Investing directly into community impact

Investing directly into community impact

Copyright Image: William Booth / www.photosport.nz

Clive Pedley
Director, Giving Architects Ltd
27 August 2018

Values-based investment is an important consideration for all socially-minded investors, none more so than Community Foundations.  When investment can generate not only the revenue required for our donor-inspired grants programmes, but also generate an intentional measured positive impact, values-based investment takes on a whole new meaning. Welcome to impact investment.

The Responsible Investment Association of Australasia (RIAA) has released its latest benchmark reports in recent weeks which shows the incredible growth and generally superior performance of responsible investment (RI) portfolios.  In New Zealand RI has grown from $17Bn in 2010 to over $180Bn in 2018.  Within the responsible investment spectrum is a growing and in-demand impact investment opportunity.

Impact investment was described by David Carrington, as UK-based Associate of Giving Architects, earlier this year as: “The investment of funds in an organisation with the deliberate intention that those funds will help to secure a clear, positive and measurable public benefit, while also generating a financial return”.

The New Zealand National Advisory Board on Impact Investment (NAB) was launched in April this year and is scheduled to be approved as a member of the Global Steering Group on Impact Investment in Delhi in October.  The NAB, along with a number of practitioners and early adopter investors in the local market, are working to increase the scale and scope of impact investment opportunities in New Zealand.

While relatively new in its current format in New Zealand (there are many examples of an impact investment approach in Maori culture pre-dating European arrival), in its modern form it is well established in international markets and is also effectively used by Community Foundations, including in Canada, as highlighted in this document.

What makes an impact investment unique from the also good responsible investment option, is:

  • The investor and the investee are both intentional about this investment delivering a blended value social/environmental/cultural/economic return alongside a financial return;
  • The impact intended is clearly defined, evidenced and will be robustly measured; and
  • The investment has additionality features, such as building on existing assets and delivering an impact that would not or could not be achieved otherwise by the market.

In New Zealand most recently, awareness of impact investment has been largely limited to Social Impact Bonds and equity investment into social enterprises.  There are other options, especially social lending, which is significant in more mature markets.  Options here are limited but certainly likely to increase, along with a growing awareness of the complementary relationship between traditional philanthropy and impact investment.

Whether through debt (i.e. social lending), equity (i.e. social enterprise investment) or fixed interest products (under development), impact investment offers Community Foundations an incredible opportunity to move one step beyond achieving socially responsible investment returns through robust investment policies.

Investing directly into community impact is possible, there are trail blazers ahead of us showing the way, and our society will increasingly expect it from us.

 

Clive Pedley is the Director of Giving Architects and on the inaugural Board of the new Community Foundation which will be launching 2019 in the Manawatu region.

Congratulations Clutha

Congratulations, Clutha!

Stacey-ScottStacey Scott
Chair
Community Foundations of New Zealand
15 August 2018

The Clutha Foundation, a local fund to be grown by the generosity of locals, is launching this week, in Balclutha, Otago.

New Zealand’s newest Community Foundation will be one of 16 around New Zealand which is being grown by the power of local generosity. People can give to the Foundation and their money is pooled and invested, with the income being returned to community causes.

The Clutha District hopes to emulate the success Community Foundations are seeing in other parts of the country, where we are seeing growing local funds really transforming communities.

It’s no surprise that Community Foundations are proving to be such a success story in New Zealand. Kiwis love their local communities and our country fosters a culture of giving, and giving back to communities is a really fulfilling. New Zealanders are very generous, they want to make a difference and leave a legacy for the future. It’s empowering for many to discover an easy way to do this, for the long term, is through their local Community Foundation.

And Community Foundations are not just for the wealthy, we see many every day Kiwis who want to give to their community, either in life or through their estate when they leave this world. It’s amazing to see that so many people simply gain so much joy from giving.

Former Prime Minister and the long-serving Clutha-Southland MP Sir William English is the Foundation’s Patron.  He has said he can see the long-term potential of such an initiative, and that increasingly communities need to take charge of their own needs. We agree that giving this opportunity directly to local communities themselves is very empowering. Change can come from within.

We have the right people driving this for the Clutha District and the potential is very encouraging. Congratulations Clutha, both CFNZ and other Community Foundations look forward to playing a part in your success as your local folk give where they live and, over time, enable local community transformation.

See the Otago Daily Times story about the Clutha Foundation launch on 17th August at the link.  Further photos from the launch are on our Facebook page.

Photos from the Clutha Foundation launch, 17th August 2018 in Balclutha, Otago