Social Space (Issue 8, 2016-2017) - The Social Finance Issue


Since its debut in 2008, Social Space, the bi-annual flagship publication of the Lien Centre for Social Innovation at Singapore Management University, has provided a platform for local and international practitioners and thought leaders to share their perspectives on social innovation and entrepreneurship. Available in print and online (

Social Space ISSUE EIGHT I







to Social Change








Hot Topics and



The Strength of Giving Together


in Social Innovation

A Focus on Women’s Livelihoods





SoFi 101


Philanthropy: Business


of Giving

Pay for Success &


Measurably Improving the Lives of People Most in Need

40 FEATURE Scaling Impact

Investing through

Innovative Finance:

The Macro Behind


Cambodia's Financial

Inclusion Success Story


in Impact: A Perspective

on Social Impact Bonds


into Venture Philanthropy



Energy Access

in Southeast Asia

through Social Enterprises

Banking on It:

Investment Banks

As the Next Step for

Impact Investing

66 THE SHORT LIST Good Reads: Best Books

for Social Entrepreneurs and Changemakers

Who’s Your Inner Socialpreneur?

Social Space ISSUE EIGHT 1

2016 / 2017 ISSUE EIGHT



Jonathan Chang

Deputy Editor

Eunice Rachel Low

Contributing Editor

Christian Petroske

General enquiries & feedback:

Editorial & submissions:


Special thanks to the following individuals for their unique contributions:

Emma Glendinning, Florian Parzhuber, Ho Han Peng, Jared Tham, Shee Siew Ying,

Shirley Pong, Sujith Kumar Prankumar and Yina Song

Aside from the editorial, all articles written by the authors, including individuals associated

with the Lien Centre for Social Innovation, do not necessarily reflect the views or standpoint

of the Centre. No part of this publication may be reproduced or transmitted in any form

or by any means, or stored in any retrieval system of any nature without the prior written

permission of the Centre.

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81 Victoria Street, Singapore 188065. Visit for more information.

2 Social Space ISSUE EIGHT



Dear readers,

As Executive Director of the Lien Centre for Social Innovation at Singapore

Management University, I travel a lot for work, mostly to give talks, lead

workshops, and form partnerships with other leading universities and

institutions across Southeast Asia and greater Asia. Time and time again,

I am in awe of the sheer number of innovative business ideas that many

social innovators have come up with, from both the non-profit and for-profit

sectors. These socially minded and highly motivated people are working

hard to address, and possibly solve, some of the most pressing societal

issues we are facing today, ranging from access to clean energy, to financial

inclusion and women empowerment—just to name a few.

One challenge, shared by many people I have spoken to, is that we tend to

work in silos. Because many innovators do not often talk to one another,

and are not always aware of similar ideas in other places, they do not

collaborate, share best practices and combine resources. We see this

as a missed opportunity in an ever-connected world. This is why Social

Space is now published twice a year instead of once, in order for us to

be more active as well as proactive, and, most importantly, relevant to our

readers. We are also making several major changes in content creation and

content dissemination with the aim to make Social Space more accessible

to academics, practitioners and students. You will find that the physical

size of the magazine has been reduced to make it easier to hold and carry,

and each issue will be centred on a theme: in this January 2017 issue, we

dive into the various forms of social finance and their implications. Lastly,

to democratise the content of Social Space, we are building an online

platform where all its issues will be made available for download, as well

as publishing articles or blog entries to keep our readers up-to-date with

relevant happenings in the region.

Social Space is more than just a publication. It is an online and offline

community, showcasing success stories, challenges, innovative ideas and

the transformative efforts of innovators in both public and private sectors.

Of course, we are still a work in progress and need your support. We are

an open book in more ways than one, and therefore welcome your valuable

feedback and suggestions on how to improve our future publications.

Similarly, our readers are encouraged to reach out to contribute articles or

submit new ideas.

Let’s make Social Space our collective space. Thank you so much for your

support, please do sign up to our mailing list so you can be notified when

the next issue is available.

Warm regards,

Jonathan Chang


Social Space ISSUE EIGHT 3


Hot Topics and Happenings

in Social Innovation

Dream Homes,

One (Lego) Brick

at a Time

Build your own Lego house and live in it?

