New program aims to open impact investment opportunities

Charitable and purpose-driven organisations will soon have help to make themselves “impact investment ready”, thanks to a new program that could open the door to 20 times the funds currently available through grants.

Impact Investing Australia and Philanthropy Australia on Tuesday launched the Impact Investment Ready initiative – two grant programs that aim to upskill not for profit and mission-driven organisations so that they can attract funds from the growing impact investment space, and increase financial sustainability.

Impact investors look for projects that will have tangible social, environmental or cultural outcomes, alongside providing a solid financial return.

Philanthropy Australia’s Chris Wootten will be managing the The Impact Investment Ready Discovery Grant program, which is targeting the NFP sector. He told The Fifth Estate NFPs were currently under-represented in the impact investment space, largely because they didn’t have the expertise in finance and investment needed to identify good impact investment proposals and attract investors.

The $500,000 program, co-funded by NAB, is providing grants of up to $50,000 to get these organisation impact investment ready. This could allow NFPs to get in external consultants to go through operations to identify current gaps in funding models and see how impact investment could be employed. Consultants could also identify skills and expertise gaps at the management and board level, and recommend staff training.

Philanthropy Australia chief executive Sarah Davies said in order to address Australia’s social and environmental problems it was crucial to have “a strong and vibrant not-for-profit sector with the capacity to develop and implement high quality impact investing programs”.

“The Discovery Grants aim to kick-start this process.”

Crowd funding a $2 million Stradivarius violin and then watching the value jump 40 per cent

Mr Wootten said thinking outside the traditional fundraising box could increase the financial sustainability of NFP and purpose-driven organisations. He gave the example of the Australian Chamber Orchestra, which instead of fundraising to purchase a $2 million Stradivarius violin, developed a fund in which people could take a share in ownership of the violin. Shareholders have seen the instrument appreciate in value – 40 per cent since 2011 – and have also created cultural impact through supporting the Australian music sector.

The Impact Investment Ready Growth Grant will be managed by Impact Investing Australia, and will provide impact businesses and mission-driven organisations with grants of up to $100,000 for business, financial, legal and other capacity building support to secure investment.

The program has been around as the Impact Investment Readiness Fund since March 2015, having supported 16 organisations to attract $37 million in impact investment capital.

“The Impact Investment Ready Growth Grant is playing an important role in driving social innovation in Australia,” Impact Investing Australia chief executive Daniel Madhavan said.

“It is supporting for-purpose businesses to connect with and attract impact investors, helping them to achieve scale and deliver greater social and environmental impact.”

One example in the property space is Ethical Property Australia, which raises social impact investment to purchase and refurbish properties to be leased to not-for-profits, campaigning organisations, social enterprises and charities. Its Donkey Wheel House in Melbourne hosts social enterprises such as STREAT, Kinfolk Café, Hub Australia, The Difference Incubator, and the School of Life.

Under the Impact Investment Ready Growth Grant program it received a $75,000 grant to help with its strategy and business development work, and to develop, refine and test business, financial and operational models. The company has now raised over $21 million.

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