As we get set to wrap up for the holidays, we’re pleased to share our year-end update with you.
Reflecting on the highs and lows of the year, our commitment to our vision that every dollar invested builds a better world, remains unwavering.
It’s an exciting time for impact investing in Australia. Following the Treasurer’s Investor Roundtable earlier this month and the public release of the Social Impact Investment Taskforce Report, we are optimistic this next phase will see Australia’s impact investing market continue to build capacity to make a significant difference to Australians experiencing social disadvantage.
We continue to be inspired by so many in the impact ecosystem, including the social enterprises we’ve met throughout the course of the Growth Grant program. The program, funded by the Department of Social Services’ Sector Readiness Fund, has now concluded and we’re delighted for the most recent Grant recipients who successfully raised capital to amplify their impact. We extend our gratitude to the Department for their continuous support of Australian social enterprises throughout the program’s funding, and we look forward to next year’s roll-out of the Social Enterprise Development Initiative that was announced in the last federal budget.
As this is our final newsletter for the year, the team and I would like to wish you and your families a safe and enjoyable festive season. At a time when there is much conflict, division and uncertainty in the world, we hope you can reflect on the positives of the year and help pave the way for positive change in 2024. That’s precisely our plan.
Best wishes
David
Government releases blueprint to scale the Australian impact investing market
We welcome the Government’s release of the Social Impact Investing Taskforce Report, which provides a blueprint to expedite the growth of the social impact investing market in Australia.
Five members of IIA’s Board formed the Government’s Social Impact Investing (SII) Taskforce, which was commissioned to develop a strategy for a Commonwealth role in the SII market. The Taskforce Report recommends the Government implement a Commonwealth Social Impact Investing Strategy to develop a mature and self-sustaining Australian SII market, with targeted contributions from the private sector and philanthropy.
The Report outlines how this can be achieved through six key SII market building initiatives:
Commonwealth Outcomes Fund – toprovide payments to states and service delivery organisations based on the measurable outcomes they achieve, enabling outcomes-based contracts. As a result of this recommendation, the Government announced a $100 million Commonwealth Outcomes Fund in the May 2023 federal budget.
Early-Stage Social Enterprise Foundation –to support early-stage social enterprises in a flexible way, tailored to the needs of each enterprise (flexible loans, funding for capacity building activities). The May 2023 federal budget announced the $11.6 million Social Enterprise Development Initiative (SEDI), to help social enterprises access capital and scale through capacity-building grants and online mentoring and education.
Social Impact Investing Wholesaler –the Government would partner with private investors to provide wholesale capital to intermediary funds. Intermediaries create investment opportunities that meet the financial and impact requirements of investors and unlock private capital to help address social disadvantage.
Commonwealth Office of Social Impact – a central policy unit, acting as an independent statutory authority, that would drive SII policy and monitor and evaluate the success of the SII strategy.
Encourage social procurement across the Australian Government – issuing of guidance on how to consider social impact when undertaking procurement processes.
Clarify the Sole Purpose Test and consider legislative and regulatory context – reinforce the position of the Australia Prudential Regulatory Authority (APRA), which highlights the existing capacity for superannuation funds to engage in SII while focused on financial returns.
Members of the Social Impact Investing Taskforce were: Michael Traill AM, Danny Gilbert AM, Dr Catherine Brown OAM, Sally McCutchan OAM and Amanda Miller OAM.
Outcomes of Treasurer’s Investor Roundtable to advance impact investing in Australia
IIA CEO David Hetherington and Board Directors Michael Traill and Amanda Miller were pleased to attend the Treasurer’s Investor Roundtable at Parliament House earlier this month, alongside Chairs, CEOs and CIOs from banking and finance, social enterprise and philanthropy, to address social impact investment in order to deliver solutions for a better future for all Australians.
We welcome the outcomes announced from the Roundtable, including:
- The agreement to establish dedicated working groups to explore social impact initiatives/recommendations as outlined by the Social Impact Investment Taskforce Report (see separate story). The proposed working groups include:
- a working group of philanthropists to engage with Treasury on the design of the $100 million Outcomes Fund
- a social impact investment working group, comprised of investors, experts and industry, to work closely with government exploring topics that could include capacity building, institutional arrangements, financing mechanisms, outcomes funding and measurement, blended finance, and pooled funding
- a commitment by major banks, HESTA and REST to contribute expertise to support the social enterprise sector
- the in‑principle agreement with Macquarie Group, Westpac, the Minderoo Foundation and the Paul Ramsay Foundation to invest alongside government in social impact initiatives that deliver positive social outcomes for communities
Also at the Roundtable, The Paul Ramsay Foundation announced a $60 million evergreen impact investing fund, and a commitment of 10% of their liquid balance sheet to impact investments with market returns.
“The Roundtable underscores important work that has taken place and progress made to advance the growth of impact investing in Australia,” IIA CEO, David Hetherington said.
“Our aspiration is that the Roundtable outcomes will help bring about a transformation in Australia’s investing landscape whereby impact investment integrates into the mainstream, unleashing the potential for capital to be a force for positive change, supporting solutions that address social disadvantage.”
