The Philanthropy Impact Podcast · Philanthropy Impact

In Conversation With Daniel Brewer

May 16, 2024·35 min·3 clips

Daniel Brewer exposes how 109,000 families slept in temporary accommodation last night and Resonance's plan to house them.

Daniel Brewer, founder and CEO of Resonance, joins the Philanthropy Impact Podcast to discuss his journey in social impact investing. Brewer is an engineer who founded his social enterprise property fund manager in 2002 after questioning corporate focus on short-term shareholder value. His early career in manufacturing revealed a system that sacrificed product quality, customer satisfaction, staff, and the environment for quarterly profits. Brewer discovered social enterprise models where market-facing businesses had an underlying purpose to support disadvantaged people. He cites historical examples like Guinness, Boots, and Cadbury as businesses originally set up to solve social problems, such as providing clean water or accessible medicine. Resonance began with backing from a small charitable foundation, aiming to connect investors who care about more than money with purpose-led businesses. The company endured five difficult years of being misunderstood and earning a minimal living before a watershed moment around 2012. That turning point involved the emergence of Big Society Capital (now Better Society Capital), which was endowed with £400 million from dormant bank accounts. The arrival of co-director Simon Chisholm, after 16 years at Rothschild, helped Resonance build on its early track record. Brewer explains that Resonance attracts institutional capital to buy ordinary residential properties, which are then leased to housing partners supporting vulnerably housed people. These partners include organizations aiding families in temporary accommodation, women fleeing domestic violence, and adults with learning disabilities. The scale of the challenge is vast, with 109,000 families in temporary accommodation and a £30 billion market opportunity, of which Resonance has raised about 1%. The company uses tailored leases to share risks with housing partners, taking responsibility for major capital items while partners handle day-to-day maintenance. Brewer notes a rigorous diligence process to assess housing partners' commercial robustness and the quality of their impact, having observed some charities make decisions that perpetuate problems to maintain their balance sheets. A key innovation is the Housing Partner Forum, which facilitates sharing good practice among organizations to improve standards. Brewer dreams of enabling tenants to eventually buy their homes, possibly through shared ownership models, though current housing regulations present challenges. Resonance is a regulated social enterprise, not a charity, with a commitment to reinvest at least 51% of its profits and a shareholder mix that includes charities and staff. The company recently accessed mainstream capital, securing investments from the Greater Manchester and South Yorkshire pension funds, a significant breakthrough after years of being considered too small or new. Brewer states Resonance currently manages £350 million but aims to reach £1 billion under management by 2030. He highlights the tension for charitable foundations, which hold an estimated £60 billion in endowments primarily invested for financial return to generate grants, with only a portion allocated to impact investing. Brewer addresses donor-advised funds, noting two have invested, but some remain nervous that impact investing could cannibalize traditional philanthropy. A pressing challenge is integrating climate goals, as retrofitting homes with low-carbon technologies costs about £20,000 but adds no asset value or direct income, though it saves tenants money. The conversation is educational and conversational, tracing Brewer's personal motivation from a principle-driven engineering mindset to building a scalable impact investment firm. Listeners interested in social enterprise, impact investing, and innovative solutions to the housing crisis will find this episode deeply informative. Those seeking highly technical financial analysis or critiques of the impact investment model might find the discussion too focused on one organization's narrative.

As heard by us

A plainspoken look at impact investing, housing, and the cost of doing good well.

The episode follows Daniel Brewer, an engineer who founded Resonance in 2002 after time in manufacturing and a growing impatience with decisions driven by short-term profit.

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Listen for a grounded take on impact investing that keeps returning to housing, people, and trade-offs.

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