Head 7: Creating Social Value in Asia - Philanthropic or Investment Capital?

EVPA is grateful for the support of:

Europe and Asia

AVPN

10M km2 in Area 0.7B people European Union

44M km2 in Area 4.1B people No integrated political/economic bloc

AVPNs platform brings together practitioners and supporters of venture philanthropy to deliver greater social impact
Government or related Universities / Research Corporate CSR

Professional Service Firms

Associate Members

Wealth / Asset Managers

Private Equity

Foundations

VPO

VPO

AVPN

VPO

Practicing Members

VPO

Greater Social Impact

AVPN currently has 115 members across 19 countries

AVPN Member Services

Jan Mar12 Roundtables: Apr Jun12 Roundtables: Jul Sep12 Roundtables: Oct Dec12 Roundtables: H1 2013

IN SG HK JP
Workshops: Workshops: Workshops:

IN SG HK JP
Workshops: Annual Conf. May 9 and 10

IN SG CN
Seminars: Seminars

SG HK JP
Seminars Seminars:

HK

IN SG HK JP EVPA

SG

2013 initiatives 1. VP fund formation 2. Deal flow database

Knowledge Center

Networks & Expertise from USA & Europe

Asian Venture Philanthropy Membership

AVPN member list at http://www.avpn.asia/member-directory

Creating Social Value in Asia: Philanthropic or Investment Capital?

Neera Nundy Co-Founder, Dasra

www.dasra.org

The Indian Social Sector

Need for High Impact Philanthropy and Non Profits
There are two crucial stakeholders in bringing about social change: social entrepreneurs who deliver change in the field and philanthropists who support entrepreneurs with knowledge, funding, and networks. For real change to happen, we need to not only connect these two groups but also work hands-on to accelerate impact and scale.

Philanthropy
Indias giving in 2006 was $5 billion or 0.6% of GDP versus $300 billion (2.2% of GDP) in US Currently 127,000 millionaires in India; expected to double by 2015 India has the worlds 12th largest HNI population and over 40% want to increase their donations

Non Profits
3.3 million non profits in India, only 500 with budget > $100k and very few reach > 5,000 people Only 30 have a $5 million+ budget Organizations lack managerial skills and focused plans needed to scale Less than 3% measure their impact in a robust manner

Dasra bridges this gap by connecting and enabling both philanthropists and social leaders

Structural challenges such as lack of accountability and awareness causes this capital pool to be under-tapped

Seemingly large sector, but lacks scale, quality and transparency, hence impact and funding is far below potential
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www.dasra.org

Introduction to Dasra
Dasra is India's leading strategic philanthropy foundation.
In Sanskrit, Dasra means Enlightened Giving. Our Mission
We work with philanthropists, non profit organizations, social entrepreneurs and impact investors, to bring together knowledge, funding and people to catalyse large scale social change.

Our Process
Build Knowledge and Insight

Our Theory of Change

We believe that if philanthropists and social entrepreneurs are given the skills, support and networks to become more strategic in their work, then increased funding will flow to the most impactful organizations and help move more people out of poverty faster.

Identify and Support Leading Social Entrepreneurs

Build Effective and Collaborative Philanthropy

Our Impact

Since 1999, Dasra has: Engaged over 400 HNIs on strategic philanthropy Published 8 in-depth sector research reports and other knowledge pieces Strengthened growth plans of over 200 non-profits and social businesses Helped direct over $15 Million to leading non profits
www.dasra.org

Create Impact at Scale

Private Philanthropy in India

Indias private philanthropy has doubled & is strong compared to some BRICS and Asian countries.

*Bain India Philanthropy Report 2011 www.dasra.org 10

2012 EVPA Annual Conference Dublin, Ireland

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Leap-frogging Development of Philanthropy in China

Rapid growth of social organizations

Rapid growth of philanthropic giving

Rapid growth of voluntary services

Fast growth of support organizations for philanthropy

Emerging of new forms of philanthropy

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Causes of the Rapid Growth of Philanthropy in China

Rapid increase of massive social needs Continuous and fast growing economy Increasing awareness and willingness of citizen participation Positive changes and improvement of social policy

2012 EVPA Annual Conference Dublin, Ireland

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Challenges for the Sustainability of Philanthropy in China

Transparency Support system Social recognition Professionalism

Effectiveness Policy limitation

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2012 EVPA Annual Conference Dublin, Ireland

Some Efforts Being Made in China

Rende Center on Philanthropy Research Evaluation

NPO Development Center Shanghai Capacity building Networking One-stop program support

