Housing for Inclusive and Equitable Cities
January 30, 2018 | Jonathan Reckford, the CEO of Habitat for Humanity, spoke about how developing sustainable, inclusive and equitable communities are dependent upon creating affordable housing opportunities.
This presentation is brought to you by Arizona State University's Julie Ann Wrigley Global Institute of Sustainability and a generous investment by Julie Ann Wrigley. Wrigley Lecture Series, world renowned thinkers and problem solvers engage the community in dialogues to address sustainability challenges. [MUSIC PLAYING]
Good evening, everyone. And thank you for coming. Thank you. How's that? All right. He's already providing great service. Wonderful. So welcome to everyone who is here, especially the gentleman in the front row who told me about the microphone problem.
My name is Chris Boone. I'm the Dean of the School of Sustainability at Arizona State University, which is part of the Julie Ann Wrigley Global Institute of Sustainability. Julie Wrigley, who is often at these events — I don't believe she's here tonight — is a strong supporter of the idea that we need to bring in thought leaders as well as people who are action-oriented working in the field of sustainability. And we've been able, through her generosity, to bring in some very remarkable speakers, including the speaker that you'll hear from tonight. And of course that's why you're all here in your very good number.
But it's not my pleasure to introduce the speaker. It's my pleasure to introduce the introducer. So with that, I want to say just a couple of words about Melissa Kovacs. Dr. Kovacs has a PhD in Public Policy and Econometrics and is a founder of a company called FirstEval. It's a data analytics and statistical consulting firm. One interesting thing about Melissa, Dr. Kovacs, is that she uses her statistics powers for good-- that sounds like a superhero- untangling homelessness data for the Central Arizona homelessness provider community. A really remarkable individual. I've just gotten to know her a little bit backstage. So please join me in welcoming our introducer, Dr. Kovacs. [APPLAUSE]
Good evening. I am so pleased this evening to welcome Jonathan Reckford to the Wrigley Lecture Series at ASU. Mr. Reckford has been the Chief Executive Officer of Habitat for Humanity International since 2005, which I think you all know, which is why you're here. He graduated from the University of North Carolina- Chapel Hill where he was a Morehead Scholar. He earned his MBA from Stanford's Graduate School of Business and started his career on Wall Street. He went on to hold executive and managerial positions at Goldman Sachs, Marriott, the Walt Disney Company, and Best Buy.
One thing he did for a year was helped with marketing and coaching for the Seoul, Korea Olympic Organizing Committee in 1988. Jonathan was serving as executive pastor of a 4,300 member church in Adinah, Minnesota when he received a call about the leadership position at Habitat. He serves on the boards of the Federal Reserve Bank of Atlanta, Stanford's Graduate School of Business, and the Duke Center for the Advancement of Social Entrepreneurship.
He's also a member of the Council on Foreign Relations and the Urban Steering Committee for the World Economic Forum. And just recently, last fall in September, he was named National Nonprofit Influencer of the Year by the Nonprofit Times.
Habitat for Humanity has helped 9.8 million people achieve strength, stability, and self-reliance through shelter since its founding in 1976. Habitat's vision is of a world where everyone has a decent place to live and its mission includes bringing people together to build homes, communities, and hope. So please join me in welcoming Jonathan Reckford. [APPLAUSE]
Good evening. I have my own mic. Thank you all for coming out today. Thank you for that very kind introduction. In the spirit of sustainability, I'm going to try to go paperless. We're going to see how that goes. But it's wonderful to be here. And I have been so impressed in the way that Arizona State has been able to demonstrate access to higher education to students that otherwise were considered unqualified. And Habitat for Humanity's goal is in a similar way to make housing available and accessible to all.
What do you think of when you hear the word "sustainability"? I think it applies on so many levels. In the past, I think too many groups in our sector-- and when we try to think about complex solutions to poverty-- tend to operate in silos. Educators said that education is the answer to everything. Health care providers would say, if we just have good health care, that would solve everything. And the same would be true for safety, for jobs, for the environment, and certainly for housing. And we were guilty of that as well.
And the reality is all of those are necessary if we're going to have sustainable and thriving communities and they're all very much interactive. I think back maybe 15 years ago to some pretty pronounced clashes between the environmentalists and humanitarian groups in different developing countries. And I think even in this country we had-- are you all familiar with NIMBY, Not In My Backyard? I think we also had BANANA, which was Build Absolutely Nothing Anywhere Near Anything, which was good for preservation, not so good for access to housing.
And I'm pleased to say that we've seen some wonderful bridges being built. And while we have a long ways to go, there's been recognition that in a very low-income context, a family won't prioritize protecting the forest if she can't feed her family. And so survival is going to come ahead or come first. And I think we've realized that the best solutions have to be "and" solutions.
How do we create environments in which people can support themselves and have thriving communities in such a way that creates a sustainability for all? For example, in Habitat's case, we work very hard to build with local, renewable resources. So in the Philippines and Nepal, we work with bamboo. In Central Asia, we work with actually an ancient cane reed methodology. And in many countries in Southeast Asia and Africa, we do soil-stabilized blocks, which take a fraction of the cement and are very resource friendly and they can be made by the local families.
And I know I looked at the very distinguished group of predecessors in this talk, and most of them focus very specifically on the environment and I'm a housing guy, but I can speak environment. And Habitat actually played a role not unlike Arizona State's role in education, where, and if you remember, it wasn't that long ago, that only rich people had "green" houses. And I remember an unnamed leader, who was proudly showing off his 20,000 square-foot green house, which is a bit of an oxymoron. But there was a sense that that was only available to people who had the resources to do that. And our view was that low-income families actually needed highly energy efficient and healthy homes the most. And if you think about the cost of housing, including your rent plus your utilities plus your cost of getting to work, transportation, then we were seeing energy poverty in very hot or very cold climates — and certainly you've got one here.
And so we started out in a partnership about 12 years ago with the Home Depot Foundation. And they put up a grant that created a subsidy for any of our Habitat affiliates across the US that would pay the difference between the base Habitat house and taking it to Energy Star or a larger subsidy, if they go to LEED or EarthCraft or one of the higher-standard metrics. And we built about 5,000 highly energy efficient homes in a relatively short period of time, making us the largest green home builder for most of the last decade.
