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Project Lighthouse

Project Lighthouse

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On any given night, over 100 000 Australians are experiencing homelessness. Our vision is to help these people develop financial stability and literacy, leading to permanent housing.

Venture Concept Overview

On any given night, there are over 100,000 Australians homeless, with around 1700 people homeless in the ACT alone. This is a huge social issue and if left unresolved, will only create a cycle of poverty. We are proposing a new method to help people currently experiencing or at risk of homelessness to gain financial independence, and break the cycle.

 

Our team hail from a diverse background of law, mathematics, science, economics and politics. In addition, we are all involved with non-profits and have known someone who was on the verge of, or experiencing, homelessness. Our proposal is simple: give people experiencing homelessness an income-matched savings account and incentives to save, whilst leveraging it with a range of loans available for the public. We have already obtained key service providers as partners, with banks expressing interest to collaborate.

 

We hope that after the official launch of this venture, we can make a real impact on our clients, through improving housing access and employment. We also hope that our model will be adopted in other states and countries.

 

Our immediate plan for the next 3 months is to conduct more research, sort through legal paper work and establish partnerships. As such, we need funding to assist with finding a lawyer and obtaining financial advice.

 

We are asking for $20,000 from the seed pool. This will enable us to gain legal support and develop our product. Additionally, we will also be doing some crowdfunding and applying for government grants.

 

(Source of Figures: http://www.homelessnessaustralia.org.au/fact-sheets )

The Idea

Our project can divided into two parts. The original issue we identified was a lack of services to homeless people, and the problem of homelessness in general. Our solution was to provide support for people experiencing homelessness through the provision of a high-interest savings account tailored to their individual needs and aimed at helping them achieve their goals of getting off the streets and into stable housing. Ancillary services may include financial assistance and referral to other service providers.

 

The second part of the project addresses the issue of the lack of affordable short-term loans to people who need them approved quickly, for example, students needing short-term financial assistance. Our solution is to use our deposits to finance these loans to people who need small sums of money, but keeping the interest rates and fees at an affordable rate. This side of the project would generate the revenue to support the first part, and may include other models in order to maintain a sustainable model.

 

 

The Market

Our customer segments include (but is not limited to) students, volunteers and Friends.

 

It is difficult for students to take short personal loans, as banks all require a minimum amount of $4000 on their bank account. The interest rate is fairly high (usually around 13%) with high establishment/other fees. This is not a viable option for students. As such, our goal is to help them obtain quick loans with lower interest.

 

There are limited opportunities for volunteers to gain meaningful experience in the financial industry. Additionally, some organisations may lack transparency. Our VC idea would allow them to gain experiences and provide feedback to a growing startup idea whilst contributing to solving an important issue. This will assist them in finding cheaper housings.

 

Friends on the streets (FOTS) are there for a variety of reason. However, the most common reason is the high and unaffordable rent in ACT. Not only is the rent high, the criteria for selecting tenants is often unrelentingly critical on their bank account and income. To help solve this problem, we hope to establish a service for FOTS and help them increase their savings.

The Competition

Our customer segments of our friends on the street (homeless
people), students and volunteers all have distinct needs and interests that are
being partially or fully solved by other organisations. For friends on the
street, currently, an array of government and non-for-profit service providers
offer an array of different programs to support their ongoing wellbeing while
living rough. These include soup kitchens and stores for food access, public
housing and even financial management skills. What they currently lack is a
coordinated reference program for different service providers, or any
specialised programs for maintaining their finances. The banks, too, have few
tailored options for people living in rough circumstances. Project Lighthouse
would be able to offer more easily accessible systems for developing financial
independence, while also being able to reduce the time cost of seeking out
different service providers through centralising referral services.

 

For the student segment, a core competitor is the major
banks in the offering of loans for student or disadvantaged needs. Their
solution offers loan customers the security of their public image, an
established system of loans already in place, and the minimal prospect of
bankruptcy. However, the solution they offer is hampered by high interest
rates, slow processing, little process for individualising loan services, and a
significant number of additional fees. On average, the big four banks charge
$981 in interest and fees for a 1 year loan of $4000 – almost a quarter of the
overall loan paid on top of the repayments! People might choose our value
proposition because we can offer substantially lower fees, a more personalised
individual service, transparency over how money is used, and good corporate
social responsibility in the use of interest. This would mean that the
administrative time taken could be reduced, the cost of the loans could be
substantially reduced, and the effort required for a customer would be
minimised. This gives significant incentive to switch to Project Lighthouse’s
solutions.

