City Matters: Social impact investing: The City must embrace a future of philanthropy
THE CITY has always been a crucible for debate, innovation and philanthropy. All three are crucial as we strive to rise to the complex challenges posed by the “new normal” – a fast-developing globalised world where resources are increasingly scarce and in demand.
I am particularly keen to draw upon the City’s energy, expertise and experience to ensure that charitable giving continues to evolve and adapt to the needs of society. This has been one of the pillars of my mayoralty, and has led to my hosting two lectures on Revolutionising Philanthropy, as part of a thought-leadership programme entitled The City’s Giving within the Lord Mayor’s Appeal.
Philanthropy has a proud tradition in the City going back centuries, to the famous legacy of Dick Whittington – whose bequests supported developments ranging from libraries, drinking fountains and public toilets. Today, Canada Corporation’s charity City Bridge Trust makes grants of more than £20m annually to charitable projects supporting communities across London, and has established a £20m Social Impact Fund.
It is important that we work hard to unlock sources of capital that can be used to bridge the gap between the cost of meeting social needs and the funding that the state and local government can provide. In his Mansion House Lecture, Sir Ronald Cohen, who champions social impact investment, made a compelling case to the City for its energetic involvement in a revolution that will transform lives. Donations from individuals and corporations will remain crucial. But philanthropy can be more than a matter of donations, at a time when the resources of the public sector are ever more constrained and demand on charities grows ever greater.
We must tap into the nexus between the philanthropic impulse to meet need and the business impulse to identify impacts, outcomes and deliver a return. It is crucial to consider how we can give more and how to make what we give go further. Giving can also be an investment, bringing to bear the expertise of the donor and the charity or social enterprise to create a return on that investment and, crucially a social impact – a social outcome for investor, charity and beneficiary alike. This has the potential to bring financial rewards, as money works hard but it also transforms lives, helps communities and strengthens society.
It is, as Cohen said, about profit with a purpose. This is the heart of social impact investing; a new way to give, which is creating waves of philanthropic investment and a swathe of new options for social enterprises and charities looking to raise funding. Social investments can deliver transformational good on an unprecedented scale. They offer the prospect of a new form of philanthropy where impacts and outcomes for society are the starting point, and not just an added bonus. In the City, it puts these outcomes in their rightful place at the heart of financial and professional services. It is an approach that harnesses the energy, innovation, enterprise, and expertise of the City to raise targeted finance to create tangible outcomes where society most needs them.
Fiona Woolf is lord mayor of London.