The $5 billion community trust sector has put a joint housing fund on the agenda in what would be a first combined investment project for the 12 funds.
Alastair Rhodes, head of the Tauranga-headquartered BayTrust, said a collaborative housing fund emerged as the top idea at the community trusts conference held in Rotorua mid-November.
Rhodes said the community trusts agreed to table a business case for a joint fund early next year with the aim of attracting other investors further down the track.
“If, say, in three to four years we can show the housing fund has delivered financial returns and made a real difference to communities then KiwiSaver schemes, for example, could also allocate to the strategy,” he said.
Several community trusts (including BayTrust) have already made local investments in affordable housing projects but Rhodes said a scaled fund using an experienced third-party manager might offer a more efficient route to achieving such ‘impact’ goals – especially if other commercial investors come aboard.
He said a seed fund of, for example, $150 million would attract interest from affordable housing development managers in both NZ and Australia.
While it’s early days for the housing fund project, Rhodes said delegates at the Rotorua conference were keen to use their financial clout beyond bottom-of-the-cliff grants to help alleviate some entrenched problems in their respective communities.
Community trusts have granted almost $2 billion since the sector was created from the proceeds of regional bank sales about 30 years ago “yet at the same time our key wellbeing metrics (environment, housing, inequality, child poverty) have all worsened”, he said in a statement.
“We need to be revolutionary and in these challenging times, funders must use all their tools,” Rhodes said. “… If we are to truly make a meaningful change in our communities then we must now explore advocacy, leadership and using our collective investment bases to make a difference and fulfil our purpose.”
As well as housing, the delegates voted climate change for collective attention but he said building an investment proposition around the theme was more complex.
Last year 10 of the 12 community trusts signed a pledge to align their portfolios with low-carbon climate objectives.
According to Rhodes, the trusts were also exploring other opportunities to “leverage fee reductions” via a joint approach to wider investments.
He said with markets set for a regime change after a long period of relatively easy returns, community trusts would likely have to revisit investment assumptions and strategies.
Overall, Rhodes said the community trust sector was primed for change.
“We’re sick of talking,” he said. “Community trusts want action to deliver on our goals.”
The three-day Rotorua event attracted over 200 delegates, comprising fund executives, trustees, investment managers and service providers in the first face-to-face gathering of the sector for four years. A number of other charitable energy trusts also attended, Rhodes said.
Historically, the combined conference is held every two years with the planned 2020 symposium canned by COVID.
Southland will host the 2024 community trust conference in Invercargill.