In its 2014 strategy, the Australian Advisory Board on Impact Investing (AAB) recognised the importance of mission-driven organisations (social enterprises) in contributing to the Australian economy and generating measurable positive social and environmental outcomes. A key plank of the strategy addressed how these organisations could be better supported to raise the capital they needed to drive business growth and scale their impact.
The Impact Investment Ready Growth Grant (Growth Grant) was subsequently launched in March 2015. It is an initiative that holistically addresses market gaps for impact-driven businesses to raise the investment required to scale and grow. It provides grants of up to $100,000 for the business, financial, legal or other capacity building support required for social enterprises to raise capital.
To date, the Growth Grant has deployed $1.4mn in grant funding, supporting 22 missiondriven organisations. Eleven of these have successfully raised a cumulative $40mn in debt and equity. The comparatively small amount of Growth Grant funding has had a catalytic effect in enabling businesses to raise investment and build and sustain organisational capabilities.
There are 11 essential elements of design that have driven successful program outcomes for the Growth Grant. They including, among others: an Independent Growth Grant Panel; specific eligibility criteria for applicants; staged payment structure for grants; openness to program adaption and flexibility; an agnostic approach to corporate form; feedback to all applicants irrespective of success and, while applicants are free to choose their provider, a requirement that the primary provider is part of the application process.
Drawing on recent surveys and interviews as well as internal data collected throughout the program, key insights and learnings have emerged. While the ecosystem supporting mission-driven organisations has come a long way since the Growth Grant was launched, there are still significant gaps that need to be addressed. These include gaps in: earlier stage funding for social enterprises, support for contract readiness; and number and reach of high quality providers, particularly beyond the Eastern Seaboard States. Understanding of what constitutes investment readiness also continues to be a challenge for many social enterprises.
At this stage of sector development, involvement with social enterprises is outside the mainstream. Larger scale professional services firms and traditional Venture Capitalists remain at the peripheral of the ecosystem. Values alignment is a key consideration in this space and where it can be achieved, as the sector grows these larger scale players may be a greater support for much needed investment and/or specialised capacity development.
Looking forward, initiatives like the Growth Grant will be important as key conduits in building sustainable capacity across the ecosystem. The data drawn from the survey indicated the important role the Growth Grant played for grantees in capital raising and capacity building. Two-thirds of grantees said they believed they would not have secured the investment without the support of the Growth Grant, and one-third expected that they would have raised less, or it would have taken them longer. In addition, 94% of the grantees reported improved skills and knowledge in topics relating to capital raising and 88% reported strengthened sustainability and scalability of their organisation.
There is also an important role that governments, trust and foundations can play in bringing further support and growth to the sector. What has been very encouraging over the last 2.5 years is the growing appetite from these groups to provide this support in collaboration with each other and further sector participants. The Australian Government’s Social Impact Investment Fund budget initiative is a good example. A select number of trusts and foundations have also provided both direct capacity support and/or are investing a part of their corpus with an impact lens.
There is nothing like a story to bring experiences to life. The last section of this report shares the stories of some truly extraordinary individuals. These inspirational people are driven to make positive impact in the world through organisations that are sustainable and growing. Theirs is the harder road and our hope is that programs like the Growth Grant can continue to help them, and others like them, to pave the way forward to a better world for us all.