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Philanthropic investors given opportunity for financial guarantee

  • August 19 2019
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Invest

Philanthropic investors given opportunity for financial guarantee

By Grace Ormsby
August 19 2019

A new financing model to address complex social issues such as chronic homelessness will be able to guarantee financial returns for investment into social impact projects.

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Philanthropic investors given opportunity for financial guarantee

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  • August 19 2019
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A new financing model to address complex social issues such as chronic homelessness will be able to guarantee financial returns for investment into social impact projects.

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The contingent grant model, as developed by NAB, the Victorian government and Sacred Heart Mission, will reportedly enable philanthropic organisations to provide a financial guarantee to investors that fund social impact investing programs.

According to NAB, the new instrument “unlocks philanthropic capital to underwrite the risk of losses and lowers the cost of financing” and is the first transaction in Australia that includes guarantees from philanthropy in the delivery of a government pay-for-performance contract.

The bank’s chief customer officer in corporate and institutional banking, David Gall, said, “This is financial innovation of the best kind because the end result is more tangible help for vulnerable people in our society.”

Social impact investing is typically able to tackle a range of social and environmental issues such as homelessness, mental health and offender rehabilitation.

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For Sacred Heart Mission general manager Catherine Harris, “the contingent grant model gives service providers, such as us, and governments the ability to unlock the potential of philanthropic capital”.

“It’s a win-win for governments, not-for-profit groups and philanthropic organisations,” she said.

 

Philanthropic investors given opportunity for financial guarantee
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About the author

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Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

About the author

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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