New fund paves the way for impact investment in the charity sector
17 January 2020 at 4:34 pm
Charities are being encouraged to consider creating their own impact investment funds
Save the Children hopes its new impact investment fund will inspire other charities to follow suit, as a new source of funding in an increasingly tough operating environment.
The charity aims to initially raise at least $10 million in private capital for the fund, which will support enterprises focused on social innovation and addressing pressing humanitarian issues.
With Australian government aid funding at an all-time low, CEO Paul Ronalds said the organisation needed to find ways to leverage private sector investment.
“While our traditional funding sources – government, public donations and philanthropy – remain integral, a change in mindset and approach is a must if we are to meet our ambitious goals for the advancement and protection of children’s rights and wellbeing,” Ronalds said.
“Disaster preparedness, mitigation and recovery are central in our work, increasingly so in the context of climate change-influenced disasters… Our impact investment fund aims to support enterprises that… address these [challenges].”
Save the Children said the fund – to be overseen by a newly established board and supported by an investment committee – will prioritise organisations with a strong business model, some revenue and a robust measurement approach to social impact and supporting vulnerable people.
Ronalds told Pro Bono News this marked the first time in Australia that the charities commission had registered a trustee company of a fund like this as a charity.
He said if Save the Children was successful with the fund, he was hopeful we would see other large charities looking to replicate the model.
“It’s obviously not something that a small charity can easily do. It does require a very high degree of sophistication in terms of financial capabilities and your impact measurement capabilities,” he said.
“But for large charities like Red Cross, World Vision and Oxfam, hopefully they will take a look at what we’re doing and consider doing it themselves.”
Ronalds said this wasn’t just about bolstering the organisation’s financial security, noting that it was the impact made that was important.
He said there was a pipeline of potential investments in the works, including a tech start-up developing a platform for electronic cash transfers during emergencies, and a health organisation trying to reduce child deaths from pneumonia in developing communities.
“What this fund does is gives us a source of capital, without cannibalising other important sources of donations and philanthropy,” he said.
“This is about increasing the impact that we’re having by harnessing new technologies, and new ways of doing our work so we can meet the unprecedented demand that we are experiencing right now.”