FaithInvest's Mathew Jensen took part in a fascinating discussion on the latest podcast in the Amaly Legacy Podcast series on the opportunities and challenges of expanding impact investing and venture philanthropy.
The podcast was entitled: 'Unleashing the Power of Purposeful Capital: Perspectives on Venture Philanthropy and Impact Investments,' and joining Mathew alongside host Wahid A Kamalian, Amaly Managing Director, were:
Kate Goodall, Co-founder and CEO of Halcyon, an incubator for early-stage impact ventures.
Myrna Attalla, Executive Director of Alfanar, the oldest venture philanthropy organisation focused on the Arab region.
Paul Ronalds, CEO of Save the Children Global Ventures, the new in-house team at Save the Children responsible for taking innovative finance and new technologies to scale.
Click on the image above to listen to the podcast.
Some of the overarching themes of the discussion were the urgent need to scale up impact, the need for partnerships and the hurdles facing faith-based asset owners.
'We’re dealing with a world on fire and a great deal of human and environmental need.' – Kate Goodall, Halcyon
Kate Goodall said Halcyon 'genuinely believes that impact investing is going to outperform traditional investments', not least because the world's needs were so great: 'We’re dealing with a world on fire and a great deal of human and environmental need.'
That sense of urgency was echoed by Paul Ronalds of Save the Children. Despite having an annual turnover £3 billion turnover, this was not enough to deal with the world's challenges, he said: 'The problems we're trying to solve – climate change, global poverty, global education, equality around health – are massively beyond any of us individually.'
That's why Save the Children began considering innovative finance activities a couple of years ago, as the only way to achieve impact at scale, and last year set up its Global Ventures team. It has three main areas of focus. 'First, blended finance transactions, where we're bringing together our traditional grant opportunities alongside private sector investment, often concessional loans, to help amplify the impact we can have,' he said.
'Second, our family of impact investment funds. Save The Children runs the only deep impact, child-focused impact investment funds in the world. The third area is climate finance projects that generate not just environmental benefits but also development benefits, often called co-benefits.'
Mathew described some of the hurdles facing faith-based asset owners (FBAOs) when it comes to getting involved in impact investment. Only the very large FBAOs today are doing any type of significant impact investment, he said.
Only about 35% of them allow impact investments as part of their investment programmes – if they've integrated their faith values into their assets – Mathew Jensen
'In fact, when we surveyed faith-based asset owners, only about 35% of them allow impact investments as part of their investment programmes – if they've integrated their faith values into their assets,' said Mathew.
'If they haven't, if there's no connection between their faith and their assets (and about 45% of faith asset owners have no connection between faith values and how they manage their money), only 5% of that group allows impact investing.
'For a faith-based asset owner to evaluate an impact fund often involves a different set of skills ... so it's a more complex field for them to approach' – Mathew Jensen
'Why isn't this higher?' is a question we ask ourselves. And working with these asset owners and then looking at impact investing products, for a faith-based asset owner to evaluate an impact fund often involves a different set of skills for them. They need to have experience evaluating managers who do private equity or private debt, or other types of private investment.
'They have to be able to evaluate different types of returns and different types of portfolio exposures. They have to evaluate different fund structures, there's liquidity issues, different fee structures. So it's a more complex field for them to approach and that's why I think today we see more the larger, well resourced faith-based asset owners active in the impact space,' he said.
Desire to do impact investing
'We hear desire by smaller faith-based asset owners to do impact investing because it can have such positive outcomes relative to the values they're trying to express in the world through their investments. But they have these hurdles of, 'Do they have the capability to select and monitor these investments?' I think that's an area that as an industry we can do more work.'
Myrna Attalla said there was a funding gap for social enterprises and businesses with impact that are attempting to scale up and grow their impact sustainably – particularly in the Middle East and North Africa region where Alfanar focuses.
'At the heart of Alfanar is a sort of frustration,' says Myrna Attala. 'Despite significant amounts of charity, development aid, etc, the Middle East and North Africa remains one of the only regions in the world where poverty rates have consistently been increasing since 2014 .
Yet to date, the area attracts only 1% of total global impact assets under management: 'There is a phenomenal opportunity to back a new thesis for our region,' she said. 'We feel strongly that there are remarkable change agents and ambitious social entrepreneurs that are looking for support.'
To listen to the podcast, click below or search for Amaly Legacy podcasts on podcast platforms including Apple Podcasts, Google Podcasts, Spotify, Amazon Music and Deezer.