  Connections to deregulating capital markets  Different levels national support pre 2008 MORE COMPLEX, DIVERSE SYSTEM BUT STILL DIRECTLY DRIVEN BY GOVERNMENTS: CRASH HAS ENDED THAT SYSTEM

 Credit rationing regimes have posed difficulties in finding private finance for projects that can actually generate a market rate of return  Where house prices have fallen a negative effect on the value of non-profits housing and land asset stock as collateral  Increases in unemployment and downward pressure on low wages have increased the risk of non-payment of rents  Reforms of social security, pensions and tax may pose problems  After 2010 austerity measures have reduced public investment support for development programmes  There has been a favourable effect from lower interest rates, and from downward pressure on land and labour costs GOVERNMENT RETREATING FROM FISCAL SUPPORT FOR THE SECTOR, SERIOUSLY MISREAD THE LONG TERM

Leaving a world where policy shapes a ‘System that ensures affordable housing available for all’.  Clarity and consistency on affordability  Market failure pervasive (credit markets!) ◦ Rental market efficiency: generation rent etc ◦ Ageing, assets and services ◦ Environment  Business policy of distanced and deregulated non-profits may discount government policy MAJOR CHANGES FOR GOVERNMENTS AS WELL AS PROVIDERS

OBVIOUS ALTERNATIVES  Passive and sell assets to offset operating deficits  Passive, don’t develop; hunker down with current interests served, await recovery (RIP).  Active: Restate social goals to wider groups, with wider sources finance, wider roles  Recognise potential niches of ‘for profits’ THE WIDER PROVIDER IN A MIXED SYSTEM

Must Shape a culture of managing capital and resources, learn from each other. Including 1. Maximising free cash, income cover for borrowings ◦ Reduce Costs, scale and integration  Subsidiary benefit of recycling cash ◦ Reassess social rents, affordable and social balance ◦ Developing new roles and businesses, some for profit

2. Managing own assets better  Active asset management ◦ Needs/demands change ◦ Patterns of value shift ( central cities) ◦ Policy premia in different niches change ◦ Need to address RTB and ‘no sales’ attitudes in UK  Leveraging own assets ◦ Previously limited: Limits in long run ◦ Issues of old grants on balance sheets

Borrowing  Keeping the banks at bay on old loans  Growing importance of direct capital markets  Major scopes for innovation in bonds  Margins and availability: System risks Equity  An age of equity: scale of equity  REITS  Roles and ownership  A Market for non-profits WHERE DOES THE SOCIALLY RESPONSIBLE CORPORATION END AND THE EQUITY FINANCED MIXED PROVIDE BEGIN?

1. THE OLD SOCIAL HOUSING SYSTEM IS DEAD, NO RESOURCES TO RECOVER IT. 2. NEEDS AND DEMANDS REQUIRE MORE FLEXIBLE RENTAL SECTORS IN AN AGE OF RENT. 3. HOUSING PROVIDERS NEEDED TO DEAL WITH MARKET FAILURES, IN RENEWAL, ELDERLY SERVICES etc. 4. NEW APPROCHES TO SERVING CUSTOMERS CREATE NEW PROFIT OPPORTUNITIES FOR NON-PROFITS 5. MORE THAN MARKET,WIDER PROVIDERS 6. CREATING A CULTURE OF CAPITAL MANAGEMENT; FACILITATING THE CHANGE: cash, equity, bond 7. NEW REGULATION REQUIRED 8. WILL BUSINESS POLICY MATTER MORE THAN HOUSING POLICY MORE ENTERPRISING, NO LESS SOCIAL