Internal stakeholder engagement to develop and qualify projects and opportunities that will be most suitable for impact investment and the development of the Investment Case in a project initiation documents.
For Social Purpose Organizations
Impact Architects provides a three-stage approach to impact investment services:
External engagement with potential investors to qualify interest and develop an investor-centric impact investment proposition for the investor market.
Broker the investment and assist in developing the impact measurement and reporting framework for implementation.
We have long held the view that since the Global Financial Crisis, traditional philanthropy, although critical and irreplaceable, has become increasingly constrained. A recent annual report from ACNC highlighted that in Australia there has been a $1.3 billion decline in annual donations and bequests to charities during 2016 and 2017. Although similar statistics are not yet available in New Zealand, the trends are historically similar in both countries. While philanthropy has declined, private and managed wealth with a strong social conscience is increasing. We can see a growing percentage of private equity wants to contribute to social, environmental, cultural, and economic impact. The finance sector has never been more ready than now to consider partnering with the social purpose sector. This is a great opportunity for the social purpose sector.
The social purpose sector in New Zealand and in Australia is significant and is the backbone of our society. It requires substantial resources every year to deliver important social and environmental outcomes that are essential for our communities to thrive. The sector is largely reliant on three forms of income: government funding, philanthropy and trading revenue. Collectively these core revenue streams are not keeping pace with our communities increasing needs or aspirations. There is a significant opportunity to invest private capital in projects and opportunities that will provide the financial resources needed to meet some of the greatest unmet needs in our communities and deliver positive impact at scale.
It is important for any organisation considering impact investment to consider how they will identify priority projects and programmes and determine the ability of these projects to generate a revenue, as well as how they will measure social value. Clarification of these details is an important feature of the initial assessment work. This requires an investor-centric approach.
Social value can be qualitative, quantitative, or both. Defining outputs, outcomes, and impact will provide the opportunity to report on the social value generated through programmes, projects and interventions. Importantly, all impact investments must define intentional and measured impact which will be qualified and outlined in a draft Project Initiation document.
The social value derived from projects may or may not have been previously clearly specified. A complete social value assessment would consider factors such as:
- improved end-beneficiary outcomes
- improved community outcomes: health, wellbeing, housing, education, etc.
- improved outcomes for staff and key stakeholders
- improved outcomes from high performing sustainable supply chain
- improved organisational capacity to scale up services faster
- improved environmental outcomes
- initial economic impact for individuals and communities: job creation and training
- increased and sustainable income generation to improve/increase core services that have significant impact