But most importantly, we measured over that time, and proved as the cost curve came down, that families were better off paying slightly more for their mortgage because their monthly cost of ownership was going to go down if we built them a highly energy efficient home. And so it is now, we're really excited to see is materials cost to come down and it's a relatively nominal cost to build well up front. And you've got a wonderful leader here in central Arizona, so your local Habitat affiliate builds all Energy Star certified homes that are fitted with low-flow plumbing features.
And they've built more than 130 LEED-certified homes, which if you don't know, is an international designation for green building. Central Arizona Habitat is partnering with the University and with the cities of Tempe and Phoenix to plant trees as part of a community carbon bank. They're also partnering with the Desert Botanical Gardens to design and install desert-supported water friendly landscaping that's more sustainable for this climate. In addition, and this is one of those sort of hidden gems for Habitat, through deconstruction services and the efforts of three local Habitat for Humanity ReStores, more than 17,000 tons of waste have been diverted from area landfills. How many of you have ever heard of a Habitat ReStore? Have you seen one? Oh, this is an educated audience. So it's pretty amazing. And we should tell the story better.
But now, last year our more than 900 US ReStores generated $450 million in sales and diverted 300,000 tons from landfills, which is a great kind of win-win-win in terms of leveraging philanthropy to have impact on our mission while making a difference in the community.
So we're proud of the contributions that Habitat makes to a cleaner environment. But I want to talk tonight about a broader view of sustainability. And certainly, it will shock you that that in our view includes the sustainable construction of homes. Perhaps most important, we feel a moral imperative to help build thriving and sustainable communities where people can afford to live and create a better life for themselves and their families. /
Sadly, I hear everyday stories about families struggling because we have a full out affordable housing crisis. Actually, affordable housing in the US right now is at the worst point in modern history in terms of the ability for that median income family to afford the median home, mortgage or rent in their community. There is virtually nowhere in the United States now where a full-time minimum-wage employee working 40 hours a week can afford a one bedroom apartment.
A report released last summer indicated that here in Maricopa County, renters making minimum wage had to work 58 hours a week to afford a one bedroom apartment. And then think if you have a family, if you have broader needs, and then if you add in utilities and transportation.
So our focus at Habitat for Humanity is on helping low-income families, many of whom struggle each day just to survive. But we have reached a point that really is unsustainable from a community perspective, where rents have become so misaligned with income. It's actually much worse than before the recession. What's happened since the recession is incomes have done this, for especially the bottom half of our society, and housing prices have done this because land prices have accelerated so fast.
You've heard the horror stories. San Francisco, I think is reaching sort of crisis territory where the average one bedroom rent is $3,000 a month. So how does that work in terms of a society where only people making $150,000 to $200,000 can live in the city? And Chicago families need to be earning roughly $90,000 a year to afford the average rent for a two bedroom apartment.
And buying a home can be equally challenging. We've seen the credit box shrink and it's incredibly hard for low-income families to save enough for down payments, to be able to qualify for mortgages. If you looked at the list of the most expensive cities, it wouldn't surprise you Los Angeles, New York, Boston, San Francisco, at the top. Phoenix is now 20th, and this was a city that historically was quite affordable. And Phoenix is right on the edge of being designated severely unaffordable. It's now only seriously unaffordable. I guess that's good. Could be worse.
But to compound the problem, not just low-income families, but essential service workers like firefighters, teachers, entry-level government workers, and hospital service workers find it impossible to live near their places of work and the communities they serve. And we're seeing this, I think, really troublesome trend of increasing economic segregation. Where cities used to be melting pots that brought people across incomes together and often had manufacturing work in the city, increasingly now, what we're seeing is economic segregation, lots of people having to drive or travel long ways to get to their workplace, which actually is bad for everybody.
And we see it even more in the international arena, where families are driven out of urban centers into often informal settlements and slums out on the peripheries of cities. And with that, we get a whole myriad of social ills.
It's not sustainable to have a world in which only the wealthy can live, so we need to focus on community development that meets the needs of all residents. And creating affordable housing opportunities is one critical component of that process.
Audience participation part. So if you're comfortable, would you raise your hand if you grew up in what you considered substandard or poverty housing? I want to see. I'm looking. We've got actually quite, maybe a dozen people in the room, which is more than I usually see. It's not unusual that I'll be an audience like this and actually nobody will raise their hand. Now what's even more clear, is if I'm in a room of corporate leaders or government leaders, it's extremely rare that one raises their hand. And then of course that becomes self-fulfilling because it's become increasingly difficult to move up if you grow up in substandard or poverty housing or concentrated poverty.
Those who have the power to affect change, therefore are rarely aware of the multitude of problems that exist when families lack a decent healthy place to call home because they haven't seen or experienced it. We can all relate to health and education because they're part of all of our shared experience. But I think sometimes again, because of that economic segregation, we can live our daily lives with the problems of poverty housing quite invisible on a daily basis.
Even if you would describe your current or previous housing as modest, likely you can't imagine what day to day life is like for a young mother in Nicaragua whose baby wriggles in her arms because he wants to crawl on the dirt floor of their home. She has to decide between helping her baby develop properly and his possibly contracting life-threatening diseases from crawling on a dirt floor.
And it's hard to fathom the story of an executive in the US who grew up always fearing that he would have to tell visitors that his home didn't have a bathroom. The reality is more than half the adults in the US have made at least one trade off in recent years to cover the rent or mortgage. Those tradeoffs include taking a second job, cutting back on health care and healthy food, and moving to neighborhoods they perceive to be unsafe. And around the world, the picture is far more bleak, with one in four people worldwide lacking adequate shelter. That's 1.6 billion people, which is really hard to get our hands around.
Habitat wants to be one small part of changing that narrative. With our partnership, Habitat homeowners achieve the strength, stability, and self-reliance they need to build a better life for themselves and their families. Here in the US when we partner with the families to build a new home, they make a down payment with what we call "sweat equity", so they come out and put hundreds of hours into helping build their home and their neighbor's homes and they take classes in financial literacy and home maintenance. So by the time they close on that home, they're really well-prepared.
In addition to putting those "sweat equity" hours in, we also do repairs and rehabs in the context of neighborhood revitalization. And there's some fantastic examples here in the community. I got to visit one not so far from here in Tempe just this afternoon. But one of our big goals globally, is how do we make the markets actually work better for low-income families? And I think we tend to think the market will work, but the practical reality is the market works better for kind of middle income and up.
