From Principles to Practice DIGITAL

26APPROACH 4 Promote alternative ownership and financing models A range of non-traditional ownership approaches – such as co-housing with upfront equity,21 community land trusts22 that lease land to homeowners and cooperative models where residents build shared equity – can incen- tivize development while preserving affordability. These can be paired with alternative mortgage structures to expand access to ownership and homeowner-led con- struction. Examples include shared equity with public or private investors, government-supported voucher systems that offer a pathway towards home ownership via a monthly fee, forgivable loans or down payment assistance. Though challenging to scale, combining these models can reduce risk and, when structured into auditable financial products (e.g. bonds), could attract institutional investment while delivering social and eco- nomic returns.APPROACH 3 Integrate performance- based metrics Performance-based models use contracting, procure- ment and payment systems to ensure that social impact metrics are included in a project. Metrics and bench- marks are set for defined social impact delivery, and if they are met over a defined measure of time, additional funding is provided to the project operator or origina - tor. This can help ensure that long-term stewardship is viable, and that the project’s ongoing success is care- fully considered at its outset. To prove successful, the metrics for success must be collectively defined by all stakeholders in a way that adequately reflects the social value objectives. As with social impact bonds, it is important that key performance indicators (KPIs) and performance-based metrics are aligned with local needs and do not replicate or replace existing social supports. Social outcome-oriented funding instruments such as social impact bonds19 may also support effective social impact through contracts based on performance that strengthen communities and places. One example may be private funders, including impact investors and philanthropists, providing the funding for specific social value activities. The government reimburses these funders if the project achieves outcomes that deliver public value, including the required rate of return for impact investors. Social impact investors will invest with the requirement that social impact goals are met, while government lenders may provide more favourable rates in exchange for verifiable progress on social value tar - gets. When using this approach, funders may need to work closely with project delivery teams to ensure that they have defined effective KPIs for the development and ensure that the social value created is of high value. SK GROUP’S SOCIAL PROGRESS CREDITS SK Group has created Social Progress Credits, a con- cept similar to carbon trading. Here, social performance credits can be earned and traded. Credits are linked to monetary rewards.20 Some impact investors are exploring broader tradeable impact markets, where social impact and outcomes are measured, quantified and traded.BLENDED FINANCE FOR HOMEOWNERSHIP, AUSTRALIA Australia’s Home Owners Partnering Equity (HOPE Hous- ing) has created a successful mortgage product to enable homeownership while providing workforce housing. The model combines a down payment and mortgage from the homeowner with institutional investment funds to make homeownership possible for median income, work - force buyers. Buyers must select housing that is within a 30-minute commute to their place of employment to ensure quality of life. The mortgage repayment rate is capped at 30% of the home buyer’s income. Unlike for rental investment, investors have no carrying or mainte- nance fees and see a consistent 9.2% annual growth.23 DATA-DRIVEN AI FOR HOUSING RETROFIT, MALAYSIA UrbanWave provides an alternative mortgage product, powered by data-driven AI, which provides cash for renovations in support of retrofits for existing housing stock.24 Funding can be provided to support the purchase of a house in need of substantial renovations, where the ownership of the renovated home is shared, with the homeowner having the majority stake and full occupancy rights. The funds are supported by private funds and a platform called Urby.ai, which supports property invest - ment through profit-share contracts.25 Funding is not a mortgage but rather allocates a share of the residence’s appreciation value to investors. Read more in the Alli- ance’s UrbanWave Innovative Practice Case Study. 27Getty ImagesUrbanmetry