Serious Social Investing

The recent Serious Social Investing Workshop held at the Gordon Institute of Business Science in Johannesburg provided some insight into the world of Corporate Social Investment in the current climate; both social and economic.

Lively and interactive discussion, debate and group work took place, to explore the dilemmas and challenges faced by CSI practitioners, as well as the ethics related to social development practice. As a number of representatives from non-profit organisations attended the workshop, the challenges they face in dealing with CSI were also up for discussion. A representative of the Department of Social Development also attended and as such the conference provided a learning opportunity for a broad spectrum of stakeholders and role players.

In her opening address, Tracey Henry of Tshikululu Social Investments, stated: “What is critical, though, is how we respond to them,” [the challenges] “the choices we make, and the impact of sometimes seemingly unimportant events on the lives of real people. At base, social investment work is about people, wherever they are to be found in the funding-or-doing equation of social change.”

This set the tone for discussion around the role of CSI practitioners “as professionals in the social development sphere, the consequences of their decisions, and especially the human result”.

A range of topics were explored at the conference, from the relationship challenges faced by CSI professionals on a daily basis, the ethical choices of social investors and the good that can be effected and potential harm that can be caused by investors to their non-profit beneficiaries, to the evolving concept of Impact Investment as an alternative form of investment to effect social change. Also tabled for discussion was the ever growing field of social enterprise [presented by Bridget Fury] “touted in especially developed economies as the clever long-term approach to social change” and enterprise development.

The session on Impact Investment was facilitated by Bridget Fury and a presentation was made by Amit Bouri; Director of strategy and development: Global Impact Investing Network. Amit defined impact investment as the use of for profit investment to address social and environmental challenges. He presented some case studies and an analysis of where impact investing fits in the continuum of social investment and what the challenges are that it faces.

Any discomfort with the notion of making a profit from investing in social development would have been eased by Amit’s definition of the continuum: while philanthropy on one hand has as its primary objective maximum social/environmental impact with no profit return, impact investing has as its objective a profitable return as well as a social or environmental impact. Both, it seems, occupy their own space on the continuum, with neither replacing the other. Interesting statistics revealed that all investing in the US currently stands at $60 trillion with US philanthropic giving now at $300 billion per annum. He went on to say that if impact investing over the next five to ten years was just 1% of all investing, it would amount to $600 billion, which would certainly provide leverage for social change. Unfortunately there are no current statistics available for impact investing in the US.

Amit stressed that impact investing was not without challenges - that “investors and investees lack a consistent way of measuring social and environmental performance; search costs are high due to diversity and fragmentation of the market, the global impact investment industry lacks leadership, organisation and connectivity and that many investors are not aware of impact investing”.

The buzz words sustainability and capacity building were ever present in discussions, which was heartening. In the past, CSI money was not inclined to be invested in the capacity building of non-profits. CSI practitioners confess that capacity building does not deliver the instant ‘feel good factor’ received from funding projects. In addition, the delayed measurability of the impact makes reporting to boards very difficult. It is a positive move that more CSI professionals are grasping that funding capacity is vital to reaching partnership objectives. Innovative ways of supporting capacity building are being sought. Through their businesses, for example, they are able to share skills and resources and some have made grants to their non-profit beneficiaries for the specific purpose of securing the services of capacity building agents or organisations.

The concept of sustainability remains a hotly debated issue. Depending on which side of the fence you sit, sustainability seems to be defined differently. The lack of agreement or common understanding amongst CSI professionals and non-profit representatives is clearly a source of discomfort, resentment and perhaps veiled animosity between the two groups.

On the one hand it seemed there has been encouragement from the ‘corporate corner’ for NPOs to become self-sufficient by developing a for profit arm to their business. This has in turn upset the ‘non-profit corner’ who explained that this type of initiative in most cases drains and deviates resources from their core business and significantly jeopardises the organisation’s ability to deliver on the aims and objectives on which and for which it was founded.

On the other hand, there seemed to be a stance from the non-profit corner that sustainability should be defined as the ability of the organisation to raise and spend financial resources effectively and to deliver on their programs and this ability often needs capacity building support. Others from both sides seemed to find a synergy, a common ground of understanding and have implemented effective plans to build capacity and ensure sustainabiity with each stakeholder accepting the constraints of the other.

On reflection, the impression I am left with is that CSI professionals want to be as professional as they can. They want to make the best possible impact with the funding they have available, bearing in mind the constraints they within which they work. They also want to develop long term, meaningful partnerships with their beneficiaries. All of this is reflective of a positive shift in thought and practice from the charity paradigm of old, towards one of mutually beneficial partnership to effect strategic social change.

Amanda Bloch
Inyathelo Associate