Why not? To alleviate the strain of

urbanisation in Phnom Penh, social

entrepreneur Kongngy Hav set up

My Dream Home, a social enterprise

that aims to revolutionise Cambodia’s

housing sector. It produces lego-like

bricks made from soil and sand, which

are both environmentally friendly and

affordable. Thanks to My Dream Home,

young Cambodians can now build their own

homes at a fraction of the regular cost.

Children in Cambodia, 2013 by Sodanie Chea, via Flickr (CC BY 2.0)

What’s Up, Doc?

Young children often experience anxiety at the prospect

of seeing doctors and getting injections. To address this

issue, Esther Wang, founder of the social enterprise

Joytingle, came up with Rabbit Ray—a patient-engagement

device that teaches children about medical procedures

such as vaccinations and blood-taking in a fun and

educational way. For Rabbit Ray, Joytingle bagged the

top prize of US$15,000 at a global innovation competition

organised by Shell. It retails at S$280.

Buyers and Cellars

Californian wine company One Hope has

come up with a sustainable business

model whereby half of its profits are

directed towards various non-profit

organisations. Since it was founded in

2007, One Hope customers get to decide

where their money goes—by selecting the

colour of their wine bottles. Silver ones

buy meals for the hungry, red bottles

go towards fighting heart disease, pink

combat breast cancer, and so on.

By working their social giveback into

their business model, One Hope has,

among other things, helped plant over

50,000 trees and provided about one

million meals to the needy.

Image of wine glass via Flickr

(CC BY-SA 2.0)

Image courtesy of Joytingle

4 Social Space ISSUE EIGHT


App-y Meal

DingGo, the brainchild

of three Singapore

Management University

(SMU) graduates, Jeff

Chin, Wallace Ang and Hayden Leow,

is well on its way towards becoming

a staple smartphone application for

Singapore’s foodies.

DingGo app interface


Users can enjoy

Koufu food vouchers by

downloading the DingGo

app. Redeem the vouchers



Matching supply with demand, this app

allows restaurants and catering services

to reach out to people in the vicinity

with an empty stomach. With DingGo,

restaurants can increase their revenues

during non-peak hours, customers enjoy

great discounts, and food wastage is

minimised. To date, the app has helped

the SMU community save 120kg of food

from being wasted.

In 2015, DingGo’s founders beat over

200 contestants to clinch the top prize

of S$10,000 cash for “Most Innovative

Startup” in an entrepreneurial competition

organised by the Nanyang Technological


Eyes On You

Wouldn’t it be great to actually see how your donations are

impacting the lives of others? Virtual reality (VR) can now

make that happen.

RYOT, a four-year-old start-up specialising in recording

360-degree movies all over the world, has notably

documented an average school day in Ghana, and received

overwhelmingly positive response from its donors. While

VR technology is still in its infancy stages and movies are

costly to produce, the investment has been worthwhile.

For instance, upon viewing a VR-enabled documentary

about a parched Ethiopian village, donors at RYOT’s annual

fundraising banquet were so moved that they pledged

close to US$2.4 million in support of helping people in

need to gain access to clean water.


VR glasses, via Flickr

(CC BY 2.0)

Bank scrabble by Jeff Djevdet, via Flickr (CC BY 2.0)

Branchless Banking’s co-founder Matthew Flannery has successfully

raised US$9.2 million for his new start-up Branch,

a cloud-based microfinance system that allows

smartphone users in developing countries to obtain

micro-loans from $2.50 up to $500. Without the need for

any brick-and-mortar bank, Branch operates through

a smartphone application that analyses the borrower’s

mobile data to determine whether he or she is eligible for

a line of credit.

By taking his microfinance idea online, Flannery has

succeeded in reducing significantly his enterprise’s

operational costs.

If you have a hot social innovation news story to

share, we’d love to hear from you. Email us at

Social Space ISSUE EIGHT 5


A Quick Guide

to Social Change Buzzwords

By Jay Boolkin

Social Impact, Intrapreneurship,

Benefit Corporation, Shared Value—

these are just a few of the many

buzzwords that get thrown around in the

social arena. But what do these terms

mean and how do we apply them?


has come up with a handy guide that

demystifies the myriad jargon and

fanfare surrounding social change.


For-profit companies certified by the non-profit B Lab

to meet rigorous standards of social and environmental

performance, accountability and transparency.


