Harbinger Consultants

Creative Sustainability :: Place, People, Product, Potential, Partnership + Pollinating

REPORT | Social Impact Investing: An Introduction

We recently attended a presentation by Sandy Blackburn-Wright about developing models and successes of social impact investing presented by the Asia Pacific Centre for Sustainable Enterprise. Sandy Blackburn-Wright presented a clear and meaningful overview of social impact investing, indicating that banks were more involved in considering social objectives in investment priorities and decisions. The intent is to achieve both a social and financial return on that investment. Recently, a major report was prepared by the Social Impact Investment Taskforce under the UK’s presidency of the G8 to offer a global view of social impact investing, Impact Investment: The Invisible Heart of Markets. Harnessing the power of entrepreneurship, innovation and capital for public good (PDF). The report, along with a number of country reports (including one from Australia), details the need for a new way of conceptualising markets and developing social impact investment ecosystem:

This requires a paradigm shift in capital market thinking, from two-dimensions to three. By bringing a third dimension, impact, to the 20th century capital market dimensions of risk and return, impact investing has the potential to transform our ability to build a better society for all (p. 1).

In the Stanford Innovation Review, Paul Brest and Kelly Born define impact investing as:

actively placing capital in enterprises that generate social or environmental goods, services, or ancillary benefits such as creating good jobs, with expected financial returns ranging from the highly concessionary to above market.

For Blackburn-Wright, social impact investing is regarded as a way of activating the social purpose and objectives of business in order to address complex social problems. It requires a shared value rather than shareholder value perspective. She provided several examples of impact investing including social impact bonds, local development investment (place-based), development bonds and cross-sectoral collaboration.

social_impact_investing
Impact Continuum (p. 19)

There is acknowledgement that the social economy delivers significant impact and benefits for society. Social Impact Investment Taskforce stresses the importance of mission driven organisations which can be constrained by existing regulations, including the prohibition on advocacy, which is not a constraint applied to for-profit entities.

Blackburn-Wright explained  that while there is a long history of mutuals and cooperatives, there is a sense of early days and shifting relationships in terms of social investment in Australia. Development can be hampered by the existing relationships and reporting between government and non-profit service providers which prioritise inputs, cost and outputs rather than outcomes, value and impact. Presently, the Queensland state government is undertaking policy work in social impact investment, and banks are playing an important role in seeding the market and social enterprises. There is a need for robust policy frameworks for the strategic and timely development of social impact investing and social enterprise. The report stresses that social impact investing is an idea whose time has come – it can satisfy the demand for responsible investing and the need for innovation in the delivery of social services.

Our work involves assessing social impact and in our reading of the report and the understanding of this presentation, we garnered the sense that there is growing enthusiasm for and interest in social impact investing. It is particularly relevant in terms of embedding social impact measurement in ways that realise these impacts. As the report explains:

The goal of measurement is to facilitate greater social impact, not to weigh down those trying to deliver it. The best measurement practice will help impact entrepreneurs to run their organisations so as to create greater value in achieving their mission (p. 30).

For us, in the work we do in communities and community organisations, there are possibilities for building these ideas into the planning process in ways that enable and empower communities and regions to find solutions and partnerships to address local issues. Impact needs to be at the core of community governance and social purpose – and is at the heart of the work Harbinger is doing in Indigenous enterprise development. It ensures that resources flow from social objectives to social impact. In our planning and engagement work with communities and community organisations, measures for impact are always an integral part of mission-focused, impact-driven governance.

More Information

Impact Investing Australia/Australian Advisory Board on Impact Investing
http://impactinvestingaustralia.com

Impact Investment: The Invisible Heart of Markets
http://www.socialimpactinvestment.org

Impact Investing Policy Collaborative (IIPC)
http://iipcollaborative.org/

Global Learning Exchange
http://gle.iipcollaborative.org/

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