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Impact Investment

The Global Impact Investing Network (GIIN) defines impact investments as:

investments made into companies, organizations, and funds with the intention to generate measurable social and environmental impact alongside a financial return.

This definition can be broken into three underlying components: intentionality, measurable social and environmental impact, and financial return. These three components serve to distinguish impact investments from mainstream financial investments, responsible or ethical investments, corporate social responsibility initiatives and philanthropic grants. Varying levels of financial return - market-rate, below market or market-beating – can be found across the spectrum of impact investment, reflecting that the required level of financial return differs between investors, depending on each investor’s motives for entering the market.

In Australia Federal and State governments are entering this space as they grapple to balance constrained fiscal environments and leverage government spending with private sector investment to achieve improved social outcomes.

Through the Social Enterprise Development and Investment Fund (SEDIF) the Australian government has provided one-off grants totalling $20 million which together with matching private sector investment.

Many Institutional Investors are challenged by the misperception that investing for impact necessitates a financial trade-off. They also grapple with how to assess and position impact investment within mainstream investment portfolios. At a more fundamental level, institutional investors seek comfort that impact investment, with its ‘soft’ and ‘non-financial’ benefits will not compromise the investment duties with which they must comply under statute and general law.

Individual, family and Philanthropic investors are exploring how they can increase the impact of their social investment by understanding these new opportunities that are emerging.

Evans and Partners are committed to encouraging better understanding through facilitating parties in thought leadership and by acting as an intermediary to create opportunities for investment at scale. Some commentators believe the social economy has the potential to grow to $32 billion over the next decade.

 

RESOURCE LINKS

Impact Investments: Perspectives for Australian Charitable Trusts and Foundations
Impact Investment Perspectives for Australian Superannuation Funds
Impact Australia
Place-Based Impact Investment in Australia
Profit for Purpose Series
Social Enterprise Development and Investment Funds
Monitor Institute; Investing for Social and Environmental Impact
Philanthropy Australia