FMSD and the DINCS Model: Building a Just, Prosperous Society

Published: Wednesday, April 30th, 2014 by Lenora

Government, business, finance, philanthropy and, most importantly, community. So few urban development initiatives have managed to blend these critical elements into an affordable housing model that creates value across stakeholders. In Colombia, where 3 million households live with serious housing challenges, the Mario Santo Domingo Foundation (FMSD in its Spanish initials) is working to achieve that delicate balance with its two DINCS (Desarrollo Integral de Comunidades Sostenibles) or Integrated Development for Sustainable Communities (1).

With more than six decades of experience across the social sector, FMSD’s model is backed by achievements in addressing the needs of the most vulnerable through microfinance, microenterprise development, education, health, arts and culture and social housing. Building on this diverse base, FMSD is developing sustainable communities in Barranquilla and Cartagena using the DINCS model while leveraging the resources provided by the government’s National Social Housing Policies. (2) These projects will ultimately be home to 50,000 families.

A history of multi-sector work. FMSD launched philanthropic investments in education in 1960 in Barranquilla. Twenty years later, FMSD moved into microfinance and affordable housing as its distinctive offerings. Starting in 2000, FMSD integrated sustainable housing and microfinance with its first efforts in Isla Baru to complement health facilities and an ecology school and institute. Weaving in arts and cultural programs, as well as philanthropic investments in conservation, enables FMSD to promote community development across several dimensions. Beyond housing, FMSD’s landmark initiatives are still embedded in conservation and sustainability, education, early childhood development, microfinance, microenterprise development, arts and culture.

What sets FMSD apart is the chemistry of its broad mandate, the hybrid structure of its model and capital sources and its commitment to capacity-building, all of which supported by the organization’s knowledge management operation. Although complex, the result is a purpose-driven approach to housing and community development.

Let’s break down the key success factors for FMSD and its DINCS projects:

Ciudad del Bicentenario, Cartagena
(Photo credit: El Universal)

  • Broad mandate. Because FMSD has such an established history and program experience in sustainable development, the leadership and its team have the bigger concept of sustainable and inclusive cities in its DNA. Each DINCS has twelve components: planning, housing, security, health, education, recreation and sports, revenue generation, trade, culture, religion, environment and technology.
  • Microfinance. Having started a microfinance initiative in 1984, FMSD’s lending for microenterprises saw that housing was complementary early on. The organization recognized that its borrowers could be homeowners if they had financial assistance to close the gap between government subsidies on mortgage rates and their savings.
  • Partnerships. Few organizations have managed to make a success of such diverse kinds of collaboration. The organization works with governments at all levels, with private sector and financial institutions, with academic institutions and with non-governmental organizations as well as other philanthropic donors in each pillar of its programs.
  • Hybrid business and finance model. FMSD matches community investment needs to the appropriate type of capital and risk. Government funds are deployed for urbanizing land with services and infrastructure. Local governments may also offer land grants or the extension of complementary infrastructure. In Colombia, government finance also mitigates payment risk for financial institutions by subsidizing interest rates. Communities also generate their own capital with proceeds from market-rate land sales, housing development, donations and commercialization of construction materials going into a social fund managed by FMSD for the benefit of community. Philanthropic capital fills gaps in the twelve components, for instance to help low income families close the financial gap between household savings and a mortgage.
  • Governance. Communities are expected to move toward self-governance and to leverage their community knowledge to work with government on its local development plans. Community committees participate in and monitor the development of projects, as well as prioritize the social funds with the participation of FMSD’s team. These resources give the DINCS a long-term resource base from which to finance social infrastructure and more advanced development initiatives as well as an avenue for self-determination and civic education.
  • Knowledge Management. FMSD’s work across sectors is being documented, tested and validated to support replication, enhancements and program growth. Its knowledge management work also supports capacity-building at the community level as new residents increasingly participate in and determine the direction of the governance of the DINCS and the communities’ social funds.

Major challenges. Right now, the pace of construction of affordable and low-cost housing doesn’t come close to meeting demand and population growth in lower income market segments. FMSD and the government also know about the challenges of ghettos and ghost towns coming out of mass social housing, both domestically and globally. Certainly, one of the challenges is the complexity of the partnerships that DINCS require to build the model and apply lessons from experience elsewhere.

Over time, FMSD’s collaboration with the government aims to generate blueprints for adaptation and scaling. In this case, the wealth of experience that FMSD brings to the table as a strong, well-funded and established philanthropic partner underpins the model’s viability. There’s no question that communities elsewhere are already building their own capacity to develop similar blueprints for integrated development. However, they do need strong partnerships, government recognition and philanthropic support.

Even so, FMSD’s is a model that other foundations with breadth and reach could emulate in their own efforts to build, literally, just and prosperous communities for the collective and individual social good.

Notes:

(1) FMSD designed the Integrated Development of Sustainable Communities (DINCS) model in response to the complex and growing housing shortage facing the country. Through built housing and social infrastructure, complementary to social integration, the DINCS model enables communities to generate broadly distributed economic and social benefits through organized, participatory, integrated and sustainable urban community development.

(2) The Macroproyectos de Vivienda de Interés Social (MISN) or National Social Interest Macroprojects are a set of joint administrative and planning actions carried out by the national government and local governments to provide land for affordable housing to lower income and priority interest groups with integrated municipal services to develop projects with municipal, metropolitan or regional impact, to ensure the development of land for housing construction and mixed economic uses, and to provide infrastructure for roads, transport, public services, public urban spaces and community facilities.