Community Financing Model for infrastructure and housing improvement services.
Implementation of a community model that financed poor families access to basic services generating benefits for the company.
About You
Location
Project Street Address
Project City
Project Province/State
Project Postal/Zip Code
Project Country
Your idea
Year initiative/program began:
2000
Field of work
Housing
If Field of Work is "Other" please define in 1-2 words below (and explain in detail in the entry form):
Service / Activity focus (If "other" please explain in entry form)
Transaction
Year organization founded (yyyy)
1992
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Project URL
Positioning of your initiative on the Mosaic of Solutions™ diagram:
Which of these barriers is the primary focus of your work?
Non-affluent are not valued customers
Which of the principles is the primary focus of your work?
Prove that social return doesn’t preclude financial gain
If you believe some other barrier or principle should be included in the mosaic, please describe it and how it would affect the positioning of your initiative in the mosaic
This field has not been completed. (333 words or less)
Name Your Project
Community Financing Model for infrastructure and housing improvement services.
Describe Your Idea
Implementation of a community model that financed poor families access to basic services generating benefits for the company.
Innovation
What is your signature innovation, your new idea, in one sentence?
Implementation of a community model that financed poor families access to basic services generating benefits for the company.
Describe what makes your idea unique—different from all others in the field.
It is innovative since it implements a financing system through a community model, where the trust fund is the instrument that warrantees transparency in the administration of resources thanks to the generation of social capital, investment return, integrating low income population of metropolitan the area of Buenos Aires to the rest of the country through the natural gas pipes access.
Thus we carried a pilot project in 2000 in the IV Zone of the Moreno Municipality, building natural gas piping and extending the service to 3,200 families in a 6 years period. This project generated savings for substitution of fuel where each neighbor went from spending $620 a year to $141.50 a year (approx.) By repaying the work done those savings had a direct impact in the families economies and it increased their property value. With these results we intend to scale the program to reach 10,000 families in 4 years, hoping the commercial banks would participate in the project, and where the management and projects carried out by FPVS are key when determining the offering so we can develop business on the base of the pyramid.
Financially we can talk about a model that not only manages to include the poor population in the financial model with a return on the investment, but also generates savings by fuel substitution with a direct impact in families economies, creating a chance to improve their quality of life in the long term.
How do you implement your innovation and apply it to the challenge/problem you are addressing?
We work simultaneously organizing the demand ad adjusting the offering. We developed a participatory methodology with the neighbors who designate a commission that would carry the project forward and promote it. Through neighborhood assemblies and training of block leaders workshops we seek to demonstrate the social feasibility taking into account the neighbors interest to assume the costs of the external piping.
This condition is formalized with the signature of a trust fund with a minimum of 65% families from the area (beneficiaries) as warrantors of the investment, where the FPVS acts as the fiduciary agent. Once this threshold is surpassed we manage to generate surplus that could be used by the neighbors in neighborhood improving works.
On the service provision side we seek to demonstrate to the stakeholders (small and medium construction companies, natural gas distributors, municipalities and commercial banks) that this is an investment with social and economic return. Once we have secured the funds to start the works on the external piping, the neighbor’s commission selects a construction company that, using local labor, would carry the works. At the same time internal piping works (inside the homes) begin.
Do you have any existing partnerships, and if so, how did you create them?
Yes, we have established partnerships with:
1) The neighbors, through the creating of a neighborhood commission named “Organized Community” that in 4 years became “Public Services Coop”.
2) The FONCAP, mix entity that invested $3,000,000 pesos (approx USD one million) for the piping works of the first project.
3) Multilateral organizations: World Bank, that awarded the initiative with u$s 250,000 in the Development Marketplace 2002 competition, the IDB, with whom we are working together to access funds that would allows us to scale the initiative in other areas.
4) Gas Natural Ban, distributing company in charge of charging and collecting payments for the trust fund through the issue of invoices.
5) Ferrum/FV in charge of installing piping inside the homes and in charge of buying materiald, training and supervision of certified gas fitters.
6) The Universidad Torcuato Di Tella, measuring the socio economic impacts through the Neighborhood Development Observatory created in 2006.
7) ENARGAS, controlling organization that allowed collecting the works payments through invoices and with whom we working in other areas of the project.
In which sector do these partners work? (Check all that apply)
Citizen sector (nonprofits, NGOs) .
