You are here

Making use of all of the balance sheet for charitable causes

Last week, Big Society Capital collaborated with the Marshall Institute on a roundtable discussion with a group of charitable foundation trustees, senior executives and relevant advisers.

We posed the question: "should trustees invest assets only for financial returns or should more investment activity be used to directly support their social purpose?”

It was a good opportunity to hear from several foundations about the shift from using grants only to using all of a charity’s balance sheet for charitable causes. Many organisations recognise that grants from independent foundations, whilst much needed and the right option for projects with no repayable model, isn’t enough to address the funding shortages facing many organisations looking to create social impact.

10 key takeaways from these discussions:

1) Social investment is a broad term – it ranges from grants plus, loans to charities to social enterprises, property and infrastructure investments, early stage social venture style investing and providing working capital to social organisations participating in payment by results contracts. It’s really important to start with what kind of investment you are referring to when talking about social investment.

2) Social investment isn’t necessary a new type of investment. Many charitable foundations have significant property holdings already use their assets to house individuals or rent to charities often at below market rates.

3) Even a small percentage of a foundation’s endowment into investing for impact would be significant and augment their grant making in a very meaningful way

4) The Charities (and Social investment) Bill gives some charity trustees statutory powers to make social investments. This may not be widely known and should be better promoted.

5) There appears to be a generational shift. Younger trustees are often actively looking for alternative tools to grants to help them achieve their charitable objects.

6) A recognition that social investing can be time consuming and require additional skills. Funders collaborating together could help alleviate some of this additional burden.

7) Whilst there is recognition that Payment by Results (PbR) contracts can provide space away from the regular commissioning structures to encourage innovative interventions, there is a need to help investors think about social investments beyond PbRs.

8) The need to communicate simple models of what works with strong evidence in a clear non-technical language.

9) Foundations have significant convening power and could effect change by bringing together public, social and commercial sectors together to solve social problems with different solutions.

10) Trustees and executives can work better together to understand unfamiliar risk. Often there is a presumption that foundations are risk adverse but there might be more appetite for taking risk if it creates greater impact.

If you are a charity trustee or executive interested in making social investments, please visit GET INFORMED which offers practical support, guidance and information to help board members of charities understand opportunities and risks of social investment.

You may also wish to join the Social Impact Investors Group (SIIG), an informal group of foundations social investors, supported by Big Society Capital.

If you have any questions about foundations as social investors, please contact Joanna Heywood.



Last updated | 
6 March 2017


Add new comment