The delivery of both a social or environmental return

and a financial return. It’s a win-win that does not

require compromise on either side of the social or

financial equation.


A term coined by the social entrepreneurship organisation,

Ashoka, meaning one who desires change in the world

and, by gathering knowledge and resources, makes that

change happen.


Collective impact occurs when organisations from

different sectors agree to solve a specific social problem

using a common agenda, aligning their efforts, and using

common measures of success.


The continuing commitment by businesses to contribute

to economic development while improving the quality

of life of the workforce and families, as well as the

community and society at large.


A distinctive process of developing innovative solutions,

rooted in principles of physical, spatial, graphic

and user-interface design. It is characterised by an

emphasis on deeply understanding the practical needs,

behaviours, and perspectives of actual users and

constituents—and may be applied to a wide variety

of challenges, including programmes, services, products,

and processes. It is an action-oriented approach

towards generating creative solutions to complex





A philosophy and social movement which applies evidence

and reason to work out the most effective ways to

improve the world. It is built upon a simple but profound

idea: that living a fully ethical life means using your

spare resources for the “most good you can do”.




Used to describe the act of misleading consumers

regarding the environmental practices of a company or

the environmental benefits of a product or service.

6 Social Space ISSUE EIGHT

A Quick Guide to Social Change Buzzwords


A set of corporate policies and practices that enhance

the competitiveness of a company, while simultaneously

advancing social and economic conditions.



The institutions, relationships and norms that shape the

quality and quantity of a society’s social interactions.

Increasing evidence shows that social cohesion is

critical for societies to prosper economically and for

development to be sustainable. Social capital is not just

the sum of the institutions which underpin a society—it is

the glue that holds them together.


Social entrepreneurs drive social innovation and

transformation in various fields including education,

health, environment and enterprise development. They

pursue poverty alleviation goals with entrepreneurial

zeal, business methods and the courage to innovate and

overcome traditional practices. A social entrepreneur,

similar to a business entrepreneur, builds strong and

sustainable organisations, which are either set up as

not-for-profits or companies.


An organisation that applies commercial strategies to

maximise social impact rather than profits.


A novel solution to a social problem that is more effective,

efficient, sustainable, or just than current solutions.

The value created accrues primarily to society rather

than to private individuals.


People within a large corporation who take direct

initiative for innovations that address social or

environmental challenges while also creating

commercial value for the company.


A form of stakeholder-driven evaluation blended with

cost–benefit analysis tailored to social purposes. It tells

the story of how change is being created and places

a monetary value on that change, and compares it with

the costs of inputs required to achieve it.



The ability to understand interconnections in such a way

as to create sustained and meaningful social change.



Consists of three Ps: profit, people and planet. It aims

to measure the financial, social and environmental

performance of the corporation over a period of time.

Only a company that produces a TBL is taking account of

the full cost involved in doing business.


Philanthropic giving to social ventures that operate

a business model and is generally associated with

social start-up or growth capital needed to deliver or

grow a social mission. It typically means the donor

is not seeking anything other than a social return or

community (non-private) benefit.


All forms of significant change experienced by individuals

and communities. This includes income and labour

market impacts, education impacts, social inclusion and

relationship changes, mental and physical health effects,

and overall impact on quality of life and well-being.

Professor Paul Flatau, Director of the Centre for Social Impact

at the UWA Business School:

This article is reproduced with the kind permission of Jay Bookin from his original

blog post at


Investment with the intention to achieve both a positive

social, cultural or environmental benefit, and some

measure of financial return.

Jay Boolkin blogs at Social Good Stuff

( and is founder

of Promise or Pay (,

an online platform that uses small promises to drive

real, wide-scale social change. Promise or Pay won

the Social Startups MVP Program, a worldwide

competition based on social impact scalability.

In mid-November 2014, it won the Deloitte Australia

Social Innovation Pitch Competition and in early 2015 received funding

from the Myer Foundation. Contact Jay at or

connect with him on Twitter @socialgoodstuff and @promiseorpay

Social Space ISSUE EIGHT 7


SoFi 101


Understanding Social Finance

Christian Petroske, Florian Parzhuber,

Haneol Jeong, John Kinsella,

Maaya Murakami, Mitchell Laferriere

and Remi Cordelle

purely social returns

What is social finance? Rachel Kalbfleisch

of the International Development

Research Centre (IDRC) defines it as

a collection of approaches to managing

money that create value for society or the

environment, often while producing

a financial return, 1 while the MaRS Centre

for Impact Investing calls it “an approach

to managing money to solve societal

challenges”. 2 In other words, social

finance is a movement that covers various

ways of using finance—via socially

responsible investments, micro-loans,

community investments, and so on—to

achieve a social or environmental impact.

