Global Social Impact Investment Steering Group

Successor to and incorporating the work of the G8 Social Impact Investment Taskforce

REPORT FINDINGS

The report, Impact Investing: The Invisible Heart of Markets, has three main categories of recommendation:

High-level recommendations

  • Set measurable impact objectives and track their achievement
  • Investors to consider three dimensions: risk, return and impact
  • Clarify fiduciary responsibilities of trustees: to allow trustees to consider social as well as financial return on their investments
  • Pay-for-success commissioning: governments should consider streamlining pay-for-success arrangements such as social impact bonds and adapting national ecosystems to support impact investment
  • Consider setting up an impact investment wholesaler funded with unclaimed assets to drive development of the impact investment sector
  • Boost social sector organisational capacity: governments and foundations to consider establishing capacity-building grants programmes
  • Give Profit-with- Purpose businesses the ability to lock-in mission: governments to provide appropriate legal forms or provisions for entrepreneurs and investors who wish to secure social mission into the future
  • Support impact investment’s role in international development: governments to consider providing their development finance institutions with flexibility to increase impact investment efforts. Explore creation of an Impact Finance Facility to help attract early-stage capital, and a DIB Social Outcomes Fund to pay for successful development impact bonds.

Subject area recommendations

Recommendations: The Age of Impact Entrepreneurship

  • Provide capability-building grants for social sector organisations.
  • Create legal forms or regulations that protect the social mission of impact-driven businesses.
  • Relax regulations that prevent social sector organisations from generating revenues.
  • Improve access of impact entrepreneurs to capital, including seed, early-stage and growth capital.
  • Broaden use of outcomes-based government commissioning.

Recommendations: The First Trillion

  • Introduce regulatory and tax incentives for impact investment.
  • Define fiduciary duty of foundation and pension fund trustees to allow investment in impact assets.
  • Support specialist intermediaries that manage impact capital and develop impact investment products and services.
  • Make impact products accessible to retail pension and savings investors.
  • Establish a social impact investment wholesaler, potentially financed through unclaimed assets, to serve as market champion and help it create specialist investment intermediaries.
  • Foundations and philanthropists to allocate a percentage of their endowments or wealth to achieving impact.

Recommendations: The Third Dimension

  • Support a single impact accounting system that incorporates existing initiatives by GRI, SASB, GIIN, the EU and GIIRS.
  • Publish data on the costs to government of social issues.
  • Support standardised measurement of social impact to appear alongside financial performance metrics.
  • Foundations to use grant capital to help impact-driven organisations build up the capacity to measure impact.
  • Government adoption of impact measurement in reporting and contracting requirements.

Recommendations: International development

  • Support coordination and collaboration between DFIs and their private sector agencies to advance impact investment.
  • Explore impact funds to support small and medium-sized firms and those serving bottom of the pyramid customers.
  • Allow development finance institutions to increase impact investment efforts.
  • Explore creation of an Impact Finance Facility to provide early-stage risk capital.
  • Encourage governments to explore how SIBs and DIBs might contribute to efficiency of social service delivery.
  • Explore creation of a DIB Social Outcomes Fund to pay for successful DIBs.

Summary objectives and recommendations for policymakers

The Taskforce has made a number of important objectives and recommendations for governments to develop the ecosystems which are crucial to the development of impact investment as a powerful force.


Recognising there is no ‘one size fits all’ approach, policy makers need to consider their own context and the policy opportunities that suit their particular environment, their policy priorities and the existing nature of social service provision.


In all cases, however, government has the opportunity to stimulate greater innovation in the delivery of services and achieve ‘better impact for money’. To ensure social impact investment thrives, government has an important role to play, as a market builder, as a purchaser of social outcomes and as a market steward, removing barriers and ensuring that the positive intentions of impact organisations are safeguarded over time.


In all three of its roles, government is called to make a number of policy decisions.

Market Builder

Objective:

Increased resources and support for impact-driven organisations to strengthen their operations and grow:

  • Provide capability-building grants for impact-driven organisations.
  • Improve access of impact entrepreneurs to capital, including seed, early-stage and growth capital.
  • Expand existing SME business support to impact-driven organisations.

Objective:

Increased flow of talent to the sector to build and grow impact-driven organisations:
  • Encourage existing impact-driven entrepreneurs and new entrants by celebrating success in the sector and offering rewards for innovation.
  • Consider tax incentives for impact-driven organisations and entrepreneurs.

Objective:

A developed impact investment culture, with a range of intermediaries that manage impact capital and provide professional advice and services to the impact investment sector:

  • Create a social investment wholesaler to act as a market champion, potentially financed by unclaimed assets in bank accounts, insurance companies and pension funds.
  • Consider early-stage support to specialist impact investment funds, intermediaries and advisory firms.
  • Support efforts to establish a ‘kitemark’ or labelling system that identifies social finance products for particular segments of the market.
  • Support efforts to enable access to a social stock exchange.
  • Promote the use and development of innovative impact finance products.

Objective:

New investors entering the social impact investment market:

  • Provide tax incentives for impact investors.
  • Provide regulatory incentives for impact investment.
  • Examine specifically what can be done to bring social impact investment to the mass retail market.

Market Participant

Objective:

Increased effectiveness of government’s role as an effective purchaser of social outcomes:

  • Broaden use of outcomes-based government commissioning.
  • Create consolidated domestic outcomes funds, for use by government departments that are unable to recognise the full value of social outcomes they achieve.

Objective:

Increased flow of investment from mainstream investors to impact-driven organisations:

  • Provide matching finance to pump-prime the impact investment market, where it is emergent – or provide first loss facilities and other guarantees, and capitalise a social investment wholesaler or impact investment funds.

Market Steward

Objective:

An appropriate regulatory and legal framework for impact-driven organisations:

  • Create legal forms or regulations that protect the social mission of impact-driven businesses.
  • Relax regulations that prevent social sector organisations from generating revenues.

Objective:

Fewer legal and regulatory barriers in the way of potential impact investors:

  • Encourage pension funds and providers of other tax-advantaged savings schemes and products to include impact investment options as part of their offering.
  • Reduce the restrictions on retail investors engaging in impact investing e.g. through crowdfunding and other measures.
  • Define fiduciary duty of foundation and pension fund trustees to allow investment in impact assets.
  • Investigate how impact investments can be integrated into existing regulatory frameworks covering banks, insurance companies and investment funds.