Archive for December, 2012

UK YPI participants donate over £1 million to charity!

December 20, 2012

December 2012 was a landmark milestone for the Youth Philanthropy Initiative (YPI) in the UK: grants won for grassroots charities by pupils across the UK reached a grand total of £1 million!

Since launching in one school in London in 2006, YPI is now delivered in eighty five schools across England, eighty one in Scotland and, for the first time this year, in five Northern Irish schools.  The past six years have seen groups of young people across the United Kingdom identify a cause they care about and subsequently champion a local charity that commits time and effort to that cause.  Thanks to the passion, compassion, and dedication of these young people, YPI has been able to channel hundreds of grants of £3,000 to grassroots charities operating within their communities.

On 13th December 2012, pupils, staff and charity representatives celebrated this milestone at Lampton School in Hounslow, London, whilst the following day a similar celebratory event took place north of the border at Banchory Academy, Aberdeenshire.

The significance of this achievement is clear, especially as the UK’s national and local governments are further tightening the amount of funding available to charities delivering crucial services to their communities. Having spoken to many of the charities represented by YPI Participants, it is evident that their financial and human resources are suffering at this time but that the efforts and engagement shown by YPI participants is invaluable as the charities seek to foster a wider support base from within in their communities.

Kudzai, a Year 10 student from Lampton School, who is currently participating in the YPI programme, said: “YPI helped me to understand that there are people right here in my local community working tirelessly to bring about change and do the right thing. Most people my age look at our community and struggle to find inspiration but I’ve learnt that there are people right here in Hounslow working hard to make a difference and that’s inspired me to try and do what I can.”

Statements such as Kudzai’s are common from students taking part in the programme and represent a sense of responsibility to their communities present in the younger generation that all too often goes unrecognised.  As YPI donations in the UK pass the £1 million mark, we of course look forward to many more millions of pounds donated in years to come but even more so to the many thousands of young people that will commit their time, talent, and creativity to fight for causes important to them in their communities.  Here’s to the next stage of YPI’s growth in the UK.

Written by George Macpherson, YPI Schools Coordinator in the UK

You can find out more about YPI here: http://www.goypi.org/

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Impact investing for community revitalisation

December 19, 2012

Socially-responsible investing. Mission-related investing. Impact investing. While the terms are not new, deploying capital beyond traditional grant mechanisms is a growing trend among philanthropists—individuals, foundations and corporations alike. The Philanthropy Workshop alumni and participants, along with other philanthropists in our broader network, travelled from Canada, Mexico, Texas, Pennsylvania and New York to meet with seasoned impact investing practitioners for a workshop last week to help us unpack the strategies behind the terminology.

We approached our workshop from two angles: (1) how can an individual make a shift to investing more assets for mission and persuade others, like family or board members, to adopt this strategy; and (2) what does it take to actually select and manage these mission-related investments and how do they uniquely help achieve positive returns for society?

To answer these questions we were joined by:

  • Clara Miller, President of F.B. Heron Foundation, dedicated to helping low-income people and communities help themselves. Heron made a bold move this year to invest 100% of its $250 million endowment for mission.
  • Angela Mwanza and Mark Sloss, Private Wealth Advisors, UBS who work with affluent families to implement high performing, values-based investments.
  • Andi Phillips, Vice President of the Goldman Sachs Urban Investment Group & COO of 10,000 Small Businesses, the firm’s initiative to provide capital and mentoring to owners of small businesses in cities throughout the United States.
  • Robin Hacke, former venture capitalist and tech entrepreneur who is Director of the Living Cities Catalyst Fund, seeded by 22 of the largest family and corporate foundations to deploy investment capital in low-income and underserved urban communities.

Before we share practical tips from our experts, below are a few key definitions drawn from the Social Investment Forum and Mission Investors Exchange and presented by UBS:

Sustainable and Responsible Investing (SRI) considers both the investor’s financial needs and an investment’s impact on society. SRI investors encourage corporations to improve their practices on environmental, social and governance issues. You may also hear SRI-like approaches to investing referred to as mission investing, double or triple bottom line investing, sustainable investing or green investing.

Mission Related Investing covers two distinct categories of investments: market-rate mission-related investments (MRIs) that have a positive social impact while contributing to long-term financial stability and growth; and program-related investments (PRIs) that are designed to achieve specific program objectives while earning a below market rate return.

Impact Investments are investments made into companies, organizations and funds with the intention to generate measurable social and environmental impact alongside a financial return. Impact investments can be made in both emerging and developed markets and target a range of returns from below market to market rate, depending on the circumstances. Impact investors actively seek to place capital in businesses and funds that can harness the positive power of the enterprise.

Here are the Top 10 Tips shared by our experts:

  1. Family members and/or foundation trustees might be skeptical about impact investing, preferring to manage the investment of endowment assets completely separate from the programmatic activities of the foundation. To overcome this hurdle, a helpful piece of advice is to simply say: “Let’s try it” and remind people that “it’s not new, it’s just different.” Once people experience a deal or two, they often become more excited by the opportunities to use capital in ways beyond traditional grants and gain a greater understanding of what it takes to run and grow and organization.
  2. An entity that governs itself in a way that is good for the community, the environment and the bottom line is arguably a good company to invest in, regardless of intent to be socially responsible.
  3. If you want to start adding socially-responsible investments to your portfolio, the most important guidance you can give your financial advisor is a clear mission and vision for your charitable work. That mission and vision serves as the framework to inform your investment policy statement that a financial advisor can then follow.
  4. One of the best ways to learn how to make social impact investments is to pool resources with more experienced impact investors—learn by doing. Another productive strategy to match lenders with borrowers is to go through a community-based intermediary familiar with the local social dynamics and institutions. In the United States, for example, certified Community Development Financial Institutions (CDFIs) are a good resource for deals. CDFIs provide a unique range of financial products and services in economically distressed target markets, such as mortgage financing for low-income and first-time homebuyers and not-for-profit developers, flexible underwriting and risk capital for needed community facilities, and technical assistance, commercial loans and investments to small start-up or expanding businesses in low-income areas.
  5. While providing loans to scale a community business or organization is important, so is access to business expertise/mentors to help build the capacity of the small business owners and leaders of community organizations.
  6. For financial services firms in the lending arena, a strong argument can be made that it’s good business to put capital toward social impact. Firms already make placed-based investments, most notably underwriting real estate deals. These transactions are more likely to succeed in thriving communities—neighborhoods with good schools, health care, housing and retail businesses. So, adding a social impact component that helps serve communities where the investment is made is a good practice.
  7. Perhaps surprisingly, in the field of impact investing, the challenge is less a supply than demand problem. There often are more funds available to be lent or invested than there are investees capable of effectively deploying large amounts of money—i.e., a capital absorption problem exists. Many organizations are not yet equipped to take on loans and go to scale.
  8. However, once an organization is prepared to go to scale, philanthropic contributions are not enough. Access to significant debt capital to grow the organization—“enterprise-level” capital—is key.
  9. A common “mistake” among new impact investors is to set harder underwriting requirements than for commercial loans.
  10. The best community investments typically involve a consortium of organizations working together with a wide range of civic leaders, supporting a clear vision and a “big hairy audacious goal” or “BHAG.”

This post was written by Tracy Mack Parker, who is Managing Director of the Institute in the US.

The ‘Impact Investing for Community Revitalisation’ event took place on the 13th December in New York. The event was open to philanthropists; for more information about the Institute’s events in New York, please contact Jodi Chao: Jodi@instituteforphilanthropy.org