Impact investing offers philanthropic trusts and foundations another tool for their funding toolkits.

While it’s true that impact investing can be complicated and it’s true that it requires new skills, many Australian philanthropic organisations are beginning to investigate the potential that comes from aligning money and mission.

One of these is Victoria’s esteemed R E Ross Trust.

The Trust’s CEO, Sylvia Admans recently shared her experience of the organisation’s early forays into impact investing with three different investment opportunities.


NR: Can you talk a little bit about how the Trust came to be involved in impact investing? 

SA: The Trust was aware of impact investing as a new trend in philanthropy and we work hard to keep ourselves appraised of what’s happening in the sector.

We have a group of five trustees and they almost immediately thought impact investing was an attractive proposition for our Trust to use – not only our income for grant making, but also to look at using our funds under management to see if we could get both a social return and an income return. This was coming off the back of the Trust having an ethical screen for a long time, so there was consideration in terms of employing our resources to have a good impact in the community.

So about three years ago we collectively set about finding out as much as we could and there were quite a few information sessions, seminars and good publications—so we just quietly went about doing our homework both at the staff and the trustee level.

Then at our annual strategy day in 2014 the determination was that we were going to start doing some impact investments. We didn’t quite know what they were at that time, but we’d done enough homework to know that we should be in the space.


The fact that you were investigating this three years ago would’ve been a very progressive position at the time. Why do you think your Trustees were so open minded?

Well, you know the Trust has always been quietly progressive and, basically, this was a compelling argument to get double the return for your investments—social and financial. It made perfect sense.

The other thing that has to be said is the Trust actually operates a commercial business [Hillview Quarries—a wholly owned subsidiary of the R E Ross Trust which distributes 100 per cent of profits to community organisations through the Trust’s granting strategy] and the larger portion of our income comes from the commercial business. So the Trustees have business hats on, as well as philanthropic hats, pretty well all the time.

We didn’t make the decision without considering the risks, but it was just a very logical and compelling argument. Then, it was really a matter of setting about trying to find what aligned with the mission of the Trust. The very broad framework that we’ve got is that we seek to have mission alignment in the investments that we make so in that way it echoes our granting strategy.


How did you find the impact investments? Did they come to you or was there an intermediary that helped you find them?

We’ve made three investments at this stage and we haven’t set aside a notional amount of capital, we’re just considering things as they come to us.

The very first one we did right at the changeover of the financial year is a patient loan to a social enterprise for an organisation that we knew quite well: Women’s Property Initiatives (WPI) which fits with our impact area of vulnerable and disadvantaged Victorians—funding housing services for women and children at risk.

WPI was setting up a commercial real estate business to generate an income stream to fund their core mission, and our loan of $200,000 is a patient loan over 10 years which goes towards the purchase of a rent roll to help them get to scale more quickly.

We have a loan agreement with them over that 10 year period and they make six monthly interest payments to the Trust.

I became aware of this by going out to things in the sector, and this particular initiative had gone through the Social Traders’ Crunch Program. So there was a whole lot of work done on the business modelling and a lot of assurance around the due diligence—well, as much as you can have with these types of ventures—so really the serious work had been undertaken.

We were able to work alongside both WPI and Social Traders and work in accordance with their reporting requirements. We’ve tried to align what we do as much as we possibly can with one of the other investors.


And the other two?

The second one came to our attention at the Australian Environmental Grantmakers Network conference so again, it’s really about the sector seeking and informing itself.

It’s the Murray Darling Basin Balanced Water Fund—we fund environmental projects in one of our impact areas. Again, a long-term investment and the investment was made through our funds managers. There’s some risk associated with it—neither this nor the WPI initiative are secured, but both are very much aligned with the Trust’s areas of granting.

The third one is a listed product. We were able to work through our fund managers and ask them to make this particular investment. It’s Future Generation Global which is a listed investment company set up by Wilson Asset Management where the fund management fees are foregone and 1 per cent of net assets go to youth mental health. And again, we chose this because the beneficiary organisations are aligned with mental health and there are ones in Victoria, so we take the alignment process quite seriously.

So you can see that they’re all very different products. It’s still an evolving area for us in terms of how we monitor and track them internally because they’re all very different—two of them will be through our fund managers but one is a direct relationship.

The total value of our investments is $900,000 so it’s still modest but there’s an appetite to do more with the right investments, though we’re more inclined to quietly seek things out ourselves than encourage people to come knocking our door down.

The thing that I’d have to say is that, to me, this is the absolute intersection of your investment policy and your granting practice. It’s really important internally that the finance side of your organisation is on board as internal alignment is very important.


What would you like to see philanthropy do differently?

In terms of impact investing I think it’s about not applying a level of scrutiny that you wouldn’t apply to other investments.

Impact investing triggers something in people that makes them excessively nervous about doing it—yet they’re quite comfortable with giving an equivalent grant. I think it’s trying to have a sort of switch in your head that gives proper and due consideration across both the returns. I certainly would encourage more of it.

People need to understand what their risk appetite is but not be too scared, and understand this is absolutely about a long-term view.

I think a lot of the creativity is actually coming from the nonprofit sector. Some of the discussions I’ve been having are with people who are starting to think, ‘Well, that could be an impact investment,’ whereas once they wouldn’t have.

So look, it will take time to mature but we’re definitely learning by doing and I’d encourage others to do that as well.



Generosity_RE-Ross-Trust-logoSylvia Admans is CEO of The R E Ross Trust, a perpetual charitable Trust established in Victoria in 1970 by the will of the late Roy Everard Ross.


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