The evolution of impact investing

Friday 2nd March 2018

The missing link

Social Ventures Australia (SVA) is at the forefront of impact investing in Australia. In partnership with Uniting, it was integral in getting the first social impact bond – the Newpin Social Benefit Bond – off the ground and continues to be involved in developing impact investing products across Australia.

Industry Moves spoke to SVA’s Alex Oppes, director, impact investing and Casey Taylor, manager, impact investing about the evolution of impact investing in Australia.

Oppes oversees SVA’s Diversified Impact Fund, which recently reached first close after raising $12.8 million of private investor capital. The new fund will make debt and equity investments of between $500,000 and $1.5 million each, in a range of social enterprises, along with providing access to expertise and hands-on support.

In terms of where those funds will be invested, SVA is currently looking actively at about six investment opportunities that aim to improve the lives of people experiencing disadvantage in Australia.

“With each of our investments…we look to achieve a financial return as well as a measurable [social] impact,” Oppes says.

The funds will be invested in social enterprises that have achieved revenue and are ready to scale. It will focus on areas in which SVA has deep experience – education, employment, housing, First Australians, health and disability.

For example, with employment, the fund is looking at models which focus on job creation for people who might otherwise be excluded from the labour market, such as people with a disability or young people at risk of homelessness.

“They might be creating Indigenous jobs or jobs in remote areas,” Oppes says.

“We are looking at a number of employment related social enterprise opportunities … one that we’re looking at is a large indigenous civil construction enterprise.”

Casey Taylor, who focuses on SVA’s social impact bond practice, says that the frequency at which these transactions are coming to market is reassuring.

“We launched three social impact bonds in three different states last year and recently announced our involvement in the Foyer51 project,” Taylor says.

The Foyer51 project is developing purpose-built accommodation in Chippendale to assist young people leaving out of home care when they turn 18. It is being developed as a partnership between the NSW Government, Uniting, St George Community Housing and SVA.

The building will provide self-contained student style accommodation units for 51 young people, as well as up to 26 affordable housing units for low-income workers.

“We are really excited about this project. There is limited support for youth exiting the out of home care system when they turn 18, often placing them at risk of homelessness. The Foyer51 project is based on an evidence-informed preventative program which aims to put an end to this cycle.”

Construction of Foyer51 will commence in mid-2018, and SVA will raise a social impact bond to fund the delivery of the program once construction nears completion towards the end of 2019.

While the NSW government was the first state government to get involved in social impact investing, last year’s Federal Budget is indicative of the national attention this area is now getting.

Of the Federal Government’s $20 million allocation, $12.2 million (over 10 years from 2017-18) was allocated to partner with State and Territory Governments to trial social impact investing initiatives; and $8.0 million was allocated over four years from 2017-18 to establish a Social Impact Investment Readiness Fund.

That fund is designed to build capacity in the non-government and private sector to develop social impact investment proposals.

“It is encouraging to see the Federal Government embrace the potential for impact investing to increase the social returns on private sector investments,” Taylor says.

“They are an important piece of the puzzle when it comes to unlocking access to data, bolstering capability of service providers, and contributing top-up outcome payment funding for State-led social impact investing transactions.”

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