 

For the volunteer segment, our core competition would be
other local branches of the non-government and charities sector. Canberra hosts
an array of international organisations that have need of volunteer experience,
including Red Cross, Salvation Army and many others. These combine with local
operators to reduce the overall potential volunteer availability. They have an
existing brand and knowledge of how they operate, as well as recognised impact
on the community which incentivises volunteers to work with them. However, many
services relating to friends on the streets are focussed upon maintaining
wellbeing without trying to improve overall situation. They also offer more
general experience for future employment, rather than training in specific
skills. A reduced amount of time taken to learn important skills, and future
employment skill opportunities, will make the time and effort put into
volunteering with Project Lighthouse’s value proposition more interesting to
volunteers.  

 

The Vision

There are approximately 1758 friends on the streets in ACT according to the latest survey in 2011. A combined total of 54% attributes the reason to difficulty in finding accommodations, combined with financial hardship. On the other hand, students and the general population alike find obtaining small, personal loans more costly and complicated than expected.

 

Aside from our primary clients, there are definitive potentials for partnerships with government and not-for-profit organisations such as Salvos, Vinnies, Red Cross and the ACT Government. If this venture does succeed, there are also potentials for partnering with the FinTech/Tech industry, retail and possibly hospitality sector to further extend our services. 

 

Nevertheless, this venture will be limited to the ACT in the foreseeable future.

Mentor Pitch

Every night in Australia, over 100,000 people experience
homelessness, with nearly 1800 across the ACT alone. Although service providers
do incredible work providing various support options, a more cohesive approach
is required to enable those in difficulty to improve their current situation
and help them find a better future. Project Lighthouse will offer sustainable
financial support by providing low-barrier, high-interest savings accounts
which will be supplemented by high-interest loans to the broader community. We
will also offer support through referrals to service providers. Our team comes
from various backgrounds in study, and has experience in financial and
administrative management. We are looking for a mentor with financial or
technological experience who shares our passion and would be interested in helping
us develop a clearer pathway to achieve our aims.  

 

Video pitch

The Customer Experience

The primary targets of our venture are people experiencing homelessness due to financial difficulties in Canberra. We aim to partner with existing service providers and charities in order to effectively reach this group of people. The way they would access our services would be the traditional methods of banking: in person, online or through telephone. This would require a physical location  as well as a technological system. We would also use this method to run workshops to help with financial literacy. We would also partner with government departments such as Centrelink. A secondary service we provide would be referral of people to services which would best meet their needs, such as mental health professionals, so it is important to build partnership with these organisations.

 

One of our secondary targets are students. Again, we can partner with universities and clubs and societies to help identify students experiencing financial difficulties and in need of our help.

 

When our customers use either savings or loans account,we would be trying to establish a long-term relationship – it is not just about keeping their money safe or giving them money, but rather the aim to try and solve the underlying financial problems which prevent them from accessing permanent housing. Thus, we would hope to build a stronger community as well.

 

 

 

 

The Team

We are an interdisciplinary team of ANU students, covering a range of fields from law and economics to science and philosophy. We have strong research capabilities, and the time and passion needed to implement this project. In addition to this, some of our team members have several years of experience in finance, with particular experience in accounting and managing small to medium funds.

 

We aim to utilise our existing networks of service providers to homeless people. Some of our team members have volunteered with these organisations before and thus have an in-depth knowledge of the situation facing homeless people in Canberra, and can easily connect to experts in the area as well. We are currently in the process of consulting with the various service providers now.

 

We are also relatively familiar with the regulatory framework and policies surrounding the finance sector. As one of our members used to work for a federal government minister, we would be able to use these connections to help form partnerships with the government and get in touch with regulators about legal compliance requirements.

 

Additionally, another member has significant contact with consulting services, either large consulting firms or student consulting societies. As such, it is a feasible idea to ask them for advice and assistance with business model, or other aspects. It is also entirely possible that we contract 180 Degree Consulting to do a consulting project or two on areas that we really need assistance, whether it is business modelling, marketing or outreach.

Our Partners

There are various resources that Project Lighthouse is
looking for to make our venture a reality. These can be broken down into
several broad areas, including service provider collaboration, financial
expertise and legal advice.