Impact
Provide one sentence describing your impact/intended impact.
To make this a suitable model for market agents to provide natural gas to 10,000 families in the short term.
Please list any other measures of the impact of your innovation.
a) The Public Services Coop would have began a least one new project to provide the neighborhood with more pipes
b) Gas Natural Ban gains at least 10,000 new customers from the base of the pyramid.
c) Commercial national banks invest at least u$s 10,000,000 in this type of initiative.
d) Ferrum/FV starts to offer housing improvement at a larger scale (bathrooms and kitchens mainly) to low income families.
e) Enargas is in charge of spreading the methodology to other areas of the country.
Does your innovation address and/or change banking regulations?
The target is that in the year 2012 another 10,000 low income families have gas service in their homes, achieving an increase in their real income of 5 % (estimated in $ 500 annual for a poor family), improving the health (due to the best quality of the air and for the best cooking of the food) and their quality of life (comfort, use of the service predictability).
Benefits to Gas Natural Ban and Ferrum/FV are generated with 10,000 new clients, and also for local gas fitters, construction workers and for FPVS by scaling the pilot project
How many people does your innovation serve or plan to serve? Exactly who will benefit from your innovation?
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This Entry is about (Issues)
Sustainability
Financing source
How is your initiative financed (or how do you expect your initiative will be financed)?
Our objective is to get the commercial banks to be interested in this type of inclusive models. To this end we are jointly working with the IDB and Gas Natural BAN to obtain a credit for u$s 9,000,000 that would allow us to start the works. We hope to obtain this financing during the second semester of 2008.
If known, provide information on your finances and organization:
• Presupuesto anual 2007
Assets
Cash $121,333.66
Fixed $ 564,770.91
Pasive
Short Term $ 80,602.61
Long Term $ 289,816.99
Expenses
Programs $ 203,613.72
Administration $ 431,866.66
Others $ 2,071.24
• Annual Income Generated
Donations $ 395,715.35
Government Support $ 139,484.64
Others $ 98,784.64
FULL-TIME: 38
VOLUNTEERS: 78
What are the main financial barriers and how do you plan to address them?
There are two types of barriers. In the first place it is necessary to overcome the difficult access to credit that generally exists in Argentina, but we could expect this to be relating to the moment. To overcome this barrier we have sought help from the IDB that would finance the initiative at market interest rates, hoping that this then would welcome new actors.
The other type of barrier is the exclusion and lack of access to formal credit of the vast majority of the population due to the risk of uncollectibility of the service and the works on the part of the users, as well as to obtain the necessary demand levels to manage scalability. The Solidary Networks Trust Fund has demonstrated that it is sustainable and can warrantee the access for most of the families proving up to 10 years financing for internal and external works.
Aside from financial sustainability, how do you plan to grow the initiative?
We expect that the change of scale involved in serving 3,200 families in 6 years to 10,000 new families in 4 years will attract the participation of local commercial banks.
Also we expect that other distributing companies will be interested in expanding their operations to similar areas. Finally we hope that other actors on the offering side, such as Ferrum/FV, will start offering housing improvement as a new business unit.
Fundación Pro Vivienda Social will be in charge of influence the offering actors to bring new investment to the neighborhoods and the demanding actors so new models of organizations that would warrantee investment and jobs creation arise.
The Story
Please select one
What was the motivation or defining moment that led to the creation of this innovation? Tell us the story.
The power of contributing to the improvement of life conditions in the lower income sectors through community empowerment is the challenge I always wanted to face.
By having as a base the good results obtained with the implementation of a micro financing system through the housing improvement with the neighbors at the base of the pyramid. All this with a 98% repayment rate led to thinking about scaling my work to not jus a house , but a group of blocks and neighborhood through infrastructure provision.
This way we are creating social capital that can warrantee capital return but can also generate the neighbors organizational capacity so they can themselves generate their improvement in their quality of life in other future projects.
The first step to accomplish this is to overcome the people’s initial skepticism, the lack of understanding from the main stakeholders are an obstacle to our work because of fear and distrust and to work with private companies to show the that this population constitutes a market that bring not only economic but social return. At the same time we work with the community to make them believe in the process so they take ownership of the role of the facilitators for a common goal, as a way of seeing to their needs.
