Looking back on my time at Investing for Good

In October 2018, I joined the Investing for Good team as a flexible intern. Since returning from Kenya, I had nurtured a curiosity in the field of impact investing and was eager to develop further understanding of the sector, alongside my studies at King’s College London. This blog is therefore a brief account of how the twinned experience of my MSc in Entrepreneurship and Innovation and my experience at Investing for Good has sewn a deep interest in impact investing, social entrepreneurship and inclusive business.

Investing for Good is at the forefront of industry thought and development, and I enjoyed assisting on a range of projects. My principal responsibility at Investing for Good was to help build a Partnership Programme. By leveraging their FCA status, Investing for Good could offer appointed representative (AR) status to those companies and individuals who embedded social value in their business model. In addition to providing some practical business development experience, I had the perfect excuse to get to grips with the UK social impact ecosystem through market analysis.

The dynamism between my work at Investing for Good and my MSc studies was particularly satisfying and I began to notice a natural trend where one would influence the other. Using applied learning from my business strategy course, I could identify and build business models suitable for the BOP. I designed a social enterprise for rural honey in Ethiopia using a cross-subsidisation model and my appreciation for microfinance developed into an interest in inclusive and sustainable business. Investing for Good’s global perspective and ability to structure and advise on impact projects in developing countries may have also influenced my decision to undertake additional modules in African Development and to write a dissertation highlighting the importance of entrepreneurship development to state fragility.

Yet what I find particularly exciting, is the industry’s continued ability to converge established practices, such as philanthropy and commercial business, into a space which fosters social innovation. Blended finance is a powerful reminder of this synergy. By the strategic use of public development capital for the mobilisation of private commercial finance, blended finance improves the viability of SDG investments and improves the risk-return profile. It’s a catalytic instrument that I intend to explore further after my internship.

I have been extremely fortunate with my internship at Investing for Good. Not only have I been able to explore an industry which is exciting, tangible, human-centric and forward thinking; it has given me a fantastic platform to launch a career with meaning and impact (two highly illusive concepts for any graduate).

Angus Spratling

When the arts make a difference

“Governments come and go but, when it concerns culture, there is one thing that all political parties agree on: that the arts are good for us”, writes Ivan Hewett in an article in The Telegraph [1]. Even Theresa May and EU Chief Negotiator Michel Barnier should agree on this.

The arts and culture have a broad appeal that render them powerful means to tackle social issues, or to support vulnerable individuals. Arts therapies, for example, have grown over recent years into a credible method to improve mental health.

Illustration: David Shrigley, Arts Council England’s website

The arts as a means to support disadvantaged groups

Music and Memory, relying on a collaboration with Grammy winning musicians, uses music to provide alternative healing treatments that allow those with dementia, Alzheimer’s and other cognitive and physical challenges to reconnect with the world through music.

Despite the enormous sums of money spent on mood and behaviour-altering medications that are often not particularly effective, nothing compares to these iPods when it comes to improving quality of life.”
— Tony Lewis, President and CEO, Cobble Hill Health Care, Brooklyn, New York

The University of Edinburgh and Limelight Music also explored how music could help disadvantaged groups, focusing on people with physical or cognitive impairments. The project, Music as Social Innovation, seeks to capture any social benefits that musical participation might engender.

Life for elderly people in the UK seems more dynamic since EASOP - Arts Enterprise with a Social Purpose – was founded. The programme they launched, Dance to Health, aims at preventing falls among older people whilst giving them the opportunity to have fun.

Dance to Health Programme, EASOP

Motion, part of last October’s National Theatre of Scotland’s Futureproof festival, is a theatre company unlike any other. All members of the cast are offenders serving a sentence, and the audience was guided through locked doors by prison officers to the performance space. Theatre behind bars can transform lives, not only for the time of the sentence, but also as part of people’s rehabilitation when they leave.

One Festival of Homeless Arts brings together works of art that have been created by artists who have experienced homelessness.

Elsewhere, arts and cultural interventions have been often used to support peace-building, helping communities to deal with the sources of trauma and bring about reconciliation: from participatory theatre initiatives in DRC, to drama in Yemen, or Peace Songs in Nepal[2].

When diversity is core to the project

“Publicly funded art is still dominated by a privileged elite who fail to engage the majority of the population. The majority of artistic directors, producers and chief executives in British theatre are still white, privately educated men. (…) Just like the conversation around ethnic diversity, we are often talked about rather than talked to.” This is the provocative picture of the arts, especially the publicly funded one, painted by Javaad Alipoor on The Guardian in June[3], advocating for the need to “fundamentally change the makeup of who is creating and watching work”.