 

The most important aspect of our model is the service we
provide for disadvantaged or homeless people with limited financial access. The
organisations who know them best are the existing Service Providers around Canberra and Queanbeyan, who provide vital
support in housing, employment, finance and healthcare. We need to work through
them to ensure that the people we are helping are actually in need of help.
Beyond that, we also need to develop our services in collaboration with them,
as they provide support to our clients that is vital to ensuring a cohesive
approach to resolving housing and finance access issues without disregarding
health or other needs. Thus, we would invite any service provider in the Canberra
region who works with those facing homelessness or the disadvantaged to get in
contact, so that we can better understand the issues being faced, and work as
part of the community to improve everyone’s wellbeing.

 

The institution we hope to create is a Financial
Institution, which carries with it significant challenges and requirements for
services. As a result, our project is in need of Financial Expertise to assist and guide us in how we should develop
our business model to maximise long-term viability, effective and useful
products for public customers, and to guide us in minimising risk in our model.
Our team has administrative skills in various different areas, but not much financial
industry experience or expertise, and so a person who could guide us in how the
industry works, as well as developing new ideas to ensure profitability, would
be valued. At the moment, we are currently looking for particular challenges
faced by public consumers of financial services that we can target to provide
funding for our savings accounts for the disadvantaged. Thus, we would invite
any person with financial expertise and an interest in achieving social
outcomes to join us to help develop a viable business model.

 

Similarly, we are also entering one of the most heavily
regulated and monitored industries in Australia today. Much of the financial
regulation today revolves around the operations and acceptance of the
Australian Prudential Regulation Authority (APRA), who monitor the operations
of banks and credit unions to ensure compliance. All financial institutions in
Australia must register with APRA, and we have no experience in financial law
or similar areas. As a result, we need Legal
Advice
on what legal requirements we must be aware of, and the process for
registering, operating and maintaining the business, both as a normal
corporation and as a financial institution. We are also interested in the
potential of non-profit status, so advice on this area of corporate law and the
process for registration would also be appreciated. Ideally, we would like to
work with a pro bono lawyer who can assist us to work through the necessary
processes to ensure our business is registered appropriately and quickly, to
ensure we can operate soon.

 

If you fall into any of these categories, and if you share
our passion for ending the scourge of homelessness, we would urge you to
contact us at projectlighthouseact@gmail.com
so we can start working together.

 

Funding Sought

To set-up an actual financial institution, we would need somewhere close to 2 million dollars.

 

Realistically, however, we have a lot more research ahead of us. This includes market research, risk analysis/prediction, and advertising. To do some financial planning, we would need $10000-$30000 to engage with pro bono consultants/lawyers who are willing to assist us at a reduced rate, as well as doing some basic beta-testing.

Our Partners

We are partnering with a variety of different organisations
to ensure that we can maximise our chances of successfully starting this
venture. Some of the organisations we are partnering with include the
following:

  • Service Providers are at the core of our business model,
    providing support on the front line to people living on the streets or facing
    disadvantage. Having contacted several service providers over the last few
    weeks, we have agreed with St Benedict’s and the Blue Door to do interviews
    with some of their clients, so as to gain more effective information about the
    issue. Likewise, several organisations including the Blue Door, OneLink and
    others have indicated they are interested in further discussion with us and
    potential partnership in future should we become fully operational.
  • Existing financial institutions provide a wealth of guidance
    and information about what the sector is like and how we can act within it. We
    are meeting with BeyondBank at the moment to consider what existing models are
    in place, and how we can get involved in the industry. They have offered us to
    partner with us to provide financial education on bank usage and activities to
    people facing homelessness. They have also suggested we at as an in-between,
    where they can provide the financial infrastructure and status and we provide
    basic services to supplement this. However, they have also pointed out the poor
    interest rates currently available, and how this limits their operations in
    this area.
  • We
    also hope to engage with student clubs and associations. Student organisations
    provide a wealth of different ideas about where the business can go, and
    potential individual customers who want to put their money towards something
    that achieves a social good. However, equally, the organisation’s themselves also need bank accounts, and currently receive minimal returns on what they have in their accounts. By partnering with such organisations, we can offer them higher rates of interest in exchange for them providing funds towards an important social cause.

Therefore, through these and other core partnerships, Project Lighthouse will be able to develop an effective existing market while also reducing the scope of the difficulties we may face. As we continue to research and develop, we hope to find more, similar organisations to further develop our understanding and who we can create new partnerships with in the future.

 

Capturing Value

From the saving’s accounts perspective, it will be a recurring payment paid regularly. The main value to be gathered for them is more money on their accounts, and (hopefully) greater credibility relating to their financial situation.

 

From the loan aspect, it will be a one-off transaction with either regular or one-off repayment. It is a bit difficult to gauge how much money we might be able to generate as we will have a wide demographic of people.