The Charity Finance Group Investment Conference, held in London on 25 September, had a broad agenda across the investment space, starting with an overview of the economy and finishing with a plenary on ethical Investments. My participation was in a panel on alternative investments.
The venue provided an example of an alternative relevant to the charity sector in itself. Inmarsat, whose conference centre it was at, was set up in 1979 by the International Maritime Organisation to enable commercial ships to stay in touch wherever they were, for operational and safety reasons. It helped take satellite communication through to the next stage of development, transforming itself from an intergovernmental organization to become a private company and ultimately floated on the London Stock Exchange. This example of how a non-government organization providing a necessary service has entered the private arena made me reflect on the theme of impact investing which I was presenting on in the afternoon.
‘Alternatives’ covered a wide spectrum. Peter Pereira Gray, one of the two managing directors of the Investment Divisionof the Wellcome Trust,looked at the role of alternative investments (private equity, venture capital, hedge funds, property) in a charity portfolio. While at the other end of the spectrum from the fledgling impact investing space I occupy, there were parallels: entering each space requires a commitment of resources, both human and financial, to properly engage with it. The lock up of resources and the time it can take to see returns require the capacity to continue to meet spending commitments (grants or direct spending on beneficiaries), riding out the inevitable downturns in performance until either the financial or the social goals are achieved.
Hearing Peter’s reflections on the importance of good manager selection made me reflect on our impact investing sector – will we see performance only in a small percentage of our managers, or will our social returns be more widely achieved, investing in social and charitable organizations?
Richard Lichfield of Eastside Primetimers talked about their review of mergers in the charity sector. It is a thoughtful and subtle exploration of the nuances of mergers in the charity sector and how they differ from the commercial world. Looking at the 189 organizations that merged through 90 deals with income of £959 million,I’d recommend a report that provides some reflective insights into activity in our sector.
Reflecting on our session afterwards, how can we take the excellence of organizations like Wellcome into our own organizations? We cannot simply replicate a structure and approach and expect it to work. However, we can adopt underlying principles around good investment, learn from the best, and then develop our own cultures and approaches in this alternative investment world.
Danyal Sattar is development director at Big Society Capital.