Impact Investing Front and Center

Impact investing was front and center at the Social Venture Partners (SVP) international conference which took place in Seattle in October. Partners from all over the globe gathered to connect and learn more about philanthropy. Impact investing had its own track this year which involved five amazing sessions over the three day conference. SDii members Martin Goodman and Nancy Cannon-O’Connell were at the conference and this is their first-hand report.

With 38 affiliates in 8 countries, SVP is a laboratory of impact investment experiments evolving in different and exciting forms. At the recent conference attendees learned about the myriad of impact investments in process including on-going efforts for social incented systems change in Toronto, equity investments made by Tokyo SVP in a health start-up, three up and coming social enterprises being accelerated and coached by Chicago SVP, and a unique Pay For Success program in Austin. Two of these are detailed below.

Bill Young of Social Capital Partners in Toronto and Tim Jackson of the MaRS Centre (and the SVP Waterloo region) set the context for the impact segment of the conference with a captivating session about creating systems change via the impact investment space. As an example, Bill’s group incents conventional financial institutions (such as Royal Bank of Canada) to provide incentives that advance positive social change. In Toronto, that manifested itself in a community hiring program. A pool of workers was created in Toronto from those who are disadvantaged. When industry hired workers from the pool, they received interest rate discounts on existing loans from participating lenders. Bill Young’s example was a successful systems-based approach because he used existing financial structures to incent companies to hire from a pool of labor that was highly qualified for the type of positions industry needed to fill.

In a later session, three SVP leaders (Tokyo, Seattle, Austin) spoke to a packed room about their approach to impact investment. For example, Austin’s Dennis Cavner, of Mission Capital, described ‘Pay –for- Success’ as 2 different markets. One is Big Government finance, which is essential to social change, but is hard work and has a huge transaction size. The other is a Private PFS Transaction, where there may or may not be a government entity involved locally, but the transaction size is more manageable. Think smaller, more agile, more relationship-based. His example: a University Project where the goal was increased enrollment and retention/graduation. The players – a Provider of services with a history of success in meeting enrollment/graduation goals; a social investor (foundation) that had invested in the program previously and trusted this Provider; a University with the need for this and a willingness to do the deal; an Impact Facilitator – the SVP had invested in this Provider and put the deal together. Dennis’ early learnings? There are transaction costs, including the cost of evaluation (to prove the achievement of ‘success’ against goals), so keep it simple and standardize quickly.

We are excited to bring some of the concepts explored at the conference back to San Diego and look forward to a lively discussion about where there are opportunities to test them out. What do you think?

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  • Nelli Garton
    commented 2015-11-24 11:29:57 -0800
    I really like the idea of more private Pay for Success opportunities. These don’t all have to be so onerous.

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