And especially in very low-income contexts, you see huge challenges. If you're a low-income family in Malawi or Cambodia, one, you may have lived on your land for generations, but you don't have secure tenure title. So without that, it's actually a financial disincentive to invest in upgrading your living conditions because you could get kicked off your land at any time. Even if you've got that secure tenure title, no one will lend to you. Traditional formal banking won't lend to the bottom half of the market. And if you could get a loan, it's hard to get good quality building materials at a fair price or skilled help.
So Habitat's really trying to engage in the market. First from an advocate's perspective, helping families get that title or secure tenure to stay on their land. We've become the global leader in housing microfinance, getting microfinance institutions to begin doing home improvement lending. And now with our Shelter Innovation Lb, we're working with entrepreneurs in both nonprofit and for-profit businesses to start up local community-based solutions in the building materials trade.
A recent example I was excited about is we've invested in a company in Rwanda that has come up with a proprietary way of sealing earth floors. And so by packing the floors down very incredibly tightly and then putting this environmentally-friendly varnish and sealant on the floor, you get all the benefits of a cement or concrete floor at a fraction of the price. So for about $80, a family can purchase a floor. And we want to help them scale and succeed because we think that will substantially speed up the process of more families getting their families off of dirt floors with all the challenges that come with that.
And not surprisingly, I talked before about the interrelationship of all these pieces. And I want to be very clear. We don't think housing is the answer or the only answer. But in some ways it's a prerequisite or a foundation or building block. We've seen that it's not surprising and we've got tons of data that show how important adequate housing is to better health, to improved education outcomes, and to new income earning opportunities.
While it's not the only factor, when you pull housing out of that equation, you don't get the outcomes we're looking for in all of those other spaces. The UN has estimated that more than 10 million people worldwide die each year from conditions related to substandard housing. Lisa Harker, a British child poverty expert, found that poor housing conditions increased the risk of severe health problems or disability by up to 25% during childhood and early adulthood. Safe, solid housing on the other hand, eliminates many of the environments that pose health threats to children and parents alike.
A friend of ours, Boston pediatrician Megan Sandel, tells a chilling story about the importance of healthy housing. She admitted a young girl with asthma to the pediatric ICU. The child's asthma condition had previously been pretty well controlled, so Dr. Sandel kept asking the family what was different. It became clear that one of the changes in the child's environment was that the family had acquired a cat even though the little girl was allergic to cats. So why would they do that? Because they had mice in their home. They actually found the mice in their little girl's bed. So the family was stuck with what Dr. Sandel called an incredible devil's choice. The decision they made concerning the mice problem, likely resulted with their child ending up in the hospital.
Dr. Sandel said that no amount of medication she could offer would make it safe to send that child back into an unhealthy place. The prescription she wanted to write was for a healthy home. She said a healthy home is like a vaccine that provides both immunity and resilience. It literally prevents disease. A safe home can prevent mental health and developmental problems. A decent home may prevent asthma or lead poisoning. And an affordable home can prevent stunted growth and unnecessary hospitalizations, she said. It's just so clear how important a decent home is to the health of a family and to community health.
When looking at the link between health and housing, it's not a big leap to see the link between housing and education. Stable housing drives better performance in school. We see too often that overcrowding, inadequate light, leaky pipes, and deteriorating walls make it difficult to concentrate. A MacArthur Foundation report said that when families lived in poor quality housing, adolescents showed lower school success in core academic subjects. A safe, quiet place to study however, creates not only an environment in which one can learn, but also a space in which to plan and dream.
Proper shelter also creates jobs, revitalizes neighborhoods, and attracts employers. It increases consumer spending and government revenues and lowers the risk of foreclosure, all while bringing transformative benefits to families and developing resiliency in communities. For communities to thrive, there has to be a soul, a center, said former Vice President Joe Biden. There has to be a place where people can afford to live. There has to be a place they can call home. He continued, adding, that people need a place where they have a sense of dignity and security. I believe with my whole heart his proclamation that ordinary people can do extraordinary things when they have a base and a foundation and an opportunity. Because the reality, and we've seen it over and over again around the world, is that if children don't live in decent homes, the odds of their staying healthy plummet. If they're not healthy, they don't get educated. If they don't get an education, they aren't able to get decent jobs and provide for themselves. And they stay stuck in that stranglehold of cyclical poverty.
All of those pieces have to line up if we're going to create the kind of healthy and sustainable communities that we all want to be a part of. So sustainability for us is not a philosophy. It's involving people in creating their own solutions and community improvements that will make a lasting difference in their lives. Many of you are familiar with some of the wonderful success stories that are being lived out by families who've partnered with Central Arizona Habitat. A lot of people are surprised, because we are the largest private home builder in America, to find out that actually 95% of the families we serve are outside the United States.
And I know we've got several Habitat champions in the room who have visited many of our country locations. But let me just give you one story that creates context when we think our problems are bad. A few years ago, I had the privilege of leading a team to build in Phnom Penh, Cambodia. Let me tell you about a wonderful woman named Lauren, who we partnered with. When I first met Lauren, she was a widow who had once lived with her mom, son, and daughter in a tiny shack on a garbage dump in Phnom Penh-- really atrocious conditions. Ultimately, they couldn't even afford that so they ended up on the streets squatting with their very meager possessions and just a tarp.
I was part of a team that helped build very simple four-by-six meter block home. She told me about the difficult nights she'd spent just before the dedication of her home and it had rained really hard. You get those violent rainstorms in the summer sometimes in Southeast Asia. And she literally had to spend the night trying to hold her tarp, standing up trying to hold the tarp together to keep her family and their few possessions dry.
And one of the joyful parts, if you've never done it, you need to be part of a dedication ceremony of a Habitat home because it is one of those times that just fills you up and we had spent the whole week all together and we moved the dedication ceremony inside because it was about to rain and you could see the clouds coming in and so we moved in and the rain just started pouring down torrentially. And I think one of my favorite moments was I just watched Laura and her daughter and I could see them just looking around the ceiling to see if any of the water was going to come in the house and we were very relieved that non, did. having worked on the construction.