If some initiatives target specifically communities from disadvantaged backgrounds, or groups in need, should we not consider the unequal access to artistic and cultural institutions as one of the main limits of the arts in tackling inequalities and social challenges?

·       Inequalities in creating in the arts

Women artists, and artists from black, Asian and ethnic minority backgrounds, are still significantly underrepresented in the main artistic and cultural institutions. Of the 663 arts organisations in the national portfolio of Arts Council England (ACE), only 8% of chief executives, 10% of artistic directors and 10% of chairs come from black and ethnic minority backgrounds. The ACE also claims that the sector faces a “major challenge” around disabled representation[4] ; and there is no disability data for nearly half the NPO workforce, making it “extremely difficult” to draw accurate conclusions in this area.

·       Inequalities in watching the arts

Around 80% of white adults engaged with the arts in 2014, compared with 68% from black and minority ethnic groups, according to a survey, Taking Part. Engaging with the arts can be very diverse however, and these figures do not convey the low participation of BAME population in some of the most elite forms of arts.

·       Towards a better representation of disadvantaged minorities

“Theatre companies must diversify or risk losing funding” announced the ACE, that takes this issue very seriously. The ACE has launched the “Creative Case for Diversity”: funded organisations are expected to show how they contribute to diversity through the work they produce, present and collect.

“Arts should do more to embrace diversity. It is crucial to the way in which society and the arts connect.” Sir Nicholas Serota, Chair of Arts Council England, former Director of Tate galleries.

INALA Show, Sisters Grimm. Photo by: Tristam Kenton

Among other examples of how subsidised cultural institutions are active in this field: The Royal Opera House, Opera North and London’s Lyric Hammersmith launched in 2017 a workshop week for black, Asian and minority ethnic artists interested in opera.

In non-subsidised cultural institutions, progress is being achieved as well in terms of diversity and inclusion. Investing for Good has worked with Sisters Grimm, creators of the Grammy nominated show INALA, who are developing a new show to celebrate the Zulu culture. This company is launching a “schools outreach programme”, aimed at offering children from disadvantaged backgrounds the opportunity to see an inspiring show in a theatre, and to learn more about careers in the arts.

The role of impact investing

The Arts and culture sector accounted for less than 0.5% of the impact investing market in 2015, according to a survey co-published in 2015 by the Global Impact Investing Network (GIIN) and J.P Morgan. We believe that the sector, and particularly artistic initiatives tackling pressing social issues, will attract more attention from impact investors.

Investing for Good is committed to fill the gap in the impact investing sector for investible opportunities. We are working alongside Arts Council England, the Mayor of London and Outset Contemporary Art Fund to design the Creative Land Trust, which will provide secure and affordable studio space to creatives in need. 

[1]: https://www.telegraph.co.uk/art/what-to-see/how-weve-got-it-wrong-about-the-arts/

[2] See “The Value of Culture in Peacebuilding -- Examples from Democratic Republic of Congo, Yemen and Nepal”, Master thesis, Dorota Piotrowska, CUNY City College, 2016.

[3] https://www.theguardian.com/stage/2018/jun/05/arts-working-class-people-britain-theatre

[4] https://www.thestage.co.uk/news/2018/bame-disabled-staff-still-significantly-underrepresented-theatre-arts-council-report/

Gender Lens Investing: A smart lens, but where is the focus?

Whether it’s labelled “gender lens investing” (GLI) or “gender smart investing”, there is increasing recognition of the need to incorporate gender factors into investment analysis and decisions. Why is this? Some will argue on economic grounds that women’s participation in the workforce and leadership provide underexploited opportunities for innovation and growth (McKinsey), are linked to greater productivity and return in companies (MSCI) and bring opportunities for better customer insights – for example, in the consumer goods industry where 70-80% of purchasing decisions are made by women. Others will remind us that gender equality is vital to the achievement of the 2030 Sustainable Development Goals – and that there’s still a long way to go.

However, there are still many uncertainties around what gender factors are exactly and what issues they should cover. In the international development world, the focus is more on Women’s Economic Empowerment (WEE), from their access to resources to their ability to make economic decisions, whereas in the private sector much of the conversation focuses on corporate activities related to diversity and inclusion; for example, the representation of women on board and the gender pay gap.

There are also various ways in which GLI can be implemented – from integration of gender considerations into ESG analysis to a more hands-on approach to address gender disparities.

