Financing Impact

In our fifth episode, Gorgi Krlev and Dominik Domnik discuss what it takes to foster innovation that benefits society. We delve into what social innovation is, and what role public policy and specific funding instruments play for the growth of the sector. Gorgi is an assistant professor of sustainability at ESCP Paris. He has conducted a study comparing and assessing approaches from 10 different countries to support social innovation. Dominik works for LMU's Innovation and Entrepreneurship Center. He has previously worked for a foundation and a family office and set-up his own social business. They discuss the rationale for factoring in the long-term benefits for society when investing into innovative solutions to societal problems, whether you are a policy maker or an investor. We also address jargon and how to bridge cultural differences between the private sector, the public sector, and civil society to jointly promote social innovation.

Links

• Gorgi conducted the study "Financing Social Innovation" on behalf of SEND, the German Social Entrepreneurship Network.

Examples mentioned by Gorgi and Dominik:

• Portugal Social Innovation is a government initiative aimed at stimulating the social investment market in Portugal. It mobilizes around EUR 150 million from the European Social Fund through 4 financing instruments: capacity building for social investment, partnerships for impact, social impact bonds, and the social innovation fund.
• Power Up Scotland develops early stage social businesses through investment, business support and cross-sector partnerships. It has been launched by Big Issue Invest in partnership with the Scottish Government and the University of Edinburgh.
• The Finnish Innovation Fund Sitra received an endowment capital fund of approximately 84 million euros from the Bank of Finland and the Finnish Parliament. Sitra's work is funded by the returns from its capital. Investments up and running and underway include Social Impact Bonds (SIB), e.g. with a focus on Type 2 diabetes prevention.

For feedback on the show or to suggest guests for future episodes, contact us at [email protected]

In our fourth episode, Kirsten Dunlop and Dominic Hofstetter discuss why adopting a systems thinking perspective is key to tackling the climate crisis. They explain that it's necessary to overcome a project-by-project mentality to achieve structural change. We hear why achieving a net-zero economy calls for an approach as ambitious as the Marshall plan. Both guests argue for the need to build portfolios of investments that are connected and create synergies to achieve sustainable transformation. Kirsten and Dominic also discuss how such an investment logic is at odds with traditional finance portfolios, which are built for diversification to reduce financial risk. Last but not least, the conversation addresses what needs to be done to foster a new logic to finance transformation.

Links

• Climate-KIC is the EU's main climate innovation initiative, of which Kirsten is the CEO.
• The Transformation Capital Whitepaper authored by Dominic elaborates on many of the ideas touched upon in this episode.
• The TransCap Initiative sets out to put to practice the ideas articulated in the Whitepaper.

For feedback on the show or to suggest guests for future episodes, contact us at [email protected]

In our third episode, Marta Zaccagnini and Ben Wrobel discuss power dynamics in funding within the impact investing space and in philanthropy. They explain why shifting decision-making power to those with lived experience of the problem at hand is both timely and leads to better outcomes. For impact investing, we look into the peer selected investment approach of Village Capital, where Marta is a manager. Ben, who co-wrote a book on participatory approaches in philanthropy and impact investing, analyzes what decision making processes in foundations and investment funds have in common. We hear examples of organizations that have introduced participatory approaches around funding decisions, and address reservations funders may have towards ceding decision-making power. In an outlook beyond the world of impact investing and philanthropy, we hear about the potential for participatory budgeting to restore trust in democracy.

Links

• Village Capital's "Flipping the Power Dynamics" report presents findings on the outcomes of the peer selected investment approach regarding both diversity and commercial success.
• Letting Go, the book Ben co-authored with Meg Massey, explores how philanthropists and impact investors can do more good by giving up control.

Additional resources mentioned by Ben:

• The Grantcraft Guide to participatory grantmaking
• Shari Davis' TED talk on participatory budgeting
• The People Powered Hub for Participatory Democracy

For feedback on the show or to suggest guests for future episodes, contact us at [email protected]

In our second episode, Aunnie Patton Power and Julia Winkler discuss the challenges associated with funding purpose-driven organizations and how to overcome them. Aunnie is an angel investor, an academic, an adviser to funders and founders, and an author. Her book "Adventure Finance" presents innovative funding options for startups and businesses that are not a fit for the venture capital world. Julia is the co-founder of Volunteer Vision, a digital mentoring platform promoting a diverse and inclusive workforce. Her social business is funded by impact investors, and she shares the lessons learned from her fundraising journey. We discuss innovative funding models such as redeemable equity, invoice factoring and supply change financing. We also talk about how investors can source impact investments, why organizations need different types of funding at different stages of their life cycle, and what skills are essential for fundraising.

Links:

• Aunnie's book "Adventure Finance" showcases innovative funding options available for social businesses and non-profits through storytelling and tested frameworks.

https://www.adventure.finance/

• Volunteer Vision, the social business co-founded by Julia, promotes a diverse and inclusive workforce through online mentoring.

https://www.volunteer-vision.com/

About Financing Impact:

Financing Impact is an interview podcast about funding and scaling societal impact. This podcast is brought to you by SciFi, the Societal Impact Financing Initiative at ESMT Berlin.

In our first episode, Stephen Muers and Antonis Schwarz discuss how dormant assets can be leveraged to finance impact. Dormant assets are, for example, bank accounts which haven't been touched for many years and for which the owner cannot be found. In the UK, dormant assets have been used for over a decade to fund social impact investment. Stephen is the CEO of Big Society Capital, the financial institution through which these funds are channeled to investments that generate both a financial and a social return (e.g. social housing). Antonis is a philanthropist and impact investor who has long advocated to use dormant assets to finance impact in Germany. We discuss, amongst others, what political momentum there is for this in Germany in the aftermath of the elections.

Links:

• Big Society Capital

https://bigsocietycapital.com/

• Proposal of the German Social Entrepreneurship Network (SEND) on dormant assets (in German)

https://www.send-ev.de/wp-content/uploads/2021/03/2_Auflage_Nachrichtenlose_Assets.pdf

About Financing Impact:

Financing Impact is a podcast about funding and scaling societal impact. To bring you fresh ideas, we conduct interviews with thought leaders from different backgrounds. This podcast is brought to you by SciFi, the Societal Impact Financing Initiative at ESMT Berlin.

For feedback on the show or to suggest guests for future episodes, contact us at [email protected]