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.

Generosity can be as personal as it is impactful

Generosity can be as personal as it is impactful

Eleanor Cater
Community Foundations of New Zealand
22 February 2018

With 15 – very soon to be 16! – Community Foundations spread across New Zealand we are seeing local people catching on to the importance of personal generosity shaping communities.

Community Foundations assist generous people to be changemakers and to have an impact locally. They enable people to realise that change really is within their sphere of influence, and not something that is just for the rich, the famous or the politically-minded.

They enable people to be not just locally-focused but cause-focused, enabling gifts that will benefit the community for generations to come.

There is a strong history of philanthropy in New Zealand, and there is a great deal of wealth that will change hands from this generation to the next. There is also an immense sense of attachment to a place which is held by people who have grown up, chosen to live and dedicated their lives to building a strong local community.

It’s a crucial niche that links generous, philanthropic people with community causes that matter. Community Foundations exclusively fill that niche enabling people to give in a strategic way, together with the surety that donations from their precious life’s work will be well cared for and continue to give forever.

Community Foundations are the natural funding choice with local impact, able to assist with intergenerational wealth transfers and invest back into the community with purpose. And, make no mistake, Community Foundations of New Zealand members must exhibit immense expertise and sound governance to give the confidence for generous people to give in this way. We are proud that our members across New Zealand do all of that.

If you would like more information on what your Community Foundation can do for you and local causes that you care about, contact us today to talk through your options. There are many ways to give and your generosity can certainly be as personally meaningful to you as it is impactful in your community.