French foundations make social investment fact-finding visit to the UK

This article was originally published on the Latest from Alliance blog on 3 September 2013. The original article can be found here. For more information about Alliance magazine, please visit www.alliancemagazine.org.

By Gaspard Verdier

A delegation of 17 French foundations professionals – all members of the French Foundations Centre (Centre Français des Fonds et Fondations – CFF) – spent three days in London this summer to review the social investment scene in the UK and meet with foundations involved in mission investing.

The idea of the trip came up when Beatrice de Durfort, déléguée générale of the CFF, and myself were discussing the role of philanthropy in the development of social entrepreneurship in France earlier this year ahead of the CFF’s AGM and annual conference. I was mentioning the interesting models (and people!) I had come across in the UK on a number of assignments and she decided thought-provoking encounters was just what was needed to help her membership move forward on this topical issue.

We offered participants the opportunity to review the current landscape in the UK, its key institutions and the role of philanthropy and foundations in shaping it up over the past ten years. The focus was on an exchange of best practices and ideas with foundations that have decided to support social enterprises and financial innovation for the social sector – strategically with grants or by means of investing.

We got an impressive positive response from members, and therefore increased the number of participants from 10 to 15. A diverse group gathered to look at the space from different angles, including the CFO of a large endowment, CEOs of dynamic forward-looking players linked to large charities and corporate foundations, and founders and managers of family foundations, some with long-standing philanthropic history and some more recent initiatives.

It was an intense three days in London for this group, meeting key players involved in various ways, from social incubation (Unltd, Ashden, Shell Foundation) to mission investing (LankellyChase, Esmée Fairbairn, Barrow Cadbury, Panahpur, Sainsbury Family Charitable Trusts…) as well as institutions developing the social investment market such as City of London Corporation and Social Finance explaining how they engage with foundations, Big Society Capital and the social investment and finance team of the Cabinet Office to form a view on where the ecosystem is heading. We also had some fruitful and open sessions with the Association of Charitable Foundations and the Institute for Philanthropy on the challenges of embedding investing in the philanthropic mission. We also met two funds that have partnered with foundations: the Global Health Investment Fund, managed by Lion’s Head and supported by Bill & Melinda Gates Foundation; and Big Issue Invest, with its interesting catchphrase ‘by social entrepreneurs for social entrepreneurs’.

Those sessions (and there are a lot more actors we unfortunately could not meet) provided a good overview of a dynamic UK landscape. We came away with the impression that foundations have a core role to play in the development of financial innovation for the social sector, but also can and need to put their expertise and skills to use to ensure the ultimate goal of delivery of appropriate goods and services to beneficiaries is achieved by social enterprises and funds. There was genuine interest in the wide array of models and approaches; in particular, the Aga Khan Foundation and Omidyar Network provided interesting examples of flexibility in the use of grants and investments to support market-based solutions. The journey towards mission investing of a number of significant philanthropic players in the UK did echo with their French peers. The route taken by Esmée Fairbairn or Barrow Cadbury for instance, demonstrating appetite for trying new things yet in a cautious and controlled way given the responsibility as a core grantmaker, is one that I think will be explored further by participants. Most in the group agreed that a portfolio of social-first investments in a PRI (programme-related investment), where returns are secondary, actually made sense and could be developed in the near future. Experiences of converting more foundation assets towards investments delivering both an acceptable return and a social or environmental impact were also well received.

All these discussions provided interesting food for thought for our group of foundations. France has a strong social economy in clear need of development capital, and foundations – which have often played a key role in the early support of interesting social initiatives and enterprises – are being called on as investment needs arise. This is an issue they want to come to terms with, as they are a natural ‘strategic investor’ in those ventures.

The day we got back to France the group was already exchanging emails to reconvene without me and Beatrice having to suggest it. It seems that a form of a fellowship is in place there, greatly helped by the warm welcome we received (and we must extend special thanks to Barrow Cadbury, Esmée Fairbairn and the City of London for their help with our logistics) and the quality encounters, but also the emotion shared when André, a Big Issue vendor invited by Big Issue Invest, came and talked to us in perfect French in a sobering, witty and hopeful way. For all these discussions about endowment, returns, asset-class, risk management… it was an inspiring moment not to lose sight of the end-game of restoring pride in people.

Gaspard Verdier is an independent consultant on social entrepreneurship and mission investing and a regular contributor to conferences and courses on impact investing.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s