Who is involved in this process?

While charities, socially driven

businesses and governments all work

towards creating positive social change,

those who finance them are the ones

facilitating the creation of social and

environmental value (hereafter

“social value”). These funders are

thus considered to be practising

social finance.

So Who Needs

Social Finance?

The recipients of social finance

span charities, non-profit

organisations and various kinds of

social enterprises. In this section,

we will discuss their role in the

spectrum of social finance.








A charity is a non-profit-making organisation set up

exclusively to achieve a social or environmental mission.

It relies solely on donations and/or grants, which often

come with strings attached, e.g. funding cycles and

reporting requirements.

Revenue-Generating Not-for-Profit

This label refers to any non-profit-making organisation,

dedicated to a social or environmental cause, that

generates income by selling products and services.

It includes businesses that make typically up to 75 per cent

of their income through commercial activities, with the

rest covered by grants and donations. 3

Revenue-Generating Social Enterprise

Also dedicated to creating social or environmental value,

a revenue-generating social enterprise typically makes

over 75 per cent of its income from commercial activity. 4

Many are able to break even through commerce, but all

surplus is reinvested to help the organisation achieve

its mission. Thus, they come in many organisational

forms, from non-profits, to LLCs, to worker-owned

cooperatives, to a hybrid of two or more.

Social Purpose Business

Organisations in this category are set up like traditional

private or public businesses, but are driven by a social

or environmental mission. They have shareholders and

distribute profit, but see business growth as a means to

create their intended social impact.

Socially Responsible Business

This is a traditional business entity that also makes

conscious efforts to benefit society at large through

various means, including targeted CSR programmes,

staff initiatives and supply chain management. Operations

of socially responsible businesses may not have social

impact as their first priority, but they cause few negative

externalities in the long run.

What Doesn’t Count as a Recipient of

Social Finance?

Commercial Business that Gives Profits to Charity

Into this category fall many of the world’s businesses,

which pursue profit maximisation but also contribute

a fraction of profits to charity. Daily operations are not tied

to any social cause, so investment into these companies

does not fall under “social finance”. However, they may

be considered social financiers themselves.

purely financial returns

Source: Adapted by the authors from MaRS Centre for Impact Investing,

“Your Guide to Social Finance”.

8 Social Space ISSUE EIGHT

SoFi 101

It’s Complicated: Other Things Also

Called “Social Finance

Social Impact Bonds

Social impact bonds (SIBs), also known as “Pay for

Success” financing, are perhaps the most confusing form

of social finance. For one, they aren’t really bonds, but

complex contracts that are used to pay for large social

impact projects. They essentially work like this: investors

invest their cash in a social project and evaluate its

results. These results are then tallied based on how

much money they save the government—for instance,

by reducing prison recidivism, the state doesn’t need to

pay for as many prisoners as it would’ve had to without

the programme. Once the project is completed, the

government pays out a portion of the savings to the

investors who originally put up the money. Often, these

savings are so large that the investors can make returns

at or above market rates.


Championed by Nobel laureate Muhammad Yunus,

founder of Grameen Bank, microfinance is a way of

providing financial services to the working poor at

low interest rates so as to increase their incomes and

improve their livelihoods. Originally only referring to

loans, microfinance has expanded to encompass other

services like savings and insurance. Large banks

don’t typically provide loans to the poor because they

consider it too risky. If they or others do, it’s usually

at astronomical interest rates. Microfinance brings

interest rates down and often pairs loans with financial

literacy training.

Social Finance

Explained Further

This section covers the relationship between risk, financial

returns and social impact; touches briefly on the tricky

issue of impact measurement; presents an around-theworld

glance at social finance initiatives carried out in

various countries; and identifies some of the biggest

players in the field of social finance.

Risky Business?

