Impact investing "offers exciting and real solutions"

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Created on Friday, 05 April 2013 16:56

Written by Editorial staff

Impact investing is an excellent opportunity to harness and effectively use Australia's growing pool of capital, a new report has claimed, particularly in support of the not-for-profit sector.

This type of funding aims to achieve social, cultural and environmental benefits, while also achieving an economic return for the investor - this financial element marks the difference between impact investing and financing through grants.

In news that may interest registered migration agents, a study published on Tuesday (April 2) by the Department of Education, Employment and Workplace Relations in conjunction with private wealth management firm JBWere revealed Australia is now ready to explore impact investment more fully.

David Knowles, executive director of JBWere's philanthropic services department, said funding of this kind "offers exciting and real solutions".

"Lack of access to capital is a chronic problem in the not-for-profit sector yet alternative sources of capital remain largely untapped, often due to the inability of not-for-profit groups to build a sufficiently clear and attractive proposition," he explained.

He argued that this issue can be solved through impact investing, as investors will immediately see the value in providing social capital that delivers financial returns.

"Australia is ready," Mr Knowles said. "The GFC experience has been an emotional and moral awakening as well as a financial shock."

"We now have a greater awareness that, regardless of our place, we are all part of a single ecosystem, in which the impact of one affects the life of another."

Several desired outcomes were referenced in the report, which is entitled Impact Australia: Investment for Social and Economic Benefit.

The document highlighted a need for community organisations to be confident and informed regarding available financial options, which could boost their sustainability.

Research also showed a need for people to have more choice over how they contribute to initiatives that cater to society's needs, while still delivering "strong" economic results.

Individuals and organisations were urged to act on impact investing, paving the way for others to build confidence in the field and garner increased activity among financiers.

"There are already Australian examples where creative use of small amounts of philanthropic or other risk-taking capital has triggered significant additional investment," the report stated.

Impact investment ensures there is a focus on building outcomes that directly affect the wellbeing and prosperity of people and communities, it concluded, which contributes to a more vibrant culture and tackles problems of exclusion.