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Nabeel Ahmed

CC14 Investment of Charitable Funds: Basic Principles - 0 views

www.charitycommission.gov.uk/...cc14.aspx

investment funds UK principles charitable guidelines

shared by Nabeel Ahmed on 07 Nov 11 - No Cached
  • Charities and Investment Matters: A guide for trustees (CC14)
  • This guidance is about how to make decisions about investing charity funds. All charities are able to invest, and investments can be a major source of funding for them. However, investing also exposes charities to risks which, if not properly managed, can affect not just the charity itself but the public's trust and confidence in the sector more generally. Because of this, it's important that charities manage these risks and operate within the law. As the regulator of charities in England and Wales, we have produced this guidance to support charities and their trustees in confidently making decisions about investments that comply with their duties.
  • A3 What does this guidance cover? This guidance sets out the legal and good practice framework for the investment of charity funds. It covers: financial investment - investing to produce the best financial return within the level of risk considered by the charity to be acceptable the key steps in making financial investments programme related investment - using assets to directly further the charity's aims while potentially also generating a financial return the key steps in making a programme related investment mixed motive investments - investing to both further a charity's aims and generate a financial return.
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  • A4 Who is this guidance for? Trustees and those who make decisions on behalf of trustees about a charity's investments and assets should use this guidance as a tool to help them make confident, informed decisions and publicly to report on those decisions.
Tim Draimin

Proposal weds investors and charities - 0 views

www.vancouversun.com/...story.html

social impact bonds pay for success social finance

shared by Tim Draimin on 02 Jun 11 - No Cached
  • Imagine if charities had to operate like companies in the private sector. They would need to raise capital from investors in order to carry out their work and investors would get returns if the charity produced results. But this isn’t just a hypothetical scenario – it’s exactly what is being proposed under a new type of philanthropy called ‘social impact bonds’ or ‘pay-for-success bonds’.
  • This pay-for-success model certainly sounds promising, but there are some potential issues that may emerge when profit-focused investments are combined with socially-focused charitable activities.
  • One is the tendency to help beneficiaries most likely to achieve a positive outcome. Sticking with the prison reform example, charities might try to maximize their outcomes by helping mostly or only those prisoners who will be the easiest to integrate back into society. The prisoners with the more complex and time-intensive reform challenges will not be helped because the risk to investors is too high. Charities that work with the hardest to help will continue to struggle to find funders who will support their costly and long-term work – important as it may be.
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  • Another potential barrier to this pay-for-success approach is that the funding to pay investors their return ultimately comes from government. These investments are not necessarily creating a new pot of money. Rather, they’re transferring the risk from taxpayers to private investors. In the past, government funding for social projects would pay for everything upfront, regardless of outcomes. Now, under impact bonds, they will only pay for results from non-profits after they have been achieved. So, are pay-for-success bonds a truly revolutionary way to fund charitable work, or is it just government funding repackaged?
  • espite potential shortcomings, these pay-for-success bonds are forcing people to rethink how the not-for-profit sector operates and funds its work. Applying private sector principles to charities is not necessarily a bad thing – many non-profits can benefit from working more efficiently and measuring their results. But whether these new bonds are the mechanism that will transform philanthropy remains to be seen.
adamspence

Charities Aid Foundation launches new social investment fund - 1 views

www.cafonline.org/...ew-social-investment-fund.aspx

social finance social impact bonds social innovation uk impact investing fund

shared by adamspence on 20 Jun 11 - No Cached
  • adamspence on 20 Jun 11
     
    Interest in philanthropy is at an all time high and with many major donors looking for new ways to help charities and achieve the maximum impact with their donations, the Charities Aid Foundation (CAF) has today launched a new social investment fund, the CAF Social Impact Fund. Philanthropists can invest their charitable capital in the fund which will provide loans for charities to help them become stronger and expand. Once loans are repaid the funds will be recycled enabling philanthropists to support more charities.
Tim Draimin

