Combating the growth of slums using for-profit social business models

Thesis (S.M.)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2009.This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections.Cataloged from student submitted PDF version of thesis.Includes bibliographical references (p. 82-85).With 1 billion people living in the slums of cities today and no signs of a decrease in the rate of urbanization and population growth, it is obvious that new approaches to combating poverty and the global housing crisis are needed. Acknowledging the recent growth of the microfinance industry and social investing, this thesis investigates how for-profit social investment techniques could be used to create housing and combat the growth of slums. It compares various for-profit social business models and provides a "toolbox" of potential structures which could be employed based on the characteristics of a specific community. In the end, it shows that social business techniques hold promise as effective ways to draw money into developing nations from the world's capital markets to improve the lives of millions of informal settlers. Using literature reviews, interviews with industry participants, and a feasibility study based in Manila, the paper shows that: - There are multiple for-profit social business structures for producing low-cost housing which could be employed based on the characteristics of the particular community. - The social investment landscape has developed to the point where there is significant capital available for investments in housing. - A social business structure would be effective in providing housing for the lower-middle class population of informal settlements in Manila; and the implementation of such a program would be effective in relieving a large financial burden from public institutions, allowing them to serve more households in the lowest income segment.(cont.) - These social business models could be scaled-up to numerous communities to create a significant impact on the housing crisis. As real estate developers fancy themselves as choreographers of a dance of multiple disciplines which, when orchestrated well, improves the quality of the built environment, I hope this paper presents a unique multidisciplinary approach to the issue of informal settlements, combining elements of finance, urban planning, law, and policy.by Kurtis C. Fusaro.S.M