Social Investing

As Austin continues to grow, by way of internal migration, pushing up the cost of housing and subsequently out of reach for many families, Austin Habitat for Humanity faces increased pressure on serving the underserved in the Austin housing market.

We all know that Austin Habitat serves via multiple programs, Home Construction, Home Repair, Housing Counseling & ReStore (Home Improvement Store) but how do we scale these programs to reach those in need.

Surrounding Home Construction, one way the organization is researching how to scale the operation is by Social Investing.  Internally at Austin Habitat we’ve referenced this term in a number of ways including Habishares, Homeshares etc, but it is essentially financing Home Construction instead of fundraising.  Traditional fundraising will always remain, and grow, but to supplement the projected growth of Home Construction we will also finance construction.  Financing could come from private investors, foundations, financial institutions etc.  In fact, we already finance some of our Home Construction by way of the Bootstrap grants we receive through the State of Texas. 

Why finance?  At a certain point we can only raise a certain amount of funds via traditional fundraising for a number of reasons – one being market saturation as many nonprofits compete for donor dollars within the Austin community.  Financing allows Austin Habitat to build a house that would otherwise not have been possible without it, and it does not affect the homeowner other than provide the needed capital to build the house.  Austin Habitat manages the financing obligations – all the homeowner needs to do is pay their regular mortgage payment the same as all Habitat homeowners.

Why haven’t we done this sooner?  As the trend and demand for Corporations to become more socially responsible, Social Investing is gaining more traction, but it takes time.  Social Investments have been in existence for many years but access to them has been a challenge.

Is financing Home Construction detrimental to Austin Habitat and what are the effects on cash flow?  No, it is not detrimental.  The financing obligation Austin Habitat pays to the investor is covered by the mortgage payment Austin Habitat receives from the homeowner.

As Austin Habitat continues to pursue Social Investing models to implement, the integrity of what we do at Austin Habitat will always remain the same.

-Mat King, Austin Habitat for Humanity Chief Financial Officer