Impact Capital is the New Venture Capital | Entrepreneur the Arts - 1 views

blog.entrepreneurthearts.com/...tal-is-the-new-venture-capital

social finance impact investing social enterprise

shared by Tim Draimin on 14 Jul 11 - No Cached
  • Impact Capital is the New Venture Capital
  • By Sir Ronald Cohen
  • Broadly speaking, capitalism does not deal with its social consequences. Even as communities grow richer on average, so the gap between the “haves” and the “have-nots” increases. For example, since the mid-1970s, both the USA and UK have actually become less equal rather than more equal. In the long post-war boom many governments did make significant headway in ameliorating the consequences of social inequality. This can be seen in levels of investment in areas such as health and in critical performance measures such as life expectancy. Nevertheless, governments, despite their best efforts and even in the best of times, have not been able to resolve all social problems.
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  • Commentators on one side of the political spectrum attribute this failure to the lack of resources available to the state and to the state’s reluctance or inability to act appropriately. Commentators on the other side attribute government’s shortcomings to the inherent inefficiency of the state itself. The truth is that the political process, which focuses on short-term gains, does not favor long-term, preventative investment of the type required to address major social problems.
  • The social sector, which is also called the voluntary, non-profit or third sector, has done its best, with the support of philanthropic donations and government, to address the social problems that fall through the gaps in government provision.
  • Some argue that the social sector’s problem is that it is significantly under-resourced. Others argue that the insufficiency of resources is in part a consequence of the sector’s reliance upon philanthropy — from foundations and from individual donors — that can be unpredictable. Both critiques may be correct: the social sector has a problem in accessing capital, often because of a lack of a reliable revenue stream, and, as a consequence, it is inefficient, especially in respect of building sustainable organizations, securing funding and utilizing assets to support large-scale activity.
  • Recent moves to make the social sector more efficient, by focusing on improvements to the management of both the donors and the recipients of grants, are an important development. The Bill & Melinda Gates Foundation applies rigorous criteria to the assessment of the performance of organizations in receipt of its grant funding. Michael Dell’s philanthropic work is similarly rigorous. Their goal, according to Harvard professors Robert Kaplan and Allen Grossman, is, essentially, “to find and fund the Microsofts and Dells of the non-profit sector.”
  • In fact, such moves are more necessary than ever, as deficit-ridden governments seek to pass greater responsibility onto the shoulders of the social sector. An example of this is the UK Coalition Government’s strategic objective to foster the “Big Society.” In essence, the Big Society agenda seeks to pass a significant portion of responsibility for social cohesion back to the community via the voluntary sector, and, at the same time, to confer greater legitimacy upon such community work and to provide incentives and support for it. However, the social sector as currently constituted is unlikely to be able to address the scale of the social need; or, to put it another way, to meet the scale of the social challenge.
  • This is where social entrepreneurs come in. We know that entrepreneurs create jobs and foster innovation. In that sense, they already make a substantial social contribution. But entrepreneurs have special qualities that could make a significant beneficial impact were they to be applied to social issues. The entrepreneurial mindset embraces leadership, vision, the ability to attract talented people, drive, focus, perseverance, self-confidence, optimism, competitiveness and ambition. To these one might add an appetite for taking informed risks, an unwavering focus on results, a willingness to take responsibility, a grounded sense of realism, astute judgment of opportunities and people, and a fascination with the field of enterprise in question. The engagement of entrepreneurs in the social sector, bringing in their wake high expectations of performance, accountability and innovation, could lead to significantly increased social impact.
