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Philanthropy’s role in the impact revolution


17 September 2020 at 8:00 am
Luke Michael
Sir Ronald Cohen says philanthropy needs to shift from funding activities to funding outcomes


Luke Michael | 17 September 2020 at 8:00 am


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Philanthropy’s role in the impact revolution
17 September 2020 at 8:00 am

Sir Ronald Cohen says philanthropy needs to shift from funding activities to funding outcomes

Impact investing is critical for the global COVID-19 recovery and philanthropy has an important role to play in growing the movement, one of the pioneers of social investment believes.  

Pro Bono News spoke recently with Sir Ronald Cohen, chairman of the Global Social Impact Investment Steering Group and The Portland Trust, following the GSG Global Impact Summit 2020.

Cohen – a philanthropist, venture capitalist, private equity investor and social innovator – has helped lead the global impact investing movement over many years, serving as chair of the UK Social Investment Task Force (2000 to 2010) and the G8 Social Impact Investment Taskforce (2013 to 2015).

During the GSG summit, leaders from 50 countries met to discuss the actions needed for an impact-led COVID-19 recovery – to create a world that benefits all people and preserves the planet.

Cohen said that philanthropy needed to play a major part in this recovery.  

He told Pro Bono News philanthropy needed to shift from funding activities to funding successful outcomes, through models such as Social Impact Bonds (SIBs), which link the funding of a project to its impact on society.

This is a key theme of Cohen’s latest book – Impact: Reshaping Capitalism to Drive Real Change – where he discusses the “dawn of impact philanthropy”, and says impact measurement is the key to unlocking philanthropy’s full potential. 

“We need to bring investment to charitable organisations through impact tools like development impact bonds, social impact bonds and outcome funds… which are funded by philanthropists [and] governments… and pay for the results that have been achieved,” Cohen said. 

“These enable charitable delivery organisations to raise investment capital to fund their activities.

“So I think philanthropy needs to shift now to take ‘pay for success’ into its panoply of means of achieving outcomes and shift from funding activities to funding outcomes.” 

Australia has already embraced Social Impact Bonds, with the nation’s first SIB – the Newpin Social Benefit Bond – established in 2013 to work with families whose children have been, or are at risk of being, removed from their parents’ care.

This was closely followed by the Benevolent Society Social Benefit Bond, which became the first Australian SIB to mature 

Cohen said there also needed to be greater focus around the endowment of foundations. He noted that environmental foundations should not, for example, invest in fossil fuel companies in a bid to maximise returns.

He said doing so just means your investments are helping to create the problems that you are trying to solve.

“We need to align our investments [with our] mission,” he said. 

“And I don’t believe… the popular perception that this means you’re going to make less money. 

“I think you make more money by optimising risk, return, and impact than you do by just optimising risk, return.” 

While COVID-19 has had a devastating effect on the global economy, Cohen does not believe this will harm the impact investment market, which he said would hit a trillion dollars this year and was “beyond a tipping point”.                         

He said the crisis would in fact just hasten the “impact revolution” and put greater pressure on political leaders to transform global economies so they better serve society.  

Building on discussions from the GSG summit, a declaration has been created setting out advocates’ goals for an impact-led recovery.

The letter will be sent to G7 and G20 Leaders, finance ministers and central bank governors.

Cohen said that governments tend to follow rather than lead, making it vital that advocates engage with political leaders to get impact on the political agenda.

“Our challenge now is to make governments aware that there is huge popular support for this,” he said.  

“We need huge pressure from investors and philanthropists and some business leaders [to make companies] provide transparency on the impact they create.” 


Luke Michael  |  Journalist  |  @luke_michael96

Luke Michael is a journalist at Pro Bono News covering the social sector.

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