Social Finance Israel
SOCIAL IMPACT BONDS

"The G8 Social Impact Investment Forum and the important initiatives resulting from it are big steps forward in the development of impact investment. I am delighted to be chairing the G8 taskforce, whose bold mission is to turn impact investment into a global force." Sir Ronald Cohen

REPORT OF THE G8 TASK FORCE

The report," Impact Investing: The Invisible Heart of Markets" (available here), has three main categories of recommendation:

High-level recommendations

  • Set measurable impact objectives and track their achievement
  • Investors to consider three dimensions: risk, return and impact
  • Clarify fiduciary responsibilities of trustees: to allow trustees to consider social as well as financial return on their investments
  • Pay-for-success commissioning: governments should consider streamlining pay-for-success arrangements such as social impact bonds and adapting national ecosystems to support impact investment
  • Consider setting up an impact investment wholesaler funded with unclaimed assets to drive development of the impact investment sector
  • Boost social sector organisational capacity: governments and foundations to consider establishing capacity-building grants programmes
  • Give Profit-with- Purpose businesses the ability to lock-in mission: governments to provide appropriate legal forms or provisions for entrepreneurs and investors who wish to secure social mission into the future
  • Support impact investment’s role in international development: governments to consider providing their development finance institutions with flexibility to increase impact investment efforts. Explore creation of an Impact Finance Facility to help attract early-stage capital, and a DIB Social Outcomes Fund to pay for successful development impact bonds.

Subject area recommendations

Recommendations: The Age of Impact Entrepreneurship

  • Provide capability-building grants for social sector organisations.
  • Create legal forms or regulations that protect the social mission of impact-driven businesses.
  • Relax regulations that prevent social sector organisations from generating revenues.
  • Improve access of impact entrepreneurs to capital, including seed, early-stage and growth capital.
  • Broaden use of outcomes-based government commissioning

Recommendations: The First Trillion

  • Introduce regulatory and tax incentives for impact investment.
  • Define fiduciary duty of foundation and pension fund trustees to allow investment in impact assets.
  • Support specialist intermediaries that manage impact capital and develop impact investment products and services.
  • Make impact products accessible to retail pension and savings investors.
  • Establish a social impact investment wholesaler, potentially financed through unclaimed assets, to serve as market champion and help it create specialist investment intermediaries.
  • Foundations and philanthropists to allocate a percentage of their endowments or wealth to achieving impact.

Recommendations: The Third Dimension

  • Support a single impact accounting system that incorporates existing initiatives by GRI, SASB, GIIN, the EU and GIIRS.
  • Publish data on the costs to government of social issues.
  • Support standardised measurement of social impact to appear alongside financial performance metrics.
  • Foundations to use grant capital to help impact-driven organisations build up the capacity to measure impact.
  • Government adoption of impact measurement in reporting and contracting requirements.

Recommendations: International development

  • Support coordination and collaboration between DFIs and their private sector agencies to advance impact investment.
  • Explore impact funds to support small and medium-sized firms and those serving bottom of the pyramid customers.
  • Allow development finance institutions to increase impact investment efforts.
  • Explore creation of an Impact Finance Facility to provide early-stage risk capital.
  • Encourage governments to explore how SIBs and DIBs might contribute to efficiency of social service delivery.
  • Explore creation of a DIB Social Outcomes Fund to pay for successful DIBs.