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New approaches to social investment

New approaches to social investment. Kevin Robbie SVA. Research Summary (Oct 2009) Kevin Robbie, Olivia Hilton and Tatiana Peralta. Social Ventures Australia. Venture Development - portfolio of social ventures that we invest into with focus on employment and education. .

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New approaches to social investment

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  1. New approaches to social investment Kevin Robbie SVA Research Summary (Oct 2009) Kevin Robbie, Olivia Hilton and Tatiana Peralta

  2. Social Ventures Australia • Venture Development - portfolio of social • ventures that we invest into with focus on • employment and education. • SVA consulting - fee for service to the non-profit sector. • Also strategic projects to achieve systemic social change. www.socialventures.com.au

  3. Bridging the gap between grants and loan/equity? • Learn from international best practice and apply to Australia • Help SVA to shape products for an emerging market here (Bonsai Social Firm, Goodstart, Fair Business)

  4. There are three types of social enterprises: • Businesses who trade and covenant their profits to a charity or for community benefit. • Businesses who forsake a proportion of their profit for community benefit. • Businesses whose social return and financial return both increase as they gain increasing market share. Venturesome

  5. What we learned: A draft Social Investment Spectrum 4

  6. What we learned: A draft Social Investment Spectrum 5

  7. Case Study – the evolution in the UK / Ireland Social Investors Donors Grants Investments Recycled Funds Venture Philanthropy Grants through a Fund Matched Investment Mixed Investment Social Finance One Foundation Impetus Inspiring Scotland Bridges Ventures* Adventure Capital Fund Futurebuilders England Scottish Investment Fund UnLtd Big Issue Invest (SEIF) Bridges Ventures (Social Entrepreneurs Fund) Social Impact Bonds Venturesome • Acceleration during the last decade • Government acting as a catalyst and main funding source • Policy changes to promote social investment and social enterprise sector • Strong collaboration amongst sectors – private, public and philanthropic UK *Note this fund wasn’t targeted on social enterprises

  8. Case Study – the evolution in the US Social Investors Donors Grants Investments Recycled Funds Venture Philanthropy Grants through a Fund Matched Investment Mixed Investment Social Finance Calvert Foundation Root Capital Acumen Fund Agora Partnerships Good Capital New Profit Inc REDF Venture Philanthropy Partners Social Innovation Fund • Strong focus on the venture philanthropy model – led by the philanthropic sector • Innovative investment models primarily operating at the financial return on investment end with partnerships between private and philanthropic sectors • Little or no Government participation for these initiatives • Social Innovation Fund – the one exception – a venture philanthropy model US

  9. Six Mary’s Place • £200k to purchase the building • Soft loan via philanthropy – interest free/ capital repayment holidays when necessary/leverage for other grants/loans and the safety net of social focus • The bank? • Grant funders?

  10. Six Mary’s Place • 3-star guesthouse, listed in main tourist publications • 22 jobs created – full-time/part-time. In 20 years over 100 people have worked there. • Servicing debt £127k for refurbishment – loan from bank, following repayment of ‘soft’ loan • £5.87 : £1 invested - Social return in reduced health care costs, reduced welfare expenditure, increased taxation, etc.

  11. Fair Repairs – new business • The people - Alex, Marc, Michelle • Due diligence/identifying businesses • Owner involvement & ownership model • Employment model/baseline SROI $4.59/$1

  12. Investment/Funding model Contracts • Partnership with Housing NSW and Spotless to deliver social aspects of contracts for repairs and maintenance of public housing in Western Sydney. • Early stage discussions about longer-term contracts that could be used as basis for discussions with banks Soft Loan/s • Soft Loan via ‘supporters’ and used to purchase businesses. • SVA has provided and additional soft loan as pilot of new approach to investment. • Repaid from sales at 0% interest over next 5 years as businesses grow and become more profitable Grant Funding • SVA provides infrastructure support for business development. • Grant funding for start-up of new businesses to purchase equipment. SVA contribution via Jobs Fund. • SVA also support the development of ‘employment support analysis’ and ongoing SROI

  13. A Proposed Investment Model

  14. Questions • What is promising about developing a Social Enterprise Development Investment Fund? • What are the challenges / barriers to developing this type of fund in Australia? • Who are the key partners that should be engaged? • What else do we need to be thinking about?

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