But smiles just broke out on their faces. And it's not just the physical house. Now they had a base, they had a foundation. And I think home is more than the bricks and mortar. It really is a sense of identity as well. We all took jasmine and lotus blossoms and threw them over the family and around the house and my daughter came on that trip and it was her first international build and I love what she wrote afterwards. She said, this was so different from any other experience I've ever had. It really makes you think about everything you take for granted. I don't even think about the fact that my house is dry when it rains and I always have a roof over my head, food to eat, and clean water to drink. It's amazing how much a home can change people's lives. I remember thinking, what a change this would be for Lauren's family. At a most basic level, for the first time they'd have a door that can lock. Think about that in terms of safety and security. They'd have access to water and sanitation. They had a protection from the elements and for the first time her children could go to school.
But her story is about so much more than a house. It was, for the first time, rather than just thinking about survival, they could actually think about a future. And sometimes I get the chance-- it's rare-- but sometimes I get to go back and revisit countries and communities again. And I came back a few years later and I'm delighted to say Lauren has remarried. She and her husband sell vegetables in front of a garment factory that's not very far from the home. They earn about $5 a day, which is not very much, but it's five times what she earned before, which means they have enough money for the kids to be in school, she owns the home, she have to worry about being evicted. Her actual cost of water and electricity is less because often prices are higher for people who live informally. And unlike before, they have enough healthy food to eat with all the benefits of that for her children.
We want to see stories like this repeated all around the world. Beyond the success stories of individual families, however, are the positive effects of adequate housing that extend much wider. And one of the things I'm really excited about, and it's happening here in Central Arizona too, is then putting housing into the context of sustainable community and how we build the coalitions, either start or join, that can then bring to bear all the different forces required to create sustainable communities.
The largest demographic trend in our world is rapid urbanization and we have cities all over the world that don't have the infrastructure for their current populations and certainly don't have the infrastructure for their projected populations, as we're seeing. And you can't stop families from moving to cities because they come for economic opportunity.
So developing sustainable communities that are inclusive and equitable for all will require creating affordable housing located near job opportunities. Some of the most promising ideas emerging in both developed and developing economies involve combining mixed-income housing with transit-oriented development. And if you've seen the economic inequality data in our country, one of the keys is to build mixed-income communities.
And it's not actually true that there is not economic mobility in the US, but what is true is there's almost no economic mobility for children who grew up in concentrated poverty and we see a very different outcome from children who grew up in mixed-income communities. Mixed-income communities often mean that children have access to better schools and better job opportunities and they also generally correlate with better household assets and family resilience. Evidence for the efficacy of these communities can be found in cities around the world and across a wide variety of contexts.
For example in Vienna, private developers collaborate with the city to build affordable housing where they rent half of all new apartments to lower income residents. Rents are regulated by the city for a set period of time so that no residents pay more than 25% of their income for housing. For members of the workforce who are forcibly or economically driven outside of city centers, the creation of well-planned, high-density, transit-oriented development is critical. Because we've seen failed examples all around the world where people relocated families out of informal settlements in the city, put them out in the middle of nowhere with no access to transit, and then not surprisingly, they just move back in and squat again somewhere else because you've got to be near your way to make income.
So these new centers, which place housing, retail, and office properties around transit stops are particularly important for low-income families. The challenge is often those transit improvements drive up land values very quickly and quickly price out affordable housing. So it's critical it's on the front end for cities to allocate land for housing before those improvements get made so that we capture some of that value from those transit improvements in a way that allows housing to be built.
Seoul, Korea has actually done a really good job of this. When I lived in Seoul in 1987, it was a city of about 8 million people. It's now a city of well over 20 million people. So huge city. And one of the things Seoul did is as they expanded the train lines, every time they did that, the farmers got a huge jump in value for their farm land, but the city grabbed a third of all that land for affordable housing. So that as the city grew, housing grew along with it. The farmers still got 2, 3, 4 times the value of their property from those public investment. But it meant that instead of having slums that most megacities have around the world, Seoul has a relatively good housing base.
And we recognize, I make no pretense that this is easy. And I think to really solve this, we need the public sector, private sector, and the nonprofit and civil society committee. We need the universities and academics, we need the faith communities, we really need everybody to come together around this. Because the public sector really sets land use and sets the environment, creates the carrots and sticks for the private sector. I think the private sector actually does the best job of building at scale. Habitat scaled through replication, but we know we can't build our way out of the affordable housing crisis. But I think civil society plays a really important role as well because it brings voice to the citizens. And doing neighborhood revitalization for a community that doesn't involve the community will never really work. It's got to start with the voices of the community and their vision and then bring those services and opportunities around those.
So I recognize how hard this is. I think globally when we look at it our best opportunity probably is not to try to fix the mega cities, because they are so complex already, but the most of the global growth in population is actually happening in secondary cities. These are cities of about a million people, who are still a substantial city and there it's not too late to think ahead and to do some of the planning that can make this work. And here in the US, I think we still have opportunities because if today this model that low-income families have to drive an hour, drive 90 minutes each way to get to work it's bad for the family. It's also actually bad environmentally and bad for the community because all the roads get clogged up and the quality of life goes way down.
So I think cities are going to have to plan very intentionally and it's going to take people of goodwill sometimes getting uncomfortable. Because I think when it comes to our home, otherwise friendly people suddenly get less friendly in terms of anything that might be a threat to their property values or to-- what we find is a lot of that's based on mythology. We've got lots of data now that shows when Habitat comes into a community, it increases property values and strengthens the community. So we've got to do a better job of educating people around that.
And we need government leaders to think about long term incentives. One of most effective models for affordable rental has been the Low Income Housing Tax Credit. We need other long term vehicles that will be enough of an incentive for private sector to build low- and moderate-income housing, not just high end housing.
The other good news out of all these challenges is that investing in housing actually has a fantastic multiplier effect. It creates jobs and has a large economic spin off. And so it actually then grows the tax base for the city as well.
So I think we have an opportunity, especially in secondary cities, and I think even in our large metros in the US, it's not too late for us to address some of these challenges, but it's urgent. Because if we don't make some of those choices now, in 10, 20, and 30 years we're going to have completely unsustainable and fully segregated cities, that I think ultimately won't work for anyone.
At Habitat, one of the words we talk a lot about is "stewardship". And I've always liked that word because it's brings about the idea that we've been entrusted, every one of us has been entrusted with gifts, talents, and resources. And I think the question we all have to address is how will we use those resources we've been entrusted with, not just for the near term, but for future generations as well.
So how do we think about creating communities that unleash the gifts and talents of all our citizens and create the opportunity for that? I want to tell one last story. Sometimes those surprise stories are the best ones and a couple of years ago, my goddaughter came to visit. We were excited to have her visit. And she was in Atlanta where we live and she said, would it be OK-- I have one friend in Atlanta. Could I invite her over? And we said, of course, we'd love to meet your friend.
