Doing Well by Doing Good
First Housing demonstrates lasting value of a social enterprise
In the 1970s, the federal government under President Jimmy Carter was developing the national Community Reinvestment Act, which aimed to provide funding and programs to build affordable housing while also providing training and employment opportunities to low-income communities across the United States.
In the state of Florida, a man named Raleigh Greene, who was head of a large savings and loans institution, wanted to implement a similar program at the state level. He understood the critical need to address the lack of affordable housing across the country, but especially in Florida, which has for decades received a high volume of immigration. Raleigh became the driving force behind the creation of First Housing.
First Housing was established in 1979 under a Florida statute. It is a quasi-governmental, for-profit company owned by financial institutions. To this day, First Housing is run as a social entrepreneurship, with a primary focus of mobilizing capital for affordable housing. Over the past four decades, First Housing has been involved in financing and consulting for over 400,000 units of affordable housing and has helped thousands of families find a place to call home.
For-Profit, With A Social Purpose
First Housing is the only company of its kind operating in the state of Florida. The organization does not act as a developer, but instead partners with developers to deliver rental housing and works with Florida Housing, the finance corporation created by the state Legislature to assist with affordable housing programs.
By lending to a wide range of developers’ projects across mixed tenures and a range of economic contexts, First Housing has diversified the risks of its investments, and in doing so, ensured the company’s financial stability. As a result, the organization has continued to thrive. In fact, First Housing has only once reported a loss. During the last major recession, the management retained its entire staff instead of carrying out layoffs, believing that their business model was robust and diverse enough that they would soon recover. They were right, and when it did, they hired more staff and continued to grow.
Strong Leadership Over Four Decades
First Housing was incorporated by 16 original shareholder banks, thrifts and savings and loans corporations. This founding investment group raised an initial $141,500 in capital.
When Raleigh launched First Housing, he hired Cliff Hardy as the CEO and Chairman. Cliff ran the company until his retirement in 2004. Doug McCree, who joined the board of First Housing in 2000, was trained under Cliff and for the past 15 years has acted as President and CEO, building on the company growth.
Throughout his career, Doug had been interested in altruistic, for-profit businesses. Over his years of leading First Housing, he has noticed the role of the company evolve. While its initial focus was primarily on providing an affordable housing lending pool, its success in that area eventually drove other financial institutions that had entered the affordable rental market through them to begin operating within that market independently.
“At first, it felt frustrating to us. It was our business; we trained these other institutions,” Doug says. “But when we stepped back, we realized that it was really our purpose. We wanted to mobilize capital for affordable housing, and we helped make that happen successfully.”
Over time, First Housing diversified its services. But it still plays a vital role in the continued financing of the affordable housing sector.
“All of these banks had made commitments to affordable housing projects, but during the recession there was a risk they could change course and back away from some of these projects. We were able to point to our record and strong arm them into honoring those commitments,” Doug says.
“They agreed if they were going to do any lending, this is what it should be,” he adds.
The company now provides training and expert guidance to its clients, which include developers, general contractors, project managers, subcontractors and laborers. First Housing helps its clients to better understand the laws and regulations designed to encourage fairness and equality within the labor trades. This includes providing training and employment opportunities for individuals and small businesses that can benefit from and thrive by participating in programs designed to improve the overall financial well-being and stability of Florida’s workforce.
Within the construction industry, First Housing also specializes in compliance monitoring, which includes regulations such as the Davis-Bacon Act that covers worker safety and fair compensation.
“Anytime federal funding is used in a construction project, prevailing wages need to be paid,” Doug says. “We send out surveys to ensure that those wages are being maintained.”
Their compliance monitoring also includes Section 3, a provision of the Housing and Urban Development Act of 1968, which is designed to encourage participation and to create shared financial gain through employment opportunities for low-income citizens within federally assisted affordable developments.
First Housing also provides both online and live training for project managers on compliance issues, including requirements for filling out paperwork and other processes that may otherwise seem dauntingly complex.
“We operate like most finance organizations but with a bit of a twist,” Doug says. “We’re dealing with government programs, so that requires a shift in knowledge and focus.”
First Housing Foundation
In 2000, the First Housing Foundation, non-profit arm of the company, was established. Since then, the organization has donated $1 million to housing-related charities throughout Florida. The foundation is now looking at acquiring rental properties that had been rented at market price and holding them to make them “naturally affordable,” avoiding the rise in rental prices that for-profit developers and owners would typically impose.
First Housing also does charitable work through its employees who are involved in Paint Your Heart Out, Habitat for Humanity, school renovations and other projects sponsored by the company. Each employee is given four paid hours of time per month to volunteer at the nonprofit of their choice.
As a result of these programs and initiatives, the company has been recognized for its philanthropic efforts as well as the quality of its employment standards. According to Doug, the firm was named small business of the year in 2008 by the Greater Tampa Chamber of Commerce, was listed as one of the Top 500 companies for the past five years by the Business Observer newspaper and was designated a Top 100 donor by the United Way for the past two years. First Housing demonstrates that doing good can also be profitable, making the business sustainable, today and into the future.