The thoughtful investor and the hands-on investor

Increasingly, gender dynamics are integrated into ESG analysis and analysed to better inform investment decisions. They can fit in the Social indicators, for aspects such as gender equality and diversity in the workplace or women’s rights in supply chains, and in the Governance indicators for aspects such as the presence of women on the board. Thoughtful investors can use these indicators to align their investments with their values and minimise risks – for example, by reallocating investments to companies with strong diversity policies and screening out those a history of sexual harassment controversies.

Even if still limited in number, some more ambitious, ‘hands-on’ investors are emerging – and they are looking to intentionally address gender disparities. While there are diverse ways in which they can do this, they can be categorised into the following:

• Channelling capital to women as leaders, entrepreneurs – especially in areas where they lack access to capital, for instance rural areas in developing countries. Considering that women entrepreneurs and venture capitalists are underfunded and often discouraged, there is a real opportunity to tap into the value that women can offer to society and the economy, by prioritising or targeting new investment flows to women-led organisations.

For example, Merian Ventures aims to address the systemic underfunding of female entrepreneurs with a specific focus on the technology sector, by finding and funding “the next woman-led Microsoft, Apple, Alphabet or Facebook”.

• Investing in products/services companies that address women’s needs – especially in markets where those needs are not sufficiently addressed, for example sexual health products in remote areas, education and financial services for the underprivileged. There are plenty opportunities to support companies with a strong gender case in their market research, product development and distribution efforts, especially in early stage and scaling up phase.

For example, the SPRING Programme, funded by the UK’s Department for International Development (DFID), the Nike Foundation, and USAID, delivers technical and financial support to early-stage enterprises that accelerate women and girls’ empowerment in parts of Africa and Asia. One of them is Zoya in Pakistan, a mobile app that delivers health and wellness information to adolescent girls via mobile phones. The App also connects adolescent girls to locate physicians and health care facility in their area.

• Investing in companies where workplace equality and economic opportunities for women are there across the value chain – from leadership through to employees and supply chains. As too few women hold executive and board positions, the thoughtful investor often finds it difficult to invest in a well-diversified portfolio of women-led companies. Here the role of proactive investors can be more focused on pressing companies to improve their gender diversity and equity through shareholder engagement on issues like the gender pay gap and women on boards.

For example, Trillium Asset Management describe in detail how they integrate LGBT Equality across investment asset classes. Instead of creating a specific LGBT fund, they incorporate LGBT issues into the investment analysis and decision-making process across all their strategies. LGBT issues are analysed alongside a wide range of other concerns, such as board diversity, community relations, and income inequalities – many of which have disproportionate impacts on the LGBT community.

From counting women to valuing women

As of today, the most prevalent understanding of gender lens investing is workforce diversity and leadership in business, whether it is for screening public entities or targeting women-led businesses. But if you want to have more substantial impact, you should also look at how women are valued in business operations or through the company’s products, services and supply chains, for example:

• The extent to which women reap the benefits of a particular product or service;
• The extent to which a company promotes shared childcare responsibility and parental leave between men and women;
• The extent to which a company’s policies and practices are used to promote economic inclusion of women and other underrepresented social groups when selecting suppliers.

This requires a new type of strategic considerations and related metrics that are still underdeveloped. Some efforts are worth following, such as the GIIN’s Gender Lens Investing Initiative, launched in October 2017 – which aims among other things to compile a database on gender lens investing allocations and strategies. Also, all the ongoing efforts to identify potential business strategies and indicators on the UN Sustainable Development Goals (including on Goal 5: Achieve gender equality and empower all women and girls) can give fresh ideas to the debate in this emerging field. Finally, the Criterion Institute offers a wide range of resources on Gender Lens Investing, helping to build knowledge and consensus in the field.

Is it all about economic empowerment?

While GLI has focused mainly on economic empowerment issues (workforce diversity, promotion of female-led suppliers, investment in women entrepreneurs, etc.), there is a need to look at the broader picture, which is that women often find themselves at a disadvantage in society on multiple levels relative to their male counterparts, not just in their economic lives. Persistent inequalities exist in legal rights, health status, inclusion in decision-making processes and political representation, education training and professional development, as well as other areas. An exclusive focus on the economic aspects of women’s lives, without considering other factors that negatively affect women’s status in society, may mean that any positive outcomes remain limited. For investors and businesses to effectively promote gender equality, a more holistic lens on all underlying barriers needs to be adopted.

