Housing association objectives need to be under the same roof: report

No correlation between housing associations’ social and financial objectives Housing associations make too small a contribution to society, the government has to step in too frequently because of maladministration, and the associations’ executives are often unaware of the far-reaching impact of their decisions. These are the conclusions of new academic research conducted by Jan Veuger of Rotterdam School of Management, Erasmus University (RSM). In his dissertation, he asserts that in numerous cases there is no correlation between social and financial objectives. The Dutch House of Representatives debated the results of the report from the Parliamentary Committee of Inquiry on Housing Associations in early December 2014. When the Housing Act (Woningwet) first came into force in the Netherlands in 1902, housing associations were considered a help to society, particularly to achieve a better standard of living for those on the fringes of society. The guiding principles in this context were the quality of the spatial structures being built, schemes of a temporary nature, citizens who could develop initiatives, and ensuring people with higher incomes were not occupying social housing at low rents. Although this objective should still apply, Veuger’s research shows that it is no longer the first consideration. On the contrary, with the exception of the Woonbond (the union of tenants), it is nowhere to be found in articles of other members of Aedes, the national association of housing corporations. In his dissertation Materieel Immaterieel. Besturing van woningcorporaties in samenhang met maatschappelijke waarden (Material Immaterial. Governing housing associations in correlation with social values), RSM’s Jan Veuger asserts that the social objectives formulated in relation to the financial objectives of housing associations are rarely fulfilled. He believes executives must be held responsible for ensuring that there is greater correlation between objective and result as well as between financial and social return. Such correlation would ultimately contribute to the raison d’être of housing associations in the future. Governance of housing associations Jan Veuger also asserts that when the executives of associations appear to support social objectives – such as raising the ‘quality of life’ of tenants, whereby the definition of quality of life has become a catch-all term – the effectiveness of these objectives is never assessed. According to the RSM PhD student, one problem in the overall governance of associations and the accountability of their boards is that entirely unrelated financial and non-financial assessment criteria are applied. However, numerous interviews with and surveys of housing association executives have shown that an inherent motivation to contribute to society definitely exists. Veuger also explains how the existing legal forms offer no solution to the issues within the housing associations. Taken alone, the legal form of the associations is no impediment to fulfil their roles; however, the form does mean the associations have virtually no return objectives. Is history repeating itself? In past years, specifically in the years 1914, 1920, 1958, 1986 and 1997, the Netherlands experienced crises and discussions about the raison d’être of the housing association system and now, in 2014, the same issues are again under consideration in the report of the Parliamentary Committee of Inquiry on Housing associations and in Dutch Minister of Housing and the Central Government Sector Stef Blok’s proposed amendment [Novelle]. Consequently, it is likely that in about 15 years’ time there will be a new housing association crisis. Veuger is calling on housing association executives, politicians, supervisory authorities and tenants to ensure the associations are governed in correlation with social values. His message to executive board members who are responsible for taking values into account is that they must ensure they govern from their own strengths, recognise the consequences of their decisions and accept their accountability. The true value of an association does not lie in chaos on a sliding scale being organised and controlled by a board member, but has to be established in correlation with social values which can enhance the role of public housing. Jan Veuger will defend his dissertation in the Senaatszaal of Erasmus University Rotterdam, on Thursday, 11 December 2014, at 9:30. The doctoral committee comprises Professor Teun Hardjono (RSM), Professor Erwin van der Krabben (Radboud University), Professor C.T.B. (Kees) Ahaus (University of Groningen), Professor Lucas Meijs (RSM) and Professor George de Kam (University of Groningen). Rotterdam School of Management, Erasmus University (RSM) is ranked among Europe’s top business schools for education and among the top three for research. RSM provides ground-breaking research and education furthering excellence in all aspects of management and is based in the international port city of Rotterdam – a vital nexus of business, logistics and trade. RSM’s primary focus is on developing business leaders with international careers who carry their innovative mindset into a sustainable future thanks to a first-class range of bachelor, master, MBA, PhD and executive programmes. RSM also has offices in the Amsterdam Zuidas business district and in Taipei, Taiwan. www.rsm.nl For more information on RSM or on this release, please contact Olivia Manders, Media Offer at RSM, on +31 10 408 2877 or by email at manders@rsm.nl.