SVA Recommends Seed Funding for Social Investment Bank

Social investment group Social Ventures Australia (SVA) has submitted a response to the Interim Report of the Financial Systems Inquiry (FSI) recommending that a social investment bank be seeded with $200-250 million of debt or grant funding from the Government.

SVA said its submission addresses the key impact investing themes under consideration from the Inquiry’s interim report in July including a dedicated social investment bank or fund, tax concessions and incentives, the role of intermediaries, and structural barriers to investment.

SVA’s latest submission said Government seed funding funding could be matched by private investors and managed by a skilled intermediary.

“Funding could also be sourced by Government accessing unclaimed superannuation and bank accounts, as has been done successfully in the UK with their Big Society Capital bank,” the submission said.

“Our first-hand experience suggests that there is market appetite amongst impact investors to invest in such a bank and the experience, resources and infrastructure required could be easily accessed,” Executive Director of Impact Investing at SVA, Ian Learmonth said.

“Research into the equivalent UK market suggests that it can be expected to grow at 38 per cent per year, much of which can be attributed to the involvement of government, which allows for greater capital flow, higher-risk models of payment, payment by success contracts and social procurement policies.”

The submission also recommended that the Government further stimulate the impact investing market by introducing tax concessions for investors across the full spectrum of social investment products, and through allowing the trustees or directors of superannuation funds, charities, endowments, PAFs and Public Ancillary Funds to take into account social, environmental and ethical considerations when making an investment.

“Government should take a leadership role in catalysing the Australian impact investment market because a larger and more robust market will realise savings and benefits to the community, governments of all levels and taxpayers."

"An expanded market will result in increased capital flow to the community sector, encourage innovative social service delivery and improve data collection and reporting,” Learmonth said.

Chaired by former Commonwealth Bank boss David Murray, the goal of the Murray Inquiry is to examine how the financial system could be positioned to best meet Australia's evolving needs and support Australia's economic growth.

In its original submission to the Murray Inquiry, Social Ventures Australia proposed the establishment of a dedicated social investment bank among its strategies to break down the barriers currently preventing easy access to capital for social sector organisations and projects.