“Our focus now is on following up with Government and partners in the sector to understand the actions that will follow and how we can best contribute,” David concluded.
Read Treasury’s Investor Roundtable media release
Celebrating the impact of the Growth Grant program
We acquitted the final eight recipients of our Growth Grant program last month, marking the end to the five-year program funded by the Department of Social Services’ Sector Readiness Fund (SRF).
The objective of the program was to grow the Australian social enterprise sector by providing grants of up to $140,000 to social enterprises to purchase capability building services that would allow them to become investment ready and therefore attract private capital, leading to an increase in their social impact.
From 2018 to 2023, through the SRF, $6.03 million in grants were distributed to 76 social enterprises, enabling them to build their capability for private capital raising. This follows on from the $1.75 million in grants awarded to 29 social enterprises during the funding of the grant program by National Australia Bank (from 2015 to 2017).
Impact that can be attributed to the SRF has two main components: (1) Direct benefit to Australians experiencing disadvantage and (2) building the social impact investment (SII) ecosystem. The direct benefit to Australians experiencing disadvantage supported by grant recipients was many multiples of the grant funds. An assessment of the program found that it:
- helped the social enterprise sector and broader SII ecosystem to grow
- increased the funds invested for impact in social enterprises
- strengthened SII specific skills and knowledge
- increased confidence of all stakeholders in the SII ecosystem in their own capabilities
- increased opportunities for investment in the SII ecosystem
- improved networks and relationships across the SII ecosystem
- improved business operations for social enterprises
IIA is proud to have administered the program, which has helped build the SII ecosystem and deliver benefits to Australians experiencing disadvantage now and in the future. We acknowledge the Department, our current and former IIA colleagues, the Growth Grant Panel members and intermediaries, as well as the 76 social enterprises for their generous support and contributions.
Empowering Second Chances: Fruit2Work secures funding for greater impact
One of the eight Growth Grant recipients we acquitted last month was Fruit2Work. The business helps those impacted by the justice system to get a second chance by offering support and providing transitional employment opportunities to allow them to reintegrate with society as returning citizens. Fruit2Work does this by providing a service delivering fruit, milk and pantry items to the workplace and runs a vending business servicing the construction and infrastructure businesses.
As a result of its meaningful purpose, Fruit2Work has achieved a zero-recidivism rate compared to a state average of 50% recidivism.
The business has expanded rapidly in recent years increasing by over 50% in the last 12 months. Its growth had been driven in part by State Government social procurement initiatives.
After initially being awarded a Growth Grant in 2021, Fruit2Work worked with Social Impact Hub on expanding its capability in the areas of financial modelling, opportunities for investment, impact measurement and developing an impact investment diagnostic. Since then, it has successfully secured $1,300,000 in debt funding, with a strong prospect of an additional $300,000. In addition, it has also secured funding through various grants totalling $1.2 million. The capital will be used to open an additional depot in Victoria and explore other growth opportunities in new locations.
“We’d like to thank the IIA team for their ongoing support, understanding and flexibility in relation to this grants program. We understand that funding social enterprises at our stage of growth can be challenging given the fast-pace at which these organisations are growing and adapting their business models. We’d encourage IIA to continue supporting initiatives like this in the future and demonstrating to both investors and investees the opportunities that exist around backing social enterprises in Australia.”
– Rob Brown, Chief Chance Creator, Fruit2Work
State of Play Report emphasises need for private sector impact investment in emerging economies
Our international colleagues on the Global Steering Group for Impact Investment (GSG) recently released the State of Play 2023 report, highlighting the urgent need for development finance institutions to mobilise more private sector capital in emerging economies.
State of Play 2023 assesses progress achieved since the ‘Time to Deliver’ report to the UK G7 Presidency in 2021. Core findings and recommendations in the latest report include:
- G7 and G20 should lead the way to a common framework for mobilising private capital.
- There is an urgent need for development finance institutions and multilateral development banks to mobilise private sector capital, creating greater pools of catalytic capital in emerging economies.
- There must be a collective effort to ensure reporting standards work together, stakeholders from emerging economies have to be involved standard-setting.
- There is compelling evidence to scale-up outcome partnerships. By paying for specific outcomes, not activity, private capital can be mobilised for better social, climate and environmental impact.
Access the State of Play 2023 report
IIA represents Australia on the GSG and works closely with its member countries.
Early bird discount to 2024 Impact Investment Summit
The annual Impact Investment Summit will be held in Sydney on 20-21 March 2024. IIA is pleased to again be supporting this event, which aims to accelerate the mainstreaming of impact investment at scale. Early bird tickets are available now, with an extra 10% off using the IIA discount code: IIA24.
Happy holidays!
As we near the end of 2023, we want to thank you for your support throughout the year.
We wish you and your families a wonderful holiday season.
We look forward to working with you in 2024, and helping deliver social and environment outcomes that create a more healthy, equitable and prosperous Australia.
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