Discover our article "Impact investing: a breadth of opportunity" published on Media Planet

The Pope Francis rarely makes headlines of financial newspapers. Media Planet dared to highlight the Catholic leader's vision of "putting the economy at the service of peoples", a vision shared by the social investment sector.

Investing for Good took part in the writing of "The Future of Impact Investing", a special edition of Media Planet published on Sept 28th 2018 as a supplement of The Guardian. Discover below the article "A breadth of opportunity" written by Geoff Burnand, CEO at Investing for Good.

To access the full publication, click here.

Impact Investing: a breadth of opportunity

Delivering the resources to achieve the Sustainable Development Goals in the next twelve 12 years requires concerted action at scale, so the recent involvement of mainstream financial institutions into impact investing is welcome. But beyond the positive headlines, many issues have yet to be satisfactorily addressed. Why is there not more competition among investors for projects explicitly focused on achieving the SDGs and the 2030 agenda? Are impact investors cherry picking deals? And in future times of duress, will investors maintain their commitment?

A greater opportunity set

One sign of the maturing market is a significant broadening of impact opportunities, hitherto disproportionately focused on microfinance, energy and social housing. Press freedom, for example – key to the development of peaceful, just and democratic societies – is now gaining mainstream appeal as an impact opportunity.

Eighty-seven per cent of the world’s population – about 6 billion people – live in countries without an independent press. Not only do peace, justice and strong institutions provide direct benefits to people in their everyday lives, they also underpin a wide range of SDGs.

How can you eradicate poverty (SDG 1) and hunger (SDG2) if you cannot create peaceful societies? How do you achieve gender equality (SDG5) without access to justice? How do you provide access to clean water (SDG6) or affordable energy (SDG7) without responsive institutions?

According to the UN, corruption, bribery, theft and tax evasion cost developing countries $1.26 trillion per year. Investing in independent news organisations can act as a strong brake on bribery and corruption and in both the public and private sector.

Impact investing in the arts

Another impact investment opportunity is a response to an adverse consequence of London’s rampant development. Although London is a city with extraordinary cultural vibrancy, 3,500 sites of creative production are projected to be lost by 2020 to short or expiring leases, to the actioning of landlord development clauses, or to the expiration of ‘meanwhile’ spaces. Few creative workspaces are owner-occupied and workspace operators often face major barriers to securing or renewing leases. They are often up against commercial developers and they lack access to financial support to take on development opportunities.

A new impact investing model, a creative land trust, based on a similar model in San Francisco, will acquire properties that will be leased to operators, thereby safeguarding affordability and long-term stability for London’s creatives.

Blended finance using grants from the public sector to underpin significant private finance investment will protect 1,800 creative workspaces and create 1,000 new ones, securing these spaces in perpetuity. London as a whole will benefit from the regeneration of under-invested sites through a stimulation of local business growth, preservation of the waning number of light industrial spaces, and the boost to the city’s world-class artistic and cultural value.

Impact investing for sexual and reproductive rights

Finally, sexual and reproductive rights for all, including the underserved, is a fundamental human right. Investing with impact capital in organisations that provide a range of health services including contraception, breast, and cervical cancer screenings, HIV prevention and treatment and safe abortion can provide millions of life-saving services annually. In many instances, these organisations have developed repayable social enterprise models that help meet the increased demand for reproductive health services and are gaining support from impact investors to implement sustainable growth strategies.

The right balance

The range of these examples reflects the diversity of opportunity that impact investing now presents. However, its future is dependent on achieving the appropriate balance between encouraging further institutional investment on the one hand, without on the other compromising the value created by those organisations dedicated to delivering a world with greater equality. Bridging the gap between the fundamental investment expectations of mainstream capital and the reality of impact investing needs innovation, expertise and a nuanced approach. Investment models that blend public and private finance optimally allow impact driven organisations to be financed by additional sources of capital while retaining the integrity of their mission.

Finding a Way Through: Who can Interpret Impact Investing for Investors and Recipients?

Interest in impact investing has never been greater. Institutional investors have been developing their approach to environmental, social and governance (ESG) issues over many years. Now they are beginning to realise that negative screening is not the only or indeed the best approach to satisfying the demands of clients to be more proactive as responsible investors. Options include positive screening, engagement and impact investing – and the latter is the most pro-active approach.

According to Tideline, nine out of 10 of the largest U.S. asset managers have launched or are exploring strategies for impact investment. https://news.impactalpha.com/major-asset-managers-moving-slowly-but-surely-toward-impact-investing-aa37fc4c8fc0 Should we take this at face value and believe that asset managers are committed to the concept of impact investment? Or are they seeing this as another box to tick to back up their ESG credentials? The reality is no doubt a mixture of both!