Rende Foundation Shanghai Foundation Park Foundation Incubator

China Foundation Center Information Hub for Foundations Knowledge Center

2012 EVPA Annual Conference Dublin, Ireland

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Some Efforts Being Made in China

Narada Foundation Jingko Project Social Innovation Award

NPI
NPO Incubator Institute for Social Entrepreneurs

YouChange Foundation YouChange Institution

British Council
Training of social entrepreneurs Social Innovation Award

2012 EVPA Annual Conference Dublin, Ireland

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What Can Venture Philanthropy Contribute to Improve the Sustainability of Philanthropy in China?
Local players
Lanshan Social Investment; Yu Social Investment Fund; Xinhu Social Investment Fund; YiMei Capital

International players
British Council; US social impact investors;

EVPA/AVPN???
2012 EVPA Annual Conference Dublin, Ireland 17

Ian Learmonth Executive Director Social Finance and Philanthropy

Our story so far

Established in 2002 by WorkVentures, AMP Foundation, BenSoc and Smith Family to provide a venture philanthropy model for NFPs Backed by some of Australias leading non-profit organisations, corporates and philanthropists, our networks are deep and well established. SVA offer strategic consulting, venture funding, a range of social finance models as well as thought leadership. 45 FTEs in Sydney, Melbourne, Brisbane and Perth and rep in ACT.

Leveraging our commercial skills, weve brought new perspective to social sector initiatives such as the formation of the GoodStart Childcare syndicate.

The social finance landscape in Australia

Examples of social finance in Australia include the Cth governments SEDIF fund, three pilot impact bonds, the Goodstart syndicate and some regional initiatives

The SEDIF FUNDs

Social impact bonds Bonds to reduce out-of-home-care: UnitingCare Burnside (SVA advising) The Benevolent Society Bond to address recidivism: Mission Australia

Private investors

Fund managers Invested in social enterprise

Commonwealth grant

The Goodstart syndicate

The social finance landscape

Other initiatives

Purchase 678 child care centres from ABC Learning

Western Australia
The WA govt have commenced a $10m capacity building grant program for social enterprises.

The structure of the SVA Social Impact Fund

Social investors and the Commonwealth government have contributed capital to SVAs Social Impact Fund, which invests in social enterprise in Australia
The trustee
Trust deed HNW individuals

PAFs

Social investors (unit holders)

Governed by trust deed

Foundations

The Social Impact Fund (unit trust)

Fund management agreement

DEEWR grant money

Fund agreement

Social enterprise

Social enterprise

Social enterprise

Social impact bonds in Australia and internationally

A social impact bond is a contract where the public sector agrees to pay a private service provider for delivering improved social outcomes that result in government savings
Summary Generic structure of a social impact bond

Summary

Private funds used to fund preventative programs If the program meets agreed targets , the Government saves money and in recognition of cost savings repays investors principal and interest.

Government pays investors when desired outcomes are met

Government

Service provider

Private investor

History

If targets are not met, investors may not receive any compensation
The first (GBP 5m) was arranged by Social Finance UK to reduce recidivism rates at Peterborough prison A number of new SIB programs are underway in NYC and Boston

Private investors fund a social program

Beneficiary of service
Direct and indirect cost savings accrue to government

Three pilot impacts bonds are under negotiation in NSW Bonds in Australia Two Bonds to reduce out-of-home-care: UnitingCare Burnside (SVA advising) The Benevolent Society Bond to address recidivism: Mission Australia

Cost savings to government

The structure of the UCB social impact bond

UCB is in the process of negotiating a social impact bond with the NSW government to reduce the number of children in out-of-home care. SVA is advising on Investor relations.
HNW individuals

Special Purpose Vehicle

Social investors

PAFs

Commercial investors Loan agreement

Implementation agreement

UnitingCare Burnside (service provider)

Direct and indirect cost savings accrue to government

Program beneficiaries

Immediate gov cost savings

Long term gov cost savings

Improved social outcomes

Building the Syndicate

The founders
Unique non profit alliance 12 month period of building syndicate

Capital Structure

Private Equity firms have good relationships with all the major banks and can secure debt relatively easily

~10% return

As a company limited by guarantee, GoodStart needed 100% debt financing

? return

Private Equity firms raise their equity capital in advance and call on it as needed

~20-30% return

Difficult to determine a rate of return that reflected the social and financial risks and rewards

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GoodStart Capital Structure

Other initiatives
Big Society Capital in Australia Federal SIBs and SIBs in other states Affordable housing

Creating Social Value in Asia: Philanthropic or Investment Capital?