Impacting investing: the future of philanthropy?


Amanda Miller


The theme of the recent Philanthropy Australia conference was ‘Evolution or Revolution – Is Philanthropy Future Ready?’ Although the overall conclusion seemed to be that it is not yet future ready, it was apparent from the topics discussed and the depth of thought on how we can best create positive change, that philanthropy is certainly evolving.

Importantly, it was acknowledged from the outset, by Audette Exel AO, that we need to hold onto the beauty and power of traditional philanthropy, whilst at the same time being open to innovation in the sector. Whilst stating that the traditional philanthropists are the pioneers, Exel said that even if all the wealth of every philanthropist in the world was utilized today, it would not be enough to solve the issues we face. We therefore need to innovate and look at new ways of solving problems.

Some evidence of philanthropy’s evolution was found in discussions on how government can partner with the community and private sectors to create change, on why philanthropists should invest in social enterprises, and why we should invest for good.

Gladys Berejiklian MP, Treasurer of New South Wales, spoke of a big shift from how governments have traditionally funded social services to new ways of partnering with the community and private sectors, such as social impact bonds and social impact investment.

Mark Gunton, CEO of the Clinton Giustra Enterprise Partnership, urged philanthropists to invest in social enterprise as a way of growing the sector, and to accept the risk that comes with doing things differently. Mark argued that in order to change the world in a sustainable way, social enterprise and impact investment are necessary.

Based on his experience of investing in social enterprises, he spoke of the need to be adaptable, grow fast and learn quickly, and warned, ‘do not become hostage to your own strategy – reboot as necessary’. He said engaging large corporates will only work when there is strategic value for both parties, and endless pilots are crucial; they’ll lead to continuous improvement.

Daniel Madhavan

Daniel Madhavan

Daniel Madhavan, CEO of Impact Investing Australia, moderated a panel on investing for good. He framed the session by explaining that philanthropy is the most precious form of capital; however, for most funders, it’s just 5% of their wealth. Imagine what could we do with the other 95% to express our mission or values? Madhavan challenged those who fundamentally separate how they make money and how they then give it away. He encouraged us to be curious and be thoughtful about how we can express our values through our investment portfolios.

Allan English, of the English Family Foundation, agreed. He posited that if our purpose in philanthropy is to benefit our fellow man/woman, we need to align our investments with that goal. He has backed up his views with action: his public company Silverchef is a B-Corp, he has signed the ‘Divest-Invest’ Pledge, and the English Family Foundation is active in both grant-making and investing in social enterprises.

There was strong agreement that impact investments do not need to involve lower financial returns. English emphasised that there is no shortage of investment opportunities that provide strong financial returns as well as social and/or environmental returns. Simon O’Connor, of Responsible Investment Association Australasia, pointed to ‘a mountain of evidence’ supporting the fact that companies that positively manage environmental and social issues will do well long-term. Certainly, according to John McCarthy of the Tindall Foundation, the alignment of the foundation’s investments with its mission has led to improved financial returns.

Fabienne Michaux and Allan English

Fabienne Michaux and Allan English

Fabienne Michaux, of the Australian Advisory Board on Impact Investing, discussed the momentum that is building in the impact investing market, both globally and in Australia. She pointed to factors such as an ageing population, the National Disability Insurance Scheme (NDIS), education reforms, and the UN’s Sustainable Development Goals (SDGs) that are creating real opportunities for innovative solutions. In response, there are mainstream organisations and advisers entering the space.

Collaboration and the need to build the eco-system were also highlighted. Given that the impact investing markets are still developing, it was agreed that philanthropists and other stakeholders need to take on the responsibility of ‘making the market’. According to John McCarthy, there needs to be a collective effort to try to build a pipeline of investable social businesses and to create an awareness of these opportunities among other investors. Allan English gave the example of a recent impact investment in a food waste business, Yume, that provided an opportunity for numerous foundations to collaborate in supporting an enterprise that that will provide social, environmental and financial returns.

In order for there to be an evolution in philanthropy, we need to use all of our resources to support positive social change. Philanthropy involves not just grantmaking but also investment, and in order to be future ready, we can no longer separate how we make our money and how we give it away. It needs to be acknowledged that all investments have impact: some positive and some negative. The speakers at the Philanthropy Australia conference encouraged investors to remove their fear of failure, to find opportunities to invest in that are fun and engaging, to collaborate and reach out to others playing in this space, and to join the effort to create a market.  As Sarah Davies, CEO of Philanthropy Australia said, ‘we are all writing the next chapter together’. Although philanthropy is not yet future ready, it certainly seems as thought it is on its way.

Amanda Miller is co-founder of Impact Generation Partners.

Tagged in: Philanthropy Australia Conference 2016

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