People who are genuinely concerned to be responsible investors need to make sure that they are not just helping big investment institutions to ‘greenwash’ their portfolios. Understanding impact investment as a potential responsible investor and being able to access suitable investment opportunities is key. Identifying the risks and choosing appropriate investments brings different challenges to those posed by more traditional investing.

At the same time, organisations that need investment have to ensure that they are identified as suitable recipients. How do they ensure they are ready for potential investors and know how to approach impact investment? For many charities, social enterprises and NGOs this may be the first time they engage with the world of investment so the risks and challenges are also significant for them.

One of the important roles that Investing for Good plays is to act as an experienced intermediary between the very different worlds of investment managers and social enterprises, charities and NGOs. Language, culture, approach to business, timelines and expectations all need to be carefully explored, explained and developed in order for a fruitful, long term relationship to be brokered. Both parties need to understand:

• The distinction between impact measurement and management;
• what outcomes they both need (financial and social/environmental);
• How financial and social/environmental returns can be balanced;
• What data needs to be collected, analysed and shared.

Investing for Good was founded in 2004 on the basis of a simple insight: that the positive use of money can change the world. We were inspired by a new class of investments that mobilised the power of finance to catalyse social good. We believe that helping organisations from very different worlds to understand how they can work together for mutual benefit and helping them to prepare for impact investment is going to be an increasingly important role.

Sally Britton, Chair of Board

Impact Platforms - Silver bullets or a poisoned chalice?

IFG’s newest recruits recently travelled to Oxford to sample Marmalade, an open-access fringe event to the Skoll World Forum on Social Entrepreneurship.

We dropped into several sessions during day two of the festival, but it was the workshop entitled - “Silver bullets in slingshots: Beyond killer platforms for social good” that intrigued us the most as we cast our eyes over the bumper five-day schedule of workshops, panels and networking events.

Everyone in the room added a social impact tech platform on a post it and it soon became clear there are lots... and lots...

Even before we arrived, the call to arms was set – to truly overcome the planet’s greatest challenges and properly harness the collective groundswell of energy for change, wouldn’t it be better if all those in the impact investment space thought beyond our own, sometimes niche, networks and platforms and considered how greater inter-connectivity could be built into our current work streams? Therefore, to truly create an ecosystem that was greater than the sum of its parts and capable of moving innovations and capital at scale.

The two-hour session was led by Astrid Scholz (CEO, Sphaera) and Audrey Selian (Director, Artha Initiative). We started by crowd-sourcing names of the many, many platforms that exist in the space. The photo below is proof of the fragmentation within the sector and collectively represents an outlay of over £60m on development costs alone, while only one platform has achieved financial sustainability to date. 

After a lively debate about the virtues and pitfalls of the aforementioned platforms, our hosts shared an update on a recent project where they had sought to break free of their own organisational silos.

Astrid & Audrey explained how they had come to realise that their respective organisations had essentially been operating at opposite sides of the same coin. For Sphaera, the focus is at the “ideation” stage – identifying, sharing and scaling solutions, while Artha provide the information management platform for entrepreneurs, investors and intermediaries to collaborate. Traditionally, both offerings would function separately with end users needing twice the amount of account logins, time and patience to participate.

The key to the Sphaera- Artha collaboration was opening back-end systems through APIs (application programming interfaces) to share information seamlessly – so the end user can use each of their preferred specialist tools without having to repopulate data over and over. Think using your Google account to speed around the web with a single-sign on.

Of course, a change in mindset away from platforms purely competing with one another is first required; impact communities exist and impact technology exists to connect those communities, but in the market at present no provider is big enough for the data layer to become sufficiently scaled to truly drive outputs. To make this happen either the number of technology platforms will have to consolidate, or the various actors must find a way to share data more successfully and accept that being part of a larger, richer eco-system where each other’s objectives, incentives and financial realities are acknowledged. This is where real progress will be made. The theory extends that that this will also encourage and enable platform creators to offer one service well rather than several services poorly.

Clearly there are real challenges over data sharing and other trust issues that will need to be worked through sensitively, but the aspiration is to make this sector more collaborative and efficient by providing participants the tools to act in this way.

Our hosts promised to update us over the summer on the progress of their project and we look forward to seeing the outputs of case studies that showcase how organisations have fared in the real world and the opportunities that greater access and API’s can offer to us all.