From the investor’s perspective, risk is defined in terms

of how difficult it will be to get one’s money back, with

interest, from an investment. 5 The less “risky” and the

higher the return, the more investors can be convinced to

put up more of their funds. The impact investor, or social

financier, looks to achieve positive social value, and often

considers the level of social impact that their investment

might yield. Different investors use different financial

tools, depending on their appetite for risks, financial

returns and social impact. The following illustration

shows the various levels of financial return and social

impact associated with different forms of social finance.





Form of Social Finance


It depends


Grants and donations are given for specific

programmes or projects in return for social

impact of some kind. Of course, they come

with no expectation of financial return.

Non-profit organisations and charities

usually relyon this type of funding mechanism.

Patient Capital

Patient capital is a long-term loan offered

at a lower interest rate over a longer period

by investors prioritising social returns over

quick profit.


Quasi-equity is a flexible term, but it

commonly refers to a loan that gets paid

back with a portion of future performance

instead of just cash. It allows enterprises to

raise debt capital without high interest rates.

Unsecured Loan

This is the form that most loans take:

provided without collateral, and only

based on the borrower’s credit or

calculated trustworthiness. Loans are

considered low-risk because lenders have

the government’s help in collection.


Equity is the ownership that comes from

buying a small piece of a company. It is

often used by companies to raise cash

without taking on debt. For investors, equity

means that they share in all the future

successes, or failures, of the company.

Earned Income

Earned income has the lowest risk for an

organisation to get capital. It is generated

by the firm’s own activities, so there’s no

one to pay back or surrender ownership to.

Plus, barring a huge shift in the market,

earned income can often be counted on in

the future.



Social Impact: Context Matters

The expected social impact of many types of investment

depends on what the recipient does with it. For instance,

a company raising capital in the form of equity could use it

to expand its low-cost health treatment to new geographies,

helping many more low-income people live healthier lives.

Another company could also use equity to develop a new

technique to drill for fossil fuels. The financial tool is the same,

but the social or environmental impact is widely different.

Social Space ISSUE EIGHT 9

Market-Rate Returns?

Is it possible to achieve both social and financial returns

simultaneously? A new analysis conducted by the

Cambridge Associates Impact Investing Benchmark, in

association with the Global Impact Investing Network

(GIIN), shows that the answer is yes: “market rates of

return are achievable through impact investing”, states

GIIN CEO Amit Bouri. 6 In this study, the benchmark

compared normal venture capital and private equity

funds to funds that have both financial and social

impact objectives. Overall, the analysis found an

internal rate of return (IRR) of 6.9 per cent for impact

funds, as compared to 8.1 per cent for non-impact

funds—“within spitting distance”, as classified by

one commentator. 7 However, breaking down the data

reveals an even more compelling story. For instance,

impact investing funds in emerging markets posted

returns of 9.1 per cent; impact investing funds that

were smaller (under US$100 million) saw 9.5 per cent

returns; and smaller impact investing funds focused on

the US returned a whopping 13.1 per cent. 8 This robust

data shows that investors who seek social impact do

not have to sacrifice profits, and might even be able to

outperform the market in some cases.

Measure for Measure

Almost everyone (with good intentions) hopes to achieve

positive social impact. According to Mark Florman,

Robyn Klingler-Vidra and Martim Jacinto Facada,

The notion of the social impact of business has

become so mainstream that government at the highest

levels—including G8 leaders and even the Pope—

advocate the creation of institutions to give greater

attention to driving social impact”. 9 However, one of the

most difficult challenges facing social finance revolves

around the question: how do we measure social impact?

There are, in fact, many ways to measure it, but the

crucial question concerns how to consolidate these many

methods under one impact measurement and evaluation

system. At present, the impact measurement field is

quite chaotic: each institution or region typically has its

own assessment criteria for impact, and creates its own

metrics. Though in recent decades the Global Impact

Investing Network (GIIN) and Social Value UK (formerly

the SROI Network) have made efforts to consolidate their

metrics, there has not been a single governing authority

to establish an official and centralised system of impact

measurement and evaluation.

There are, in fact, many ways to measure it [social impact], but the

crucial question concerns how to consolidate these many methods

under one impact measurement and evaluation system.


Triple Bottom Line (People, Planet, Profit)

The triple bottom line is one way to think about what an

organisation’s relationship to its impact should be. The triple

bottom line consists of three Ps: people, planet and profit.

Organisations that take this approach are understood to

prioritise social, environmental