The strategy of building alliances: Shared funds for a shared vision -- Habitat for Humanity Int'l 1

The strategy of building alliances: Shared funds for a shared vision

By Zoran Kostov

Books say that the outcome of strategic planning should be visionary, conceptual and directional. They also say that the preparation of a strategic plan is a multi-step process covering the vision, mission, values, strategies, goals objectives and programs of the organization.

Thus, while exploring the possibility of developing a partnership program[1] with the global microfinance coalition Opportunity International (OI), HFH Macedonia was guided by knowing that Habitat for Humanity and OI share a number of common values and approaches to their work. Both organizations view their clients as responsible and accountable partners. OI treats its clients as entrepreneurs fully capable of repaying their loans and building their businesses. With a 98-percent repayment rate, OI can sustain its lending operations and recycle its loan portfolio to new clients. HFH clients not only invest sweat equity into their home, but over time repay HFH affiliates for their costs, enabling HFH to recycle its resources to new homeowners in the community.

Building a sustainable program was to provide both OI and HFH with the financial base and program infrastructure to continue to reach a growing number of poor families.

Developing a common product

This partnership intended to address poverty housing on a larger scale than the regular HFH program in terms of the number of clients/partner families served.

Approaching a large number of clients was based on joining funds for the credit portfolio, their faster turnover, followed by an introduction of moderate interest rate on the housing loans. These elements combined are aimed at providing long-term sustainability, thus multiplying the number of those being served, while affirming, at the same time, the Habitat principle of simple, decent and affordable housing.

In this way, the newly developed product would contribute to HFH Macedonia’s general goals and objectives. As described above, it fits the mission, the vision and the strategy of the organization, as well as the strategic objectives of the partnering organization. The added value of the partnership for HFH Macedonia was seen through its new methodology of serving those affected by poverty, as well as through their increased number. Added value for the microfinance partner was seen in its extension of operations, through developing new products and reaching new categories of clients.

Sharing tasks and responsibilities

After establishing the partnership framework and creating the joint Home Improvement Fund, tasks and responsibilities were shared on both the strategic and operational level. These were shaped to reflect on the governance, as well as on the management of the partnership.

In respect to the governance, there are two levels of engagement of the boards of the organizations involved.

On a strategic level, the boards set up the principles of cooperation through a written partnership agreement. In addition, the two boards are committed to evaluate the results of the partnership annually, and to project a mid-term and long-term strategy of further cooperation. Each board was given the discretion to decide to withdraw from the partnership after the contract term expires, or before, in case of its violation.

On an operational level, the two boards appoint corresponding members for the joint credit committee, which makes the final decision about the loans. In accordance with Habitat principles, the joint credit committee selects prospective clients/partner families on the basis of need, willingness to partner and ability to repay their loan, regardless of race, religion, gender or ethnic background. Priority is agreed to be given to low-income households.

The partnership is set to operate through the joint engagement of both management teams of the partner organizations as well, in different phases of loan processing. Generally, the microfinance partner is responsible for the financial effects/results, while HFH Macedonia is in charge of the provision of know-how in simple, decent and affordable reconstruction.

Synergy that is to be monitored

The idea to promote holistic transformation of the poor through partnerships is not a new one. In fact, OI and HFH work side by side in many communities across the globe and, indeed, share a remarkable program synergy while serving the same or very similar target groups.

However, it is very important that each of these partnerships be well-monitored and documented, including all of their successes and challenges. Drawing lessons, surveying the future potential and making recommendations for future development are essential.

Although most of the challenging aspects of the partnership had to be precisely defined prior to its implementation, the resulting impact should not be underestimated. Sustainable transformational development is what both organizations are dedicated to, and that vision requires not only considering what has been designed on paper but also adapting to the changing needs of the clients.

Zoran Kostov is the executive director of HFH Macedonia.


[1] See “Habitat partner families as 'clients': A challenge to the organization’s traditional values?” in the “International Affiliate Update,” Volume 12:4, for more information about this partnership. The issue is available on PartnerNet.