Big Society Capital has joined up with The Beacon Collaborative to form the Individual Impact Investing Commission– a six-month challenge to better understand what holds wealthy individuals and families back from impact investing.
The Commission has produced a report that argues many high-net-worth individuals (HNWI) and wealthy families want a more value-led approach to their wealth, especially the younger generation. However, HNWI investors and some family offices do not typically have access to the same levels of resource as institutional investors or fund managers, and can be held back by a range of barriers, from under-informed advisors to a lack of impact management data.
Lyn Tomlinson, Head of Impact at Cazenove Capital, Commissioner, commented: “As climate change and social inequalities threaten our way of life, public funding and charitable giving continue to fall short. But, with the rise of impact investing, the vital role of private capital has never been more apparent. It is estimated that between £2 and £11 billion of private investments could be re-directed to impact investments, if only barriers to high-net-worth impact investing were addressed.”
The report identifies and focuses on five key barriers:
- Lack of impact investment knowledge and expertise, marketing and promotion
- The need for values-centred advice, including impact investing options
- Lack of appropriate products and their availability
- Limited understanding of tax reliefs and related incentives and the need for innovation
- Low uptake of Impact Investment through charitable giving vehicles
The report makes several recommendations for how key players in the private wealth sector could help address these barriers, which were presented at the launch event on Friday 4 November, hosted at Cazenove Capital’s headquarters.
These include endorsing professional accreditation for financial advisors to ensure they are qualified to offer impact investing advice; requiring all advisors (financial, legal, tax and philanthropy) to establish their clients’ appetite for impact investment; designing new networks and events to attract investor interest; and increasing government support in the form of grants or matched funding programmes accessible for private capital.
The audience also heard from Sherry Coutu, Angel Investor and Philanthropist, who commented: “Angel investments in the impact category form an important pipeline for later stage investments throughout the UK. It is well-known that angels add a lot more than just money by helping early-stage ventures with talent acquisition, talent development and customer referrals so they grow from start-ups to global companies that can be invested in by institutional investors such as pension funds.
“I’d like this report to become a go-to resource for angel investors and impact entrepreneurs who seek impact without a trade-off in expected returns, so the capital markets can support this category to flourish as it should.”
The Commission was formed as a group of 11 leading impact investors, fund managers, advisors, advocates and experts in the HNWI investor world. Their experiences, ideas and requirements drive the report. They include:
- Sir Harvey McGrath, former Chair of Big Society Capital (Chair)
- Matthew Bowcock, Co-Founder & Chair at The Beacon Collaborative
- Lyn Tomlinson, Head of Impact, Cazenove Capital
- Jamie Broderick, Board member of Impact Investing Institute
- Sherry Coutu, Entrepreneur and Philanthropist
- Cansu Deniz Bayrak, Senior Partner, Bethnal Green Ventures
- Ceris Gardner, Partner, Maurice Turnor Gardner LLP
- Scott Greenhalgh, Chair of Certitude and former Executive Chair, Bridges Evergreen
- Sarah MacFarlane, Senior Investor Relationships Manager, Big Society Capital
- David Scott, Chairman at Tribe Impact Capital
- Paul Tselentis, CEO, 24Haymarket
The project was funded via the Connect Fund, managed by Barrow Cadbury. Dame Sara Llewellin, Chief Executive Barrow Cadbury Trust, commented: “There is a new generation of HNWIs seeking more than just profit, but to invest in benefitting people and our planet. It is vital we grow this movement, as the capital is uniquely flexible and potentially patient.”
Sarah MacFarlane, Senior Investor Relationships Manager, Big Society Capital, commented: “We hope this report will provide an important next step towards opening up the conversation on how to navigate the impact investment market for wealth holders and advisors alike, to work together to create impact with capital.
“Forming these recommendations has been a truly collaborative process – we are proud to have worked with all stakeholders involved to help unlock more private assets for impact.