Investing with purpose for a better future

 

Amanda Miller

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The theme of the recent Philanthropy Australia conference was ‘For the Love of Humanity: People, Place and Planet.’ One topic on the agenda was the use by philanthropic organisations of not just grants, but also investments, in order to generate positive returns for people, place and planet. As was highlighted in numerous sessions, investing with the intention of generating a social and/or environmental impact as well as a financial return is increasingly seen as both a responsibility and an opportunity for philanthropists, foundations and not for profit organisations: a responsibility to invest in line with their mission and purpose; and an opportunity to use all the tools in the toolbox, beyond grant making, to create change.

There was an acknowledgement from a number of speakers that impact investing enables philanthropists, foundations and not for profit organisations to leverage their financial resources to achieve social and environmental goals and that they must consider doing so, in order to maintain their social licence to operate. As Lourdes Inga, Executive Director of International Funders for Indigenous Peoples challenged us: ‘as foundations we need to ask where the assets we hold are sitting and divest from activities that harm indigenous peoples or the environment.’

This sentiment was reiterated by Kristy Muir, Chief Executive Officer of the Paul Ramsay Foundation, who asserted that ‘We need to be responsible custodians of our resources and invest in a more equitable future’. Bella Wiggs, Philanthropy and Engagement Officer at Groundswell Giving, speaking on a panel on future directions in philanthropy, explained that impact investing is a focus for the next generation, who look to align their vocations, spending choices and investments with purpose.

There was also a recognition of the need to invest in the social enterprise and impact investing ecosystem, with incoming General Manager of the AMP Foundation Nicola Stokes announcing that the foundation would be using some of its corpus to invest in impact and would be supporting emerging social enterprises.

In a panel on the topic of impact investing journeys of philanthropic organisations, there was consensus on the need to invest in initiatives to help build the sector and to support and nurture early stage social purpose organisations. Georgina Byron, CEO and Executive Director of the Snow Foundation, which has so far made 29 impact investments across a range of asset classes, gave the example of the Snow Entrepreneurs – fellowships for social change program that provides grant funding as well as professional wrap-around support to help impactful ideas become a reality. According to Georgina, a number of enterprises that have gone through the first cohort of the program this year are now at the stage of seeking investment capital. This demonstrates the power and importance of early stage capacity building and support.

Abhilash Mudaliar, Chief Portfolio Officer of the Paul Ramsay Foundation gave examples of sector building initiatives the foundation was investing in, such as seeding new fund managers, supporting intermediaries with grants and establishing an incubator program. The panelists all agreed that intermediaries were key to helping them along their impact investing journey, assisting to bring stakeholders such as investment committees on board, and helpful in providing a pipeline of investable opportunities.

On the topic of whether impact investors are looking for at or above market returns, or whether there is a role for philanthropic organisations to play in providing capital where the financial returns might be lower, but the social returns are high, Sara Parrott, CEO of Hand Heart Pocket the Charity of Freemasons Queensland, explained that sometimes the impact investor needs to be the ‘benefit payer’, which might mean accepting a lower financial return. As Abhilash Mudaliar pointed out, it can be unhelpful to speak about a ‘market rate’ of return, as in some markets no rate has been established yet, the risks are not yet known and so they are merely perceived. Abhilash explained that at the Paul Ramsay Foundation, the focus is on trying to optimise performance for the four characteristics of risk, return, liquidity and impact.

In answer to the inevitable question of which impact measurement framework to use, the advice from the panel was to choose one of the hundreds of existing frameworks, rather than inventing another one! And advice for those early on in their impact investing journey – ‘just get started and don’t let perfect be the enemy of good’.

Amanda Miller OAM, Co Founder Impact Generation Partners and Co Chair Philanthropy Australia

Tagged in: Philanthropy Australia National Conference 2022


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