  • Could the social sector be transformed to allow the emergence of entrepreneurs from within its own ranks and attract social entrepreneurs and capital on a large scale? The answer is yes, provided that we can create an effective system to support social entrepreneurship, by linking the social sector to the capital markets and introducing new financial instruments that enable entrepreneurs to make beneficial social impact while also making adequate financial returns for investors. Given these conditions, it is possible that social entrepreneurs and impact investors will significantly fill the gap between social need and current government and social-sector provision. Indeed, were social enterprise to achieve significant scale, it would transform the social sector and lead to a new contract between government, the capital markets and citizens.
  • In this process, charitable, institutional and private investors, attracted by the combination of social as well as financial returns, would bring into being a new asset class: impact investment. In a recent report, JP Morgan came to the conclusion that impact investments already constitute an emerging asset class: “In a world where government resources and charitable donations are insufficient to address the world’s social problems, impact investing offers a new alternative for channeling large-scale private capital for social benefit. With increasing numbers of investors rejecting the notion that they face a binary choice between investing for maximum risk-adjusted returns or donating for social purpose, the impact investment market is now at a significant turning point as it enters the mainstream… We argue that impact investments are emerging as an alternative asset class.”
  • This new asset class requires a specific set of investment and risk-management skills; it demands organizational structures to accommodate these skills; it must be serviced by industry organizations and associations; and it must encourage the development of standardized metrics, benchmarks and even ratings. As has been observed by the impact-investment firm Bridges Ventures in the UK, such an asset class should provide welcome diversification for capital markets: at times of economic stress, price-sensitive business models appropriate to lower income neighborhoods can prove more resilient and also find wider applications in the mainstream market as both margins and consumer spending power are squeezed.
  • Not surprisingly, politicians as well as academics, entrepreneurs and investors are paying increasingly close attention to these developments. In the US and in the UK, and now also in Canada and Australia, steps are being taken to provide social entrepreneurs with access to the same kinds of resources as business entrepreneurs. The USA’s Social Innovation Fund ($173 million) and the Investing in Innovation Fund ($644 million) are notable examples; as is the proposed creation of the UK’s Big Society Bank. In Canada, the Federal Government recently received the report of the Canadian Task Force on Social Finance, whose recommendations include requiring public and private foundations to devote a proportion of their funds to mission-related investments; clarifying fiduciary obligations so that pension funds and others can invest in social programs; introducing new financial instruments for social enterprise; and marshalling government support for social enterprise, directly through seed investment and business support services and indirectly through fiscal engineering.
  • How likely is it that such steps will succeed? In answering this question, we would do well to consider that the global economy faced a similar moment of challenge and opportunity in the 1970s and 1980s, when many of the most familiar names in the post-war corporate world started to decline and shed jobs, among them General Motors, American Motors, Courtaulds, ICI, Smith Corona, Olivetti, US Steel, Bethlehem Steel, Kodak and International Harvester. The question then was: what would take their place?
  • What took their place was a new wave of business enterprise helped by venture investing, mostly focused on high-tech industries. This is the wave that brought us Intel, Cisco, Oracle, Microsoft, Apple, Sun Microsystems and Genentech. The hi-tech wave has since swept the world, taking us into the embrace of Google, Wikipedia and Facebook and ushering in a communications and information revolution based on global access to information from multiple sources. It has thereby profoundly changed global culture.
  • Just as hi-tech business enterprise and venture capital, working in tandem, have attracted increasing numbers of talented risk-takers since the 1970s, so social enterprise and impact investment are now attracting a new generation of talented and committed innovators seeking to combine new approaches to achieving social returns. Social enterprise and impact investing, in short, look like the wave of the future.
  • About Sir Ronald Cohen Sir Ronald Cohen is chairman of Bridges Ventures and The Portland Trust. He chaired the UK’s Social Investment Task Force and the Commission on Unclaimed Assets and he is a founder-director of Social Finance. Until 2005, he was executive chairman of Apax Partners Worldwide LLP, which he co-founded in 1972.
  • Tim Draimin on 14 Jul 11
     
