A new initiative is bringing investors wishing to make a positive impact in the community together with housing
providers to help build more affordable homes for Kiwis in need.
Community Finance is providing low cost finance to New Zealand’s Community Housing Providers to help address
homelessness and the affordable housing crisis.
James Palmer, Chief Executive, says successive governments and the private sector have not been able to meet New
Zealand’s housing need, and Community Finance has been established to fund community housing projects and deliver more
“The Community Housing sector is constrained by the high cost of borrowing from banks. We know at Community Finance that
by lowering the cost of finance to the sector, more families will be coming home to warm, dry and affordable homes. It
really is that simple.”
Mr Palmer says Community Finance is connecting investors with organisations such as The Salvation Army, Habitat for
Humanity, and Community Housing Aotearoa, all of which have a proven track record in creating housing solutions that
help to tackle the housing crisis.
“Our aim is to work alongside the private sector and Government to help deliver more quality houses, in the right
places, for those who need them most.”
New Zealand’s social and community housing makes up approximately three per cent of the overall stock, whereas
internationally in developed countries, it is on average six per cent.
Mr Palmer points to the Waimahia Inlet development in the South Auckland suburb of Weymouth as a community made up of
mixed housing that works - and is thriving. This project was delivered by a consortium of Community Housing Providers
“We need to build more of these types of mixed developments which are incredibly successful and create vibrant and
diverse communities, rather than building what will become the ghettos of the future.”
Community Finance was established with capital from four key stakeholders: the Lindsay Foundation, The Wilberforce
Foundation, Christian Savings, and the Matua Charitable Trust.
Community Finance’s first project is a Salvation Army Community Bond which will require investment of $40 million to
fund 118 new homes for those most in need. This Community Bond targets the Auckland region with new homes being provided
in Royal Oak, Westgate and Flat Bush. These homes will reduce homelessness and the waiting list for social rental
accommodation in Auckland.
Brendan Lindsay from the Lindsay Foundation says: “The Lindsay Foundation was established to support Kiwis and
organisations who aspire to make a positive difference in New Zealand. Community Finance to us is all about investing in
projects that will help get more affordable, well-built, safe homes to address one of our country’s greatest needs.”
Economist and author of Generation Rent, Shamubeel Eaqub, has joined the board of Community Finance as a practical way to contribute to the housing crisis.
“Community Finance connects philanthropy and finance with need,” he says.
“The power of finance is that it is transformative. With Community Finance, finance and wealth in New Zealand is
connected with Community Housing Providers that have a proven track record of providing secure, and stable housing
solutions. Community Finance is a genuine impact investment option.”
How the model works
Community Finance works with Community Housing Providers to undertake financial modelling, social impact assessments and
credit analysis and if the project stacks up, the loan is approved.
Community Finance acts as an intermediary with loans secured and managed through securitisation, to create a Community
Bond. Community Finance charges less than 1% pa to manage both the investments and lending.
Investors receive regular reports on the direct social impact of their investment as well as a financial return of
between 2% pa and 2.50% pa, which is similar to the financial returns on corporate bonds and term deposits.
Partnering with The Salvation Army
The Salvation Army has been at the forefront of tackling the social and housing needs of low-income New Zealanders for
decades. It is a trusted service provider and is a respected advocate for social justice, especially promoting safe and
secure housing as a basic human right.
Paul Gilberd, Community Finance General Manager, says it has committed to working in partnership with the Salvation Army
because of the many years of consistent, high-quality service it has delivered.
“Our values are aligned, and the need for affordable housing has never been greater. Our intention is that Community
Finance will enable the likes of the Salvation Army to achieve more by helping to make their money, and therefore their
impact, go further.”
Mr Palmer says impact investing, which focusses on making a beneficial impact in the community while also receiving a
financial return, is becoming more popular in New Zealand.
“Community Finance provides a straightforward, secured and genuinely ethical investment option. We have created a bridge
between wealth and the needs of the poor, where investors and borrowers benefit alike.”