By Mark Ingram from BrightLight
Creators of impact investment products are often so preoccupied with how the investment product meets the risk-return expectations of the investor, we can forget the ultimate purpose of impact investment: to create benefit for society and the environment.
It was therefore, an unusual and enlightening request when in 2019, Dennis Turton, Chief Executive of Trust Waikato, came to Brightlight to ask:
“Can you help me create a fund that represents the voice of communities in small town New Zealand and measures success by beneficiary outcomes?
Can we reverse the natural order of impact investment funds, focused on the investor, and take the view of the beneficiary?”
We were delighted to accept this challenge.
As a business, we have learned a lot from our partnership with Trust Waikato. It has been a humbling experience for us all to change our perspective from investor to community. As Dennis says, “If you can’t measure beneficiary outcomes to communities, how can it be an impact investment?”.
We have had the remarkable experience of travelling around regional New Zealand simply listening to communities – hearing their needs, hopes and dreams for the future. We learned to appreciate their amazing talents and unrealised potential.
As a result, we have identified a range of community infrastructure investment opportunities that were not serviced by the financial system. Some deals did not meet bank’s credit criteria, some were too small for institutional investors, and most, simply fell through the cracks.
By late 2019, our fund ‘Te Puna Hapori’, which aims to be a ‘wellspring of life for communities’, was born.
This fund is a result of listening to communities and its success will be measured by outcomes for communities, through their eyes.
The next stage was to line-up investors, which should have been a fairly smooth process, however as we entered 2020, COVID-19 hit and investors were distracted by the market turmoil. In addition, communities across regional New Zealand were hit particularly hard. In response, philanthropic trusts and foundations ramped up their support, once again demonstrating the vital role of philanthropy in times of crisis.
Markets at the best of times fail to direct capital to the greatest need. More so in times of uncertainty and upheaval. That needed to shift.
Remarkably, by the end of 2020, it did shift; market sentiment accelerated toward genuine impact.
Trusts, foundations, private wealth, institutional investors suddenly started advising us that they were pivoting their mandate toward impact. Community Finance raised $50M for social housing.
In 2021, we have a remarkable situation. Investors – particularly in the philanthropic sector, but also institutional - are aligning their portfolio settings to allocate capital in order to generate beneficiary outcomes.
We are now on the front foot to realise the dream of Te Puna Hapori – an investment fund that is community driven, community outcomes focused, with market rate returns – in that order of priority.
Moving forward we remain committed to this journey, continuing to educate and align more investors with community impact to make impactful, long-lasting change for the people and places that need it most.