    Sir Ronald Cohen's overview of the emergence of the impact investing space, including references to Canada the Canadian Task Force on Social Finance.
Tim Draimin

Banking on the 'big society' | Social enterprise network | Guardian Professional - 0 views

www.guardian.co.uk/...banking-on-big-society

big society bank UK mutualisation social finance

shared by Tim Draimin on 01 Jun 11 - No Cached
  • With the plans for the development of a "big society bank" endorsed on Monday, government has never put social enterprises so squarely at the heart of its policy-making. This year alone, the big society bank will receive an unprecedented £260m to invest in intermediary organisations, compared to the £360m that was injected into the social investment market by the Labour government over 13 years. Despite this, growing a social enterprise that covers its costs and genuinely helps vulnerable people remains an almighty challenge.
  • The Big Society Bank is clearly good news but obstacles still remain and social enterprises will need to pick fights judiciously if they are to respond to the tough problems facing society. The bank will enable intermediaries to offer cash as capital investment not revenue.
  • While the Big Society Bank offers investment for growing larger social enterprises, it does not help those organisations become investable. Other investors looking to scale social enterprises have already struggled to find organisations that are ready for investment. Ethical bank Triodos had to close a large fund for social enterprises last year after only being able to make one investment. Investors report that only 16% of the social enterprises that approach them are investable.
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  • While the Big Society Bank will offer capital to help social enterprises scale, it may not provide the right kind of capital for new, potentially ground breaking, ideas. Ambitious start-up ventures require investment to test their models and start paying their way. The Big Society Bank will not be issuing grants so it looks unlikely that intermediaries will, in turn, be able to offer the kind of "soft capital" required to new social enterprises. Largely avoiding the world of social investment, the successful graduate teaching programme, Teach First, secured its founding investments from businesses, government agencies and charitable foundations. This diverse range of sympathetic supporters sacrificed financial return to give the untested vision of Teach First a chance. Other successful start-ups continue to cobble together the finance they need rather than waiting for social investors to meet their needs.
  • To attract investment to scale, an enterprise needs a clear strategy, a robust model for generating revenue, and economics that scale (or, as the enterprise grows it will simply become bigger, and not better). This is tough; entrepreneurs often need support from some of the 100-plus organisations – identified in the NESTA-commissioned report, Growing Social Ventures – that are dedicated to supporting Britain's 65,000 social enterprises improve, expand or become more resilient. For example, Scottish social enterprise Working Rite was supported by the Young Foundation to develop a financially sustainable business model before it could attract capital to its apprenticeship-style work preparation programme, even though it had achieved better results for youngsters from tough backgrounds than its larger, commercial competitors.
  • While we welcome the Big Society Bank, the government needs to level the playing field in the ever-tighter fight for government contacts. Shrewd social entrepreneurs – like those behind Enabling Enterprise, Teach First and Working Rite – will need to continue to scrape around for risk capital, and scramble to build robust business models under innovative services. From on high the government declares that social enterprise is critical to the success of the big society, yet on the ground it can feel like "soft privatisation".
  • Tim Draimin on 01 Jun 11
     
    Article places new Big Society Bank finance offering in context of the range of support new ventures need...
Peter Deitz

Social impact bonds unlikely to attract tax relief - 0 views

www.guardian.co.uk/...f-community-interest-companies

uk sib

shared by Peter Deitz on 19 May 11 - No Cached
  • Unlike charities community interest companies can't use tax relief to raise capital through social impact bonds, and it may not happen anytime soon, say experts
  • Lodhir offers social impact bonds, developed in partnership with law specialists Clifford Chance – acting on a pro bono basis – to a handful of investors that cost between £2,000 and £3,000 each, from which he hopes to raise enough capital to run the pilot.Lodhir says his organisation's own research suggests the scheme could reduce re-offending rates by up to 60%. And, he says, it could result not only in multiple returns to investors, but also in multiple savings to the taxpayer, through reduced healthcare and re-offending costs and in tax and national insurance contributions from those ex-offenders whose businesses take off."The savings come almost immediately," he says. "But when I contact potential investors, they say, 'oh we only donate to charity'. But building an enterprise culture won't happen with donations – more innovative solutions are needed."John Mulkerrin, chief executive of the CIC Association, thinks the sector is unlikely to win tax reliefs outright from government. "That will come after we've raised £1bn [as a sector] and we offer to turn it into £100bn," he says. "A tax break would be fantastic, but it's not likely to happen because I doubt the sector is mature enough yet."
  • He believes if government is serious about social enterprise, it must make the social investment market just as attractive to investors as charitable donations: "I think CSR is a corporate tax savings initiative. If so, let's include social impact bonds. Why not?"
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