So Crystal came over. We met Crystal, who was a spectacular young woman. And Crystal had just finished putting herself through a master's degree program in counseling, having already put herself through college and she was taking a pause to earn money to go and start her doctorate in counseling. And she had met my goddaughter when they took sign language classes together and they both learned sign language. And Crystal was doing sign language to interpret for hearing impaired youth with their counselors, to be a translator. And then she thought, I could cut out the middleman. So she wanted to become a counselor herself.
And I was so moved by her and I'm always interested in what's creates that spark? What makes somebody want to serve that way? So I said, Crystal, you know, so what made you want to do this? This is fantastic. And she paused and said, you know, I don't usually talk about this, but things were actually really rough when I was young. And I won't go into the details, but things were really bad for her mom and her four siblings and her. And at one point, her mom literally just took the kids and in the middle of the night, escaped. And they ended up homeless for a period of time and then bounced around from place to place.
And then she said, but you know, everything changed for us when I was 13 and my mom qualified to buy a Habitat for Humanity home. And she didn't know what I did. I was like, oh. And now all five kids are in or through college and they are going to make our world such a better place because they had a chance. And just think about how many Crystals are here in Tempe and in Arizona and across the US and across the world who can do so much to make our country and our world better if they just have the opportunity to grow into what God intended for them.
A pastor friend of mine named Bill Hybels coined a phrase right before I joined Habitat that really struck me. He talked about a holy discontent, which is kind of a funny idea when you think about it. And he said, our world is full of discontent. We say that everywhere. And you know discontent, my version of that is someone's watching TV and watching these terrible events unfold in the community or in the world, and the reaction is that's terrible. Somebody ought to do something about that. And then they change the channel and watch a movie.
And I think that that holy discontent, in contrast, is when we're watching that same terrible event unfold in our community and the world and God just grabs us by the neck and the reaction is I can't stand that and I'm going to do something about it. And they get off the couch and get out into the community and decide they're going to be part of making it better.
So we need a whole lot of holy discontent in this city, in this country, and in our world. And as you think about the resources you've been entrusted with, what could you do to help think about creating a place to live, not just for your family, your community, but in a way that would create true resilience and sustainable communities worldwide?
So we're going to move into a conversation. I would look forward to feedback and we're going to take some questions and answers. But I am truly grateful to be with all of you. So thank you and God bless you. [APPLAUSE]
See if this is on. Is this on? So thank you so much, Jonathan. That was so insightful. I really enjoyed hearing about all this. So I have the privilege of being your voice, the audience, all of you submitted some amazing questions for this evening. And so I wanted to start out and tell you that so many of the questions were related to what you talked about, which was great, related to sustainability and affordable housing and even related to building materials. So I really appreciated the detail that you went into for that.
So I'll kick this off and I want to ask you a question. I also want to let our audience know that you were just at the World Economic Forum meeting last week in Davos, Switzerland. And so maybe that could color a little bit your answer to my first question. What changes would you like to see in the field of sustainable, affordable housing? Or maybe if you had your dream, if you had your three wishes, what would you really love to see in this arena of sustainable, affordable housing?
Thank you. I think I would just reinforce it would be that the communities would understand the need and the value of housing. I think the biggest piece would be breaking down this increased economic segregation, because I think that is toxic to the real community. I don't think it's actually good for anybody to live only in their own economic bubble, good or bad.
And I was sharing at the reception earlier, one of my heroes is a man named Clarence Jordan, one of the great unknown figures in America. And he was a pastor who founded an interracial farm in Southwest Georgia in the 1940s. You can imagine how popular an interracial farm was in Southwest Georgia in the 1940s. And that's a long way of answering a question, but he wrote this incredible letter. The farm never worked economically. They were boycotted and shot and harassed and it was a real struggle.
But he had a huge impact on a whole generation of pastors, including Martin Luther King, Jr. around nonviolent protest and social justice. And then the farm was really struggling and he pulled a group people to pray and discern what the next thing might be and out of that came this extraordinary letter in 1968 that really became the foundation for Habitat for Humanity, which was born out of that. And what he said is what the poor need is not charity, but capital, not caseworkers but coworkers. And what the rich need is a wise, honorable, and just way of divesting themselves of their overabundance.
And he had a vision that everyone had something to give and everyone had something to gain in a spirit of community. And when I think about a sustainable community, it would really be getting back to the roots of that in some ways. I grew up in a college town in North Carolina, you know, and we all went to the same school. If you went to church, it was everybody across town was represented there. And I think we've lost a piece of that because as we've become economically segregated, which become self-fulfilling, people only go to school with people like them, and they only marry people like them. And we see this cycle being exacerbated or accelerated. And I think we've got to find ways then to break that down.
So even though it doesn't direct housing, part of a group called Voices for National Service, it's an unbelievable longshot, but I would actually love to see, not required military service, but a year of community service for every young person in our country, which would actually recreate some of those social bonds that we saw with all the sad parts of military service. But that used to be true when people served together across all these different boundaries.
And in some ways I think Habitat's greatest contribution may not be the physical houses we construct, though we're very passionate about those, it's actually sort of the software of getting people to come out and cross some of these divides and work together and build empathy. And I've seen some fairly miraculous things happen between Hindus and Muslims in India, between Christians and Muslims in Egypt, between Protestants and Catholics in Northern Ireland. I've even seen Democrats and Republicans build together, so anything is possible.
Great. So on that note, I don't know if you knew we couldn't avoid really a political question this evening. So the question is could we get a sense of how Habitat as an organization has changed or has had to respond in the wake of tectonic political shifts in Washington?
No, thank you. It's really important. And I would say the giant change, is for our first 30 years, we didn't really do advocacy. In fact, when Habitat was founded, it didn't take government funding intentionally and it was separate. And I think there was a realization that I feel very strongly about, that we can't solve this unless the government's involved as I talked about before. We need the public sector and the private sector and nonprofits working together.
And so we've shifted and believe that we've got to be very active in advocacy. We are ferociously bipartisan. We don't think housing is a Democrat issue or a Republican issue. I worry that we used to have more bridge builders in Senate and Congress, so it's getting harder to get things done.
