While “restriction” seems to characterise much of life today, promising pockets of growth are emerging. Ivan Chew, Tearfund’s Head of Impact Investing, outlines an exciting new avenue for Tearfund and our partners: social enterprise and impact investing.
Impact investing involves making investments into organisations, projects or funds with the intention of generating measurable social and environmental outcomes, alongside a financial return. Impact investments are different to grants and normally take the form of loans or equity.
For Tearfund, impact investing presents an opportunity to support partners in building market-based development approaches which demonstrate potential for financial sustainability and scalability. When successfully executed, Tearfund will be able to recycle the initial capital plus financial return into another investment. These approaches complement traditional grant-funded development projects, in which there are no financial return expectations.
Along with community-led development initiatives, entrepreneurship and employment can be powerful tools that unlock new opportunities for people facing poverty.
We believe that, along with community-led development initiatives, entrepreneurship and employment can be powerful tools that unlock new opportunities for people facing poverty and help them achieve more of their God-given potential. Furthermore, as traditional donation mechanisms and aid-funding arrangements are under increasing public and political pressure, this model can help unlock new forms of capital. It is our innovative response to continue fighting poverty and supporting our partners.
Four years ago, Tearfund began exploring impact investing after hearing from a few partners about their interest in market-based development approaches. Tearfund was also challenged internally to think innovatively about new funding sources for our work. We consulted with partners in South Sudan, Ethiopia and India to better understand the initiatives they had in mind. At the same time, consultations with more experienced Australian impact investing organisations helped inform our early thinking. Currently, Tearfund works closely with Brightlight (a subsidiary of Christian Super) to continuously refine our approach and integrate it with our development work.
In the last eighteen months, Tearfund’s work has been focused around two key pillars of our strategy namely Create and Build and Grow and Scale.
On one end, Tearfund is supporting nascent, untested models by our NGO partners; on the other end, proven business and impact models by new partners. By doing this, we’re intentionally building a pathway for partners at both ends to intersect and share knowledge. Our hope is that this will lead to stronger business and impact models being built.
With our “Create and Build” partners in India and Nepal, their nascent social enterprises have had to be suspended due to the lockdowns. We are supporting them to help them relaunch once the restrictions are eased. As for our “Grow and Scale” partner, their expansion plan to Nepal had to be suspended too. They had to take prudent cost measures immediately to keep the business stable but still prioritised supporting their vulnerable staff members with basic necessities. We continue to stand with all of our partners who have been impacted and pray for their work.
You can make a tax-deductible donation to Tearfund and highlight that you will like it to be used for our Enterprise Program. For more information, visit tearfund.org.au/what-we-do/enterprise, and if you’d like to register your interest as an investor in future impact investments, please contact Ivan at [email protected]