Panahpur (meaning ‘place of refuge’ in Hindi) is a UK-based foundation which seeks to operate its capital holistically to achieve its charitable goals, which are rooted in the Christian faith and reflect a concern for all people – especially the excluded, marginalised and vulnerable.
During the early 2000s, the board became uncomfortable with the paradigm where a charitable foundation would delegate the operation of its capital to the financial services industry which focused exclusively on financial outcomes, which were then used to give grants to charities. They became concerned that social interests in wealth creation on one hand and charitable outcomes on the other had become dis-aligned. To some degree, our investment and charitable activities were conflicting with one another.
This led the board to seek alternatives which enabled them to steward their capital in a way that was more integrated and consistent.
From 2005 to 2016 Panahpur started to move its assets into impact investments, and became an active pioneer in the impact investment community, both in the UK and overseas. We participated in a number of initiatives, such as the Big Society Finance Fund (a pilot project for Big Society Capital), the UK Government’s Social Investment strategy, and the G8 Social Impact Investment Taskforce and subsequent Global Impact Investment Steering Group. In December 2016, Panahpur entered into a partnership with the Golden Bottle Trust to create Snowball, an impact investment vehicle that might in time offer a diversified, allocated, yielding impact investment portfolio to others. To date we have invested in Private Equity (e.g. Big Issue Invest, Bridges Ventures, Social Venture Fund); Real Assets (e.g. Resonance Real Lettings Property Fund, Civitas Social Housing PLC); Liquid Debt (e.g. Rathbones Ethical Bond Fund, Oikocredit); Cash (e.g. Triodos, Charity Bank, Southern Bancorp, Ecology Building Society); Public Equity (e.g. Wellington Global Impact Fund, WHEB Sustainability Fund) as well as a variety of direct Program Related and Mixed Purpose Investments.
Turning the idea of a charitable foundation upside down – from grant-maker to for-beneficiary investment company (as opposed to for-profit investment company) - cannot be done glibly and the challenges should not be underestimated. The capital markets were not built on this idea, and so do not yet generally have decent offerings to meet this need. The capabilities required by a grant-maker are very different to those required by an investment company.
However it evolves, in one crucial way foundations are well positioned to successfully make this transition. They have developed a track record in running programs to strategically serve their beneficiaries, to create social impact. The grants officer’s profession is to understand the causes of a social problem and the likely positive impact of recipients or investees putting money to work to address them.
If foundations are to transition from grant-makers to for-beneficiary investment companies, they must either evolve social impact investment competencies in-house, or they must demand social impact investment services from their asset managers. Most likely, they will do both. In their grants officers, they already have an in-house social impact analyst function and in their finance departments they often already have an in-house investment function.