The challenges and lessons learned when creating bridges between finance and social impact

 

Jenny Conrad

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Jenny Conrad

The 49th Social Investor Breakfast Club, held in London on 25 April, featured presentations from two very different organizations which are working to make a social impact. Bertand Beghin and Dominic Llewellyn spoke about Numbers4Good, an organization that aims to bridge the world of finance with the world of positive social and environmental impact. This was followed by presentations from Martin Short and Julia Fan Li of Lion’s Head Global Partners, a merchant bank based in the UK with experience in the area of sustainable development.

Beghin and Llewellyn described a number of projects that Numbers4Good has been working on since it launched in 2012. These highlighted that many social enterprises are operating a business to government model: Restorative Redress aims to reduce NHS legal costs by providing a less costly reconciliation process for healthcare court cases; the Bond for Hope is a youth employment bond that would enable a return by tapping into UK Government payments such as the Work Programme, Youth Contract and Apprenticeships. Numbers4Good says that using financial tools and products such as the bond structure helps charities create payment structures that work for them, explaining that essentially the government is a purchaser of social outcomes.

Beghin and Llewellyn outlined some of the key lessons they had learned from their first projects. One of the most notable was ‘Be multilingual’. Rather than speaking a number of foreign languages, this refers to the need for understanding the language and terminology used by those you are working with, whether these are charities, investors or the government. For example, their work on Restorative Redress has required them to translate medical and legal concepts for investors to understand. While working on the Bond for Hope, they discovered that the government’s definition of success may be quite different to that of the charity delivering the project, so it was important to ensure all those involved with the project attached the same meaning to their words.

Lion’s Head Global Partners (LHGP) also aims to use banking ideas and structure to create positive social impact. However, unlike Numbers4Good, they emphasize that rather than consultants they are bankers who give their activities a sustainable development focus. Fan Li detailed their management of the Global Health Investment Fund, a new investment vehicle designed to provide financing to support global health product development while aiming to generate a net financial return for investors.

An interesting example of the ways in which approaching projects from a financial perspective can have social and environmental impact was LHGP’s involvement with farming in Tanzania, where their efforts to increase the profitability of their own agricultural investments have had a knock-on effect for farmers in the region. Short began by outlining the challenges of working in this area, ranging from the lack of government protocols for registering new potato varieties — they ended up writing these themselves so they could introduce new types of potato to their farm — to their difficulties gaining loans from local banks, which was an eight-month process. However, these efforts have resulted in an increase in the average yield of potatoes in the area from 7 tonnes per hectare to 20 tonnes per hectare with these new varieties and they are now supplying these seed potatoes to 150,000 smallholder farmers.

While working in very different ways, both of the presentations served to highlight the value of a financial perspective when striving for positive social impact. Whether using financial tools with a social purpose or developing market-focused solutions that will benefit the wider community, it seems that there are many lessons that can be learned from working across both the social and financial sectors.

Jenny Conrad is Communication & Circulation Officer at Alliance magazine.

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