Despite Australia’s prosperity, too many Australians still face persistent disadvantage and exclusion. Social impact investing can ignite—and grow—better interventions to ensure everyone can participate in the economic and social life of the nation. In Australia, the full potential of social impact investing is as yet untapped.
The Commonwealth Government has taken steps to build and participate in the social impact investing market. The Commonwealth should now take a coordinated and longer term approach to guide its involvement and support the development of a mature and sustainable social impact investing market.
- There are three distinguishable forms of social impact investments: payment-by-results programs; small to medium social enterprise; and large scale social enterprise.
- Participants value well-designed payment-by-results programs, but are looking for ways to reduce the complexity of such transactions.
- A key challenge for smaller social enterprises is to support them to become investment and contract ready. And investors are seeking reasonable risk adjusted returns on their early-stage investments.
- For larger social enterprises, the key question is why there are not more. The challenge is that—in order to attract the scale of funding required—large scale social enterprises need to be attractive to mainstream institutional funders.
The Taskforce recommends the Government consider three initiatives, which are ready for immediate implementation;
- Develop evidence and data on social impact
- Principles for future initiatives, and
- Support capacity-building and connections through an information portal.
- If the Government decides to proceed, the Taskforce will work with Ministers and departments at the Commonwealth and state level—as well as other key stakeholders—to progress the initiatives.
- The final report, due mid 2020, will contain the Taskforce’s advice on a Commonwealth strategy. The report will include recommendations to address key issues, including: support for early-stage social entrepreneurs; support to increase outcomes-based contracting; and establishment of an impact investing wholesaler.