Social Investment - Making a Difference & a Profit
In recent years, more and more companies and foundations are putting endowments into projects that help the world and work towards sustainable development goals, rather than just using the stock market and hoping for corporate gains.
On November 15, the Georgian Center for Strategic Research and Development held a seminar on venture philanthropy and social investment. Attendees from various corporates and NGOs gained practical information about projects and their social outcomes from experts in the field of venture philanthropy and social investment.
The main ambition of social investment is to build the capacity of a charity in order to achieve greater social impact. The market has been growing rapidly over the last ten years as businesses adopt the technique of gifting grants or mainstream financial investments. Indeed, in 2016, investors looking for financial returns that demonstrated social good improvement committed $21.1 billion to approximately 8000 investments. In the UK, the industry is even growing faster than the agricultural industry, with 100,000 social enterprises now in existence.
Venture philanthropy and social investment move away from the traditional approach of gifting grants and uses three core practices to increase impact. Firstly, it tailors finance to the specific needs of each organization and doesn’t just restrict finance to the form of grants. Secondly, it applies added value support services to develop skills or improve structures, for example, by offering expert advice and training. Finally, it uses impact measurement and management to pinpoint what does and doesn’t work in order to better manage the impact.
Speaking at the seminar, Chris West, former Director of the Shell Foundation from 2008 - 2015 and pioneer in venture philanthropy, spoke in detail about his experiences adopting a social investment approach.
The Shell Foundation was set up by Shell in order to help the company’s suffering PR image by investing in social projects. After an initial relatively unsuccessful phase, the team adopted a venture philanthropy approach which hugely benefited social enterprises, Shell as a company, and millions of lives around the world.
Pirkko Valge from the Good Deed Foundation in Estonia spoke of their challenges and successes in building an incubator for social enterprises, the first of its kind in the country.
By implementing a social investment and venture philanthropy method to support projects, both the Shell Foundation and Good Deed Foundation witnessed a transformation in the success of projects. In 2010, 80% of the partners supported by the Shell Foundation had achieved impact at scale and in ways that were financially viable. Millions of lives were changed for the better through the development of companies that created products such as clean energy cooking stoves. In the Shell Foundation’s first 13 years, they generated 21,400 jobs and saved 3.4 million tons of carbon.
Venture philanthropy is still relatively unknown in Georgia. However, as more and more businesses wake up to the potential of creating social change in this way, the success rate should continue to rise in Georgia, and around the world. Money invested in business-driven solutions could be a significant opportunity for Georgia to improve financial services access, renewable energy, affordable housing, and healthcare, among other important aspects of life.
By Amy Jones