The personal commitment with these projects increases as we experience the transformations of social capital into financial capital in an environment lacking of trust such as Argentina. These experience recreate the hope of transforming society.
As the projects incorporates new actors such as businessmen, companies, civil servants, the state administration, bankers and the banks, etc the process recurs. Again the agreements between diverse actors reinforce the share capital and allows to carry on business where they all win; the circle is extended and the hope of change they are possible.
In my profound faith that human being are capable of transforming reality if we agree on it and respect each other leads me to engage in new challenges.
Please provide a personal bio of the social innovator behind this initiative.
Professor of Physics and Applied Mathematics. He did a Specialization in Management of Small and Medium Companies – institute of High Managerial Studies of the business School, Southern University, IAE - and a Master in Nonprofit Management -Univ. of San Andrés, and Univ. Torcuato Di Tella-. He began to be employed at the social sector more than 30 years ago, as a volunteer in the neighborhood of Retiro. He was President and Executive director of a Foundation for Housing and Community; and then Executive director of the Foundation Pro Vivienda Social (FPVS). From the year 2006, president of the Networ of Institutions of Microcredit in Argentina (RADIM). His specialties are: microcredit, housing problems, and access to public services.
a) Please identify the individuals that your innovation benefits (Please check all that apply)
Producers , Consumers , Holders of assets.
b) Do you help the people you serve to buy goods or services using financial innovation? If so, how?
Si, ayudamos a la comunidad a mejorar sus condiciones de vida, de tal manera que puedan tener acceso a servicios de infraestructura como el gas, con lo cual los vecinos han obtenido un ahorro por sustitución de combustible, que impacta directamente en su economía familiar. Este ahorro es destinado a la compra de otro tipo de servicios y al mismo tiempo se ve reflejado en la realización de mejoras habitacionales, revestimiento de paredes, cubiertas, ampliación de superficie de la vivienda, inclusión de nuevas habitación y con disminución del nivel de hacinamiento, entre otros, dado que este tipo de intervenciones genera un sentido de propiedad que incentiva a los vecinos a continuar con el proceso de mejoramiento de su vivienda y de su entorno en general.
c) Do you help the people you serve to sell goods or services using financial innovation? If so, how?
Si, dentro del desarrollo propio del proyecto, se prevé la realización de obras de extensión de red como de instalaciones internas y mejoramientos habitacionales, los cuales son otorgados a una empresa constructora que cuente con participación de mano de obra local, zanjeros, ayudantes y gasistas matriculados, siendo un generador de empleo en la zona.
Para garantizar la calidad de estas obras de instalación domiciliaria, se creó una Oficina Técnica que se ocupa de la realización de los cómputos y presupuestos, contratación de gasistas matriculados, la realización de los planos de obra, la compra de insumos.
Es así como se puede observar que el impacto en la zona incrementa en general la venta bienes y servicios de empresas proveedoras de materiales, albañilería, restaurantes, asi como permite generar nuevos servicios como panaderías, restaurantes o mejorar otros como calefacción, en invernaderos, entre otras.
 | 182 weeks agoLaura de Nestosa said: espero que les vaya bien!! about this Competition Entry. - read more > |
| 182 weeks agoPedro Saenz de Santa Maria said: Una vez más, felicitaciones por los proyectos about this Competition Entry. - read more > |
| 183 weeks agomiguel jesus said: lamejor onda. about this Competition Entry. - read more > |
| 184 weeks agoGabriel Lanfranchi said: Hola Gastón, Si bien existen numerosas iniciativas de financiamiento del mejoramiento habitacional (como el caso de Patrimonio Hoy en ... about this Competition Entry. - read more > |
| 193 weeks agoGaston Wright said: Hola Gabriel, que bueno esto que contas. Existen otras iniciativas de este tipo en America Latina u otras partes del mundo? Un ... about this Competition Entry. - read more > |
| 193 weeks agoGabriel Lanfranchi said: Hola Julia, Muchas gracias por tu comentario. Soy Gabriel Lanfranchi y trabajo con Raúl en la Fundación. Con respecto a la ... about this Competition Entry. - read more > |
| 193 weeks agoJulia Forlani said: Hola Raul, Como estás? Fecilito por su iniciativa. Es muy buena. Con muy grande posibilidad de impacto. Podria responder una ... about this Competition Entry. - read more > |
