by Sally McCutchan
As I walked the corridors of Parliament House in Canberra earlier this week with Rosemary Addis, Sabina Curatolo, and our ICA presentation decks (yes, always a deck), distracted by the deadline for this article, I considered the journey of the last two years. After a long career centred around finance and strategy, in May 2015 I met Rosemary Addis. Some of you, like myself, Dan and the rest of the IIA team, may divide your career into the ‘before meeting Rosemary’ and ‘after meeting Rosemary’ periods. Let me just say, it’s hard to say no (and I am truly grateful I didn’t) to a leader like Rosemary, of such incredible intellect, strategic insight and deep understanding of the power of social innovation, who is sincerely dedicated to turning a vision for a flourishing impact investing market and a better society into reality.
So I signed up to Impact Investing Australia as a one day a week volunteer working with a group of cross-sector senior leaders (whom I’m glad also said yes), to develop a concept for a new institution to drive impact investing to scale in Australia. In October 2015, after many working group meetings, conversations and long days with Rosemary and the team including Peter Munro from AT Kearney, I was on the podium as we launched Blueprint to Market: Impact Capital Australia. That report outlined the concept for the newly named Impact Capital Australia or ICA.
For those of you that are yet to see the ICA deck, I will find you, but in the meantime here’s a quick overview with a few of my favourite diagrams. Right now, like we have seen in many immature markets, while we have growing demand and supply for impact investment and there are a few good intermediaries, there are not enough of them with enough capital to facilitate transactions at scale.
ICA is designed to be a game-changer. The vision for ICA is to create a new and independent organisation that has $300 million of capital, a mission and a mandate to drive the market towards impact at scale. Its two key roles would be investor and market champion.
ICA’s investment mandate would focus on measurable societal impact, financial viability and contribution to market development. Its investment focus would be predominantly wholesale to support growth in intermediaries by opening up capital availability and the potential to bring in other investors to both funds and direct investments. An example of this could be an investment by ICA in a fund like the Bridges Sustainable Growth Fund. This fund could then go on to invest in socially focused SMEs in under invested markets. ICA direct investment would focus on proving transformative approaches in social innovation. For example, it could make an investment in a disability housing asset with an innovative model in service provision.
Beyond its investments, ICA would be a market champion, targeting barriers to growth, and actively developing and openly sharing expertise, knowledge and tools. It would build meaningful engagement and collaboration between communities, sector experts, business, regulators and governments.
The goal is to raise the capital for ICA from government (50%); mainstream financial institutions (40%); and the community sector, philanthropy and other investors (10%). Where the initial capital comes from is important, as it will send critical signals to, and build confidence in, other market participants. The terms are clearly also important in ensuring ICA becomes self-sufficient.
Since the release of the Blueprint, we have moved forward in building out a framework for the implementation of ICA. While slowed by the election last year, our efforts continue in relation to engaging the Government and the banks around their potential role in providing capital. Strengthened by the excellent work of Sabina Curatolo, we are gaining traction in some areas to the extent that we believe ICA must remain a key area of focus for Impact Investing Australia.
We have travelled a long way over the past 2 years to bring ICA closer to reality. Standing behind that has been a team of committed and passionate people, some of whom leave IIA this week. So a big thank you to Dan Madhavan, in whom a great sense of humour, amiable style, mastery of the metaphor (just ask him about the platypus) and ability to cut across issues with extraordinary insightfulness, is a truly amazing combination. To Carly Hammond and Gayertree Subramaniam, for bringing their talent and expertise to a fantastic communications effort across so many mediums which significantly contributed to raising stakeholder awareness, and to Lisa Powell for her commitment and hard work in holding many of the pieces together.
As Dan said to me the other day, there are two kinds of people in the world: those who see problems and walk towards them and those that see problems and walk away. As we move forward at Impact Investing Australia, we are incredibly lucky to do so with a team of talented and dedicated people who continue to walk towards the problem and not shy away from the challenges that may be presented in trying to create a better society for us all.