Last night, which was a very tangible example and a little bit parochial, we got a bill passed in Congress last night that made a small change in the well-intentioned mortgage reforms that came out of the mortgage crisis. But one unintended consequence of those reforms is it outlaw donated appraisals. Well donated appraisals are one more way that places like Habitat can lower the cost of the entitlements and fees for families.
So I don't think they intended that when they wrote the laws, we had great debates with the Consumer Finance Protection Bureau, but we couldn't get-- they didn't want to make the change because if they changed anything, that was going to open the box. So we got a legislative fix for that for us and for other nonprofit groups last night. It's going to take a very heavy lift from all of us and countless ore to find ways to solve this.
I think if there's good news on the legislative side, last week-- this is unprecedented-- the Council of Mayors got together and for the first time-- as far as I'm aware-- in history, the Council of Mayors said affordable housing was the number one priority in our American cities. So that shows that it's gotten bad enough that it is getting noticed, which is good news. Now the question is what are we going to actually do about it? And I think sometimes it's easier to do things at the city level than it is at the national level.
But we need the federal funds, we need federal funding, we need statewide financing and then we need the land use to happen at the local level. So we are trying to be better advocates, again, in a nonpartisan way, local level, state level, federal level and at the global level. Have any of you heard of the Sustainable Development Goals?
So it's-- actually 15 years ago, we created the Millennium Development Goals to cut poverty in half in 15 years-- overall, unbelievable success. But they left out housing, which goes to my whole thesis, and it was very disheartening to us. And so we forced our way in along the slum upgrading and a couple of other things where we could fit. In the sustainable development goals, which is the next iteration passed last year by the United Nations, they did include housing and we actually represented all of global civil society to the UN for the housing goal. And then we actually, with the country of France, set the targets for the sustainable development goal for shelter. So we have been deeply engaged at kind of every level of multilateral government as well as national. And we just have to do a whole lot more.
And I think it's symbiotic. In a way, because we build in all of these communities, that gives us credibility to be advocates. But we are fighting really hard to say this shouldn't be one party or the other party. There are different approaches. And we're fine, we're enthusiastic about reform. But reform just can't be getting rid of all the funding. That's not going to be reform.
And so we have a good partnership with HUD and have met with them many times. Actually the new deputy at HUD is somebody who ran an affordable housing foundation for the last eight years and we know really well. But it is, I think the key is, can we find better ways, but also we're just going to have to find ways to create more supply. And I used to think this market failure, I talked earlier about the idea of how markets aren't working for very low-income families. I think now that's true in the US, too. You know, we're just not building enough affordable housing and what's it going to take? And not just affordable at the low end, we're not building enough mid-quality housing either.
California is the extreme. They're are a million units short already and they're losing ground at a very rapid pace. But you can then go down the other cities and on both coasts it's accelerating right now. And we've had the good of a good economy, but it also exacerbates it. The people with assets have done fantastically well in the past seven or eight years but people without assets have fallen further behind. And I think that's a huge collective challenge.
So I don't know if that quite gets there. You know, Canada-- and we were deeply involved with that, passed a national housing policy. And I had the privilege of spending some time last week with Prime Minister Trudeau. I would love to see the US pass a national housing policy. We don't have one. We officially have a stated statute that goes back to the Fair Housing Act that every American has a right to decent housing but we just haven't delivered on it.
Great. So a few people in the audience had questions related to Habitat building on native reservations in Arizona. And maybe talk about what's been your experience when working with reservations and are there kind of different capital or different resources that are needed with reservations?
You know, it's really complex and our team here could probably give a better local answer. I can give some general principles that we've seen in reservations around the country. It's really difficult almost by definition because it's tribal land. And so our particular niche is homeownership, which is in conflict with tribal land. So we have struggled a little bit.
The other challenges is how do we, finding families that have enough income to be able to purchase their homes. So I think some of the work we've done towards housing preservation or housing repair and renovation, in the context of neighborhood revitalization, has been easier for us to do where we bring resources to help preserve homes rather than build new. I think heart-wise, we would love to do more.
Our model is not as well-designed where the families can't own land free and clear and then for have a mortgage with us that we can hold because we play this very narrow niche between subsidized rental and the marketplace and we don't want to stretch too far beyond that.
So in the context of neighborhood community, we're doing a lot more repair, rehab, and upgrading of housing especially to keep families in their houses. But we want to stay fairly narrowly focused on homeownership because we're kind of all alone in that space and there are actually lots of very good providers in the rental spaces. But it's a dilemma because one of our principles is if we can, we want to serve most vulnerable groups. And clearly if we looked at the housing need in Arizona, along with all the needs we've talked about in the cities, there's a huge deficit, at least qualitative if not quantitative deficit of housing on the reservations.
Certainly. Great, thank you. So now this question is more related to your role as CEO at Habitat. How do you balance the goals of your donors with that of your organization while also ensuring you meet the requests of residents in the communities that you work? And in a sense, whom do you ultimately aim to please?
Oh, that's a great question. Tension. A really wise person, I heard from pastor, but it wasn't originally him, said and I thought it was really helpful, that there are problems you solve and tensions you manage. And I think that's helpful sometimes because we have a lot of those that we live in. Can we be faithful and inclusive? Can we be, how do we manage on the personal level?
And I think one of the tensions for nonprofits is how do you have funding and be true to your customer? So is your customer your donor or is your customer your home buyer? I would say our primary customer is our home buyers and the communities that we serve, but we won't exist without donors. And we leverage, as I talked about, with our ReStores and our mortgage portfolios. Some of our affiliates are actually fully sustainable without philanthropy now, but that's very rare. And then they want to grow. And if you want to grow we still need sponsorships and philanthropy.
So don't misunderstand that. And I would say the key is really education and experience and helping to bring the donors into the community and so that they build relationship so that we don't with good intentions do bad development. And boy, history is littered with well-intended, bad ideas. And I think it's often because the voice of the community is not fully represented or properly represented. And so it's not easy.
In some cases, we've failed where almost we let donors essentially create programs. And I think what we really have tried to do is to say, here's what we're trying to achieve, please come alongside us. And there are always little compromises and tweaks that come within that. But as painful as it is, there are a bunch of donors we've just said no to because sometimes they don't fit our values, sometimes they want to do things that we think are developmentally inappropriate and for us always the starting point is mission first.
