Social Impact Investing

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senior debt Root Capital Layered Structures Is it possible to structure a deal that satisfies the needs of both Financial First investors and Impact First investors? This is a common question that arises when investors contemplate Impact Investment. The AAF extends not only to singular examples that serve a specific intention and asset class, but also to cases that are layered in nature. In these deals Financial First and Impact First investors (sometimes even pure philanthropists using grants) come together to set-up deal structures that otherwise would not be possible or as effective. Below we discuss a few examples of how these layered structures can work to satisfy the motivations and objectives of different Impact Investors. Asset Allocation Framework Asset classes Alternative Instruments Cash Senior Debt mezzanine /quasi equity Public Equity Venture Capital Private/ Growth Equity real estate other real assets absolute return (hedge Funds) Financial First 2 Bank Consortium 1 Retail & Comm. Investors (IFFIm Bonds) Impact First 1 Various Countries 2 City of NY + Foundations 1 International Finance Facility for Immunisation (IFFIm) 2 The New York City Acquisition Fund 33
International Finance Facility for Immunisation (IFFIm) financial First Investor Impact First Investor Prime Rate Retail and Commercial Investors Bonds $1.6 B area of impact Vaccination geography 70 Poorest Nations Grant Providers (Various Nations) 20 year grants $5.3 B 2006 2026 “There certainly is no discount; each transaction is priced at market so someone doesn’t have to differentiate between our product and another based upon returns. When faced with a decision between buying a government bond or an IFFIm bond with a slightly higher yield and helping the immunisation effort, most people will take the second .” George Richardson World Bank International Finance Facility for Immunisation (IFFIm) (http://www.iff-immunisation.org) •• IFFIm was launched in 2006 through an initiative of the United Kingdom government to support the GAVI Initiative -- The GAVI Initiative was launched with a $1.5B grant from the Gates Foundation to fund immunisation in the world’s 70 poorest nations •• Realising that the social impact of their committed funds will be greater immediately vs. over the 20 year commitment period, the government sponsors decided to set up IFFIm to tap the financial markets to access funds immediately •• The World Bank, as IFFIm’s agent, manages IFFIm’s finances and capital markets activities. The World Bank also coordinates with IFFIm’s donors, manages their pledges and payments as well as IFFIm’s disbursements for immunisation and health programmes through the GAVI Alliance Grant Providers (Various Nations) •• IFFIm was able to gather $5.3B in grants from 6 European nations (UK, France, Italy, Spain, Sweden and Norway) when IFFIm was set up, as well as South Africa who joined later •• The grant money was donated over a 20 year period through legally binding payment obligations, starting in 2006 and growing in aggregate amount every year until 2021 before declining through 2026 •• Encouraged by the large donations from the Gates Foundation, the nations wanted to provide support to the global immunisation effort underway by the GAVI Alliance partners Retail and Commercial Investors •• IFFIm so far has tapped the financial markets to help raise immediate funds based on the $5.3B in committed dollars •• With a AAA/Aaa rating from numerous rating agencies, they are able to offer returns at a slight premium to government bonds, offering slightly higher than market returns for their rating compared to governments with the same rating •• So far IFFIm has been able to raise funds from investors in the US, Europe and Asia through its inaugural transaction in 2006 and in Japan through two issues specifically for the Japanese market. The latest offering will target both retail and commercial customers in the UK with an offering by HSBC Impact social/environmental impact •• With money from IFFIm and donors such as the Gates Foundation, GAVI has been able to protect 213MM additional children with new vaccines since 2000 •• Due to increased vaccination, GAVI has been able to prevent more than 3.4MM premature deaths •• New and underused vaccine coverage has risen substantially, doubling in most areas financial impact •• IFFIm has been able to raise $1.6B through three offerings to date •• Due to contractual guarantees from various governments, IFFIm has been able to retain their AAA/Aaa status 34 Investing for Impact: Case Studies Across Asset Classes
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Fund Fund A Praxis Growth Index Fun
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development in the US, or are made
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concern, and submitting and voting
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sustain land trusts, to a meeting o
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that are often excluded from market
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Some organisations that have used S
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it helps identify the critical sour
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and shareholder trust through posit
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Approaches Some commentators have i
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Wieland and Handfield (2013) sugges
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EthicalQuote (CEQ) tracks reputatio
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Displaying commitment to CSR is one
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Brand Differentiation CSR can help
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takes health and safety, diversity
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advance with the practice of CSR wh
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Stakeholder Influence One motivatio
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Regulation Fifteen European Union c
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jurisdictions. E.g., some jurisdict
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"Impact investments can be made in
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venture capital community. Investor
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countries via local intermediaries.
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determining views of affected commu
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Another measure of economic impact
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The Board for the CCEG was to inclu
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17 Love Relationship Online dating
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Social Value Act 2012 legislation.
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Development released a report outli
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Benefits and Costs of Social Impact
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UK On 18 March 2010, Secretary of S
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US Massachusetts: The second of two
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US Federal: The U.S. Department of
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would establish a five-year pilot p
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We are dedicated to finding ways to
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In the past, public monies have oft
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indicate that more Americans want t
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Page 112 and 113: Notes _____________________________
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Page 116 and 117: Investing for Impact Case Studies A
Page 118 and 119: Contents What is Impact Investment?
Page 120 and 121: What is Impact Investment? Impact I
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Page 138 and 139: Venture Capital Bridges Ventures CD
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Page 146 and 147: Venture Capital Aavishkaar Impact F
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Page 152 and 153: The New York City Acquisition Fund
Page 154 and 155: Appendix Methodology The Investing
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Page 164 and 165: SOCIAL IMPACT INVESTMENT: BUILDING
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SOCIAL IMPACT INVESTMENT: BUILDING
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Global Research 29 November 2010 Im
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Impact Investments: An emerging ass
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Advocacy Foundation Publishers The
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XVI for Drug-Free Communities Landm
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Vol. VIII 2022 ComeUnity ReEngineer
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Vol. XV 2029 Inner-Cities Revitaliz
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The e-Advocate Journal of Theologic
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Issue Title Quarterly Vol. I 2015 I
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The e-Advocate Juvenile Justice Rep
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2018 - The Theological Law Firm Aca
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About The Author John C (Jack) John
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Social Impact Investing

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