We can invest to make an impact, Side by Side

Michael Traill

By

16/02/2018

The Wayside Chapel challenges corporate leaders everywhere to combine business discipline with social objectives to make a positive impact. It can be done.

OPINION | I was invited to speak recently at a unique one-day forum hosted by the Wayside Chapel, a highly respected nonprofit providing care and life pathways for the homeless.

The event, called Side by Side, challenged us all to think more deeply about our common humanity and the role of the funds management industry in contributing to the social fabric of the Australian community.

Speakers were asked to share their thinking and insights on how the finance industry could make a difference. We did so in front of an audience that included a diverse mix of professionals and ‘visitors’, the term Wayside uses for those for whom it cares. It was a grounding and humbling experience.

I was particularly moved by the story of Doug, who courageously shared his own life experience and the feeling of being worthless and invisible as he battled a challenging personal background that contributed to addiction issues.

It raised questions. What, if anything, can the behemoth, $2.3 trillion super fund industry do to contribute to Doug’s opportunities to be part of the Australian community? Is the delineation between financial returns and social purpose so sharp that never the twain shall meet? I believe not.

In the field of impact investing, there are emerging, and large-scale, examples of how financial returns can be generated that would satisfy the expectations of the investment committees of superannuation funds and also deliver sustained and meaningful social impact.

As chair of Goodstart Early Learning, the largest provider of early learning and care in the country, I shared with Wayside’s forum the history of the capital raising that brought this unique social-purpose entity to life.

Goodstart emerged out of the ashes of the bankrupt ABC Learning chain. It sourced $165 million in debt capital to buy the business from the receiver in 2010. The annual return on the lower-ranking debt in this deal was 12 per cent.

Founded by four non-profit organisations, Goodstart is run explicitly with business disciplines for social purpose, with a board and senior management team that reflect the balance of skills required. Surpluses are reinvested to drive improved quality learning and care in Goodstart’s 652 centres, with a particular focus on communities of exclusion and disadvantage.

Wide impact

Childcare is not the only area where applying business discipline with social purpose can make a difference; for example, the increasing focus on aged care presents opportunities for impact investing.

A number of funds are being much more proactive in looking for investment opportunities in this area, and Sunsuper recently committed $200 million to enable faith-based aged-care providers, including PresCare and others, to expand its portfolio. They will do so with the ethic of care that has been their hallmark, for a client base that will include Sunsuper members.

As with Goodstart, the return parameters for this transaction are firmly within the range that would be regarded as prudent and reasonable in terms of risk-return balance.

Looking for more

The challenge is to create more of these large-scale impact investing opportunities, and to ensure that we find quality boards and management teams to run them with business discipline connected to social purpose.

While the Goodstart transaction could not attract funding from mainstream super funds back in 2010, Sunsuper’s investment in faith-based care highlights that opportunities in what can be broadly categorised as impact investing are now drawing mainstream interest.

We must have the capacity to build and complete transactions in this vital asset class.

It has the capacity to make the kind of difference Side by Side inspired and challenged
us to achieve.

Michael Traill is the chair of Goodstart Early Learning and a director of Sunsuper.

Share your comments and feedback with the editor

Sponsored content

Playing Now:

Have your say

What are the most pressing issues for super funds currently?
Vote Now