And as painful as it is to turn down money, we would rather turn it down than take money that would actually take us off mission or cause us to inadvertently be doing harm in the communities that we're trying to serve. I think that the good news for us that has really helped, and I know we've got people in the room who have certainly experienced this, is a little bit of an unusual thing about Habitat is that donors can participate. And there are a lot of really important causes that you can't really participate in. You can't go into the operating room and help with the surgery. You can't most of us aren't qualified to go into the classroom and teach, though maybe there are ways to volunteer around the edges.
And, you know, and I say this with the utmost respect, knowing that this group would be the exception, most of our volunteers aren't amazingly skilled construction workers. And in some ways, it's kind of an odd construction strategy to take unskilled volunteers and teach them how to do stuff and build houses, but it's not really a construction strategy. It's really a social change strategy.
And our big vision really is we had 2.2 million volunteers last year, which is kind of an amazing thing. But what we want to do better is when people come out and have that volunteer experience, we want to educate them about why housing matters so much, give them that visceral connection to housing so that they'll become advocates and supporters of affordable housing so that the market will provide more housing and Habitat can build more housing so that we get that virtual cycle moving in the right direction.
And I think that's powerful. So we have a lot of companies come to us because their employees, we can measure it-- it drives up their employee engagement for participate. Or right now, and I pray it will continue. Right now our brand has an amazing halo around it. So for the last few years, we've been the number one brand in social service in America and the most trusted and the most loved, which is kind of brand heaven. Even though, the funny thing-- and I'm going all over the place, I apologize-- is the things, the two things we're best known for if you ask anybody about Habitat. First, they smile and say, oh, I like Habitat. And they say, you know what I like about it is they give away houses and President Carter started and runs it.
So we're best known for two things that actually aren't true but they actually like us more when they find out how it works. But it is often so sometimes volunteers come out for the first time because their school gives them an opportunity, their company gives them an opportunity, their faith institution gives them an opportunity. But I'll tell you my experience when I came as a corporate volunteer, 20 something, 26 years ago, was you got to experience community in a way that is so rare in our world today. And I think that's what has people come back and come back because we all, even if we can't articulate it, are seeking that feeling of connection that is so desperately needed in our communities and world.
Great. And as you said, turning down donor money takes courage so probably goes far towards being well-respected.
Where do you see Habitat in 10 years, looking in your crystal ball?
So we've had-- and it's because we've got unbelievable local leadership in so many places around the world- we've moved from helping about 125,000 people in 2005, to 3.5 million last year. So we've had a pretty aggressive growth pattern. Most of that's been outside the US. And I think if I were to look forward in 10 years, there's several things I've referenced will be working better.
So I would love to see housing microfinance scale. That the market would broadly and widely make housing loans. And these aren't home mortgages, they're home improvement loans, so a family could get a loan for a roof, or a floor, or an extra room so they'd have enough space for the family and could start a business in that room. And then as they pay off that loan, they can get another loan and maybe they get water hooked up or they get the next piece. So we wouldn't consider someone properly housed until they have the right to stay on their land, until they have enough living space per person, until it's durable for the risk conditions in the community, and that they have access to water and sanitation. But we celebrate any one of those five because each one has actually a meaningful improvement in quality of life for the family.
And so I would hope as I look at it that we would have cracked the code on getting volunteers to become agents of change for affordable housing, that we would see the market providing a whole array of new and innovative low cost services that would allow families to improve their own housing, which is really the way very low-income families around the world have always built, and that in the US and globally we would have meaningfully impacted the policy environment, such that housing has become a higher priority for social investment. And those I would hope the measurable outcomes.
And I hope we're building more than ever. So to me, this isn't instead of building, that I hope we would be building far more. But I'm more concerned that the big framing change we made was rather than saying how many houses can we build, which is a really good metric, the metric we're now chasing is what would it take to meaningfully reduce the housing deficit in each geography in which we serve? And that's a much scarier question, but then sort of forces that more systemic approach through partnership. And so we have just committed, as painful as it is to do everything we do in partnership, and partnerships are slow and messy and they are extra grace required, people you have to work with, but it's really the only way to get to transformational change, in our view.
Great. We had a question about with all of the natural disasters that have been occurring lately, how has Habitat stepped in to help, especially in places like Puerto Rico?
Thank you. You know, that's another thing that we didn't used to do. But as we observed, the people who live in the worst housing conditions get hit the hardest when disasters happen. And so, it will probably always be seared into my mind. I joined Habitat the week Hurricane Katrina hit, which was not part of the plan. And that was the worst housing disaster at that point in decades and decades in the US and it came on the heels, if you remember, the Indian Ocean tsunami, which was the worst global housing disaster that had happened in modern times. And so Habitat in a way, rallied, and we thought, this is so big we have to go after this in a giant way because of the sheer volume of people that were suffering.
And so we end up building 25,000 houses in the Indian Ocean basin, and learning how to do that actually opened upscaling in some ways for us, because we broke a lot-- you know, we could tip the sacred cows and do a whole bunch of stuff that wasn't culturally OK for Habitat, because we had to build a lot of houses. Instead of building a few houses in a lot of places, we needed to build a lot of houses in a few places. And we ended up building 2,500 new homes and then cleaning up or fixing up another 3,000, 4,000, 5,000 homes in the Gulf Coast. So for four or five years, we were the largest homebuilder in the Gulf Coast, which is a failure actually. It showed that the market wasn't working. But I was really proud of the work that Habitat did.
And building off of that now, in any given year, about 20% of our global work is disaster recovery. We don't want to be the Red Cross or a relief agency, but we recognize that we've got to get there quickly. And the way we approach it is we call it Pathway to Permanence, so we try to help families as fast as possible get back on their own land in their own communities, not moved off to tents in camps.
And then we've now started practicing-- sadly, we actually did in Puerto Rico, and it's sad that a practice that we use in Nepal or Haiti was needed in a US territory. But in Puerto Rico, we distributed 2,000 shelter repair kits, emergency shelter repair kits. They gave tools and materials that allow families to do a repair or at least get back undercover in rural areas because it's going to be a very long time until it gets back on its feet.
We have really good capacity in Texas and Florida. We made a public commitment to help 2,000 families rebuild in Texas, 2,000 families rebuild in Florida, and help at least 2,000 families in Puerto Rico, which we've already done. Now we're doing the strategy work in Puerto Rico to figure out if we can scale up permanent housing. Really, we could have a long conversation about it. There's so many challenges there and things you don't even think about. They've got Roman slash Spanish law and US building codes, which is a really tricky combination. Because most of the houses aren't built to code but if we touch them, we have to bring them all the way up to US code. And under the Spanish law, we're then liable for anything that goes wrong on the house. That's a terrible combination when you're starting with houses that are in such terrible shape.
So we're trying to get very creative about how we can be compliant and still make a big difference because still, which is awful, so many families don't even have power or electricity, let alone the supply chain to be able to start the permanent construction process. And a huge amount of the talent is now on the mainland. So who's going to do it is a giant question as well.
But we're going to need-- one of our goals is to sort of keep people's attention because the media attention is about three days and the rebuilding timeline is about 10 years, so we've got a pretty huge disconnect between-- and about 80% of the funding for disasters goes to the relief effort, which doesn't leave a whole lot for the permanent reconstruction. So it's a big challenge. And people forget because it hardly got in the press, we had catastrophic flooding in Bangladesh, Nepal, and India right before the hurricanes. We had earthquakes in Mexico we're responding to, We had the fires and mudslides in California. This has been a terrible six months for going backwards on housing. So sadly we've got our hands full right now.
Absolutely. So my last topic for you is more of a personal one. We had some questions about your career path. What inspired you to enter the nonprofit sector after working in the for-profit sector for so many Years and maybe just whatever you want to mention about your own career path that led you to where you are today.
Thank you. I always laugh talking to students that my career path wasn't much of a path, it was just a set of seemingly random steps. But I think God has a sense of humor. And I look back and actually every one of those things has turned out to be incredibly valuable for Habitat, which I think sometimes for me I look at it through a faith lens, but it's often easier to see God's fingerprints in the rear view mirror than in the present.
And I actually early on had a desire to work in something mission-driven. And how to do the pieces. I had some great role models growing up, both in my parents and my grandmother and godmother who were great fighters in civil rights and human rights. And my grandmother was an iconoclastic woman who she actually got the most fame because Garry Trudeau created a character after her in Doonesbury. But she was one of the first women in the US Congress and a huge fighter for civil and human rights.
And every time I would go visit her, we'd see her once in the summer and once at Christmas. And she would quote Micah 6:8 to us virtually every time, which is "he has shown you a man what is good and what does the Lord require of you but to act justly, and to love mercy, and to walk humbly with your God." And then she would look at us and go, what are you going to do to be useful?
And her general view, that was kind of her view of what we were all supposed to do, which is pretty good marching orders. And I had no idea what to do with that for a very long time. And had that very surprising stint on Wall Street, which was not a great fit. Korea was kind of life-changing for me in a whole bunch of ways. And I went to business school, but actually very intentionally with the idea of learning about nonprofit management. And back then, Stanford and Yale were the only two business schools that believed we needed professional management of nonprofits. Now that's very much mainstream and virtually every business school has that as part of the curriculum.
So I got an MBA with a certificate in public and nonprofit management. And then in business school thought I ought to go into the private sector and learn because I thought I could gain more skills in the private sector and then bring those to the nonprofit sector versus I didn't have an obvious path in the nonprofit sector.
So you're getting the long story. And then, you know, it's so funny. My dad just got "a job" and kept it for 45 years. I thought that's what you did. You know, I went to Marriott and helped start a new business and then got laid off in the recession of '91. I went to Disney, which was a blast, and worked on new businesses for Disney, two big successes, one terrible failure. And got recruited to Circuit City stores, which I had no idea I was going to go to. But they were just starting something called CarMax and I thought that was fascinating. They were going to disrupt the used car business and fix it. And I was really interested in that. And so I came and helped and we took that public, which was really fun. And then was recruited away again.
But I never really looked. Each thing just sort of showed up and as best I could tell, it was the next step. And then the company I was helping lead got acquired and that created the pivot point to leaving the business world. And I think the hardest-- I've often talked to young people about-- sometimes the whitespace is really important. So you look at a resume and we look at all the words, but it's actually what's not on the page. That's where most of the growth and learning takes place.
And so probably one of most important times in my life was a frustrating time when I was unemployed. So I did what I tell people never to do, which is left my business job without knowing what I was going to do next. And I went off to India to serve on a short-term mission and just got deeply convicted around poverty issues again and came back from that thinking, OK, I want to go work on international poverty issues and got offered a couple of great jobs in the business world, turned them down, said, no, I'm on a mission. I want to go work. And then got close to a couple of nonprofit jobs, didn't get them, and then for the first time in my life, just nothing happened. Every door shut for a period of time.
And it was fabulous for my family. It was great for having time to think and it was terrible for my ego, which was really good for me. And out of that, I had really an avocation, in a way of coaching pastors. I always thought seminaries did a really poor job of preparing pastors for the leadership side of church versus the preaching and spiritual leadership side of church. And so I would help pastors with how do you build a board? How do you hire people well? How do you actually fire people well, which is really painful for pastors. How do you deal with management? And to my great surprise, my local church asked if I would come and run it. And everyone I trusted for career advice said, don't do that. That's a really bad idea and that scared me. But it really felt, my wife Ashley and I prayed about it, and it just seemed like what we were supposed to do.
And I think this is sometimes you just have to step out in faith and it's such a to me a, I don't really believe in coincidences, but the day-- I think, literally the day, maybe it was the day after-- the day I decided to go work for my local church, I got a call from one of the big national headhunting firms with a great job to run an internet retailer that I can't name.
And I was like, ooh, that's a great job. Pause. I'm going to go work my local church. I thought I will never hear from you again. I have exited the world. And two years later, I'm happily working away in Adinah, Minnesota, and she co-leads the Habitat search, calls up out of the blue. Hey, Jonathan, do you know anybody who might be interested in Habitat for Humanity?
And I just remember kind of the adrenalin going down my back and I took a long pause. I was like, does it have to be somebody famous? And went home and wrote this very passionate two-page letter that said, look, I don't know if I'm right, but this is the kind of thing I think I've been preparing for my whole life. And I never thought it would happen, but remarkably fast. That kind of led to that was April of 2005. And I could never hold a job as you can tell but I am setting a record every day at Habitat. So this is new territory. But I can genuinely say there's nothing else I want to do, which is such a gift. So I feel incredibly blessed to get to be part of this.
Amazing. Thank you so much.
This presentation is brought to you by Arizona State University's Julie Ann Wrigley Global Institute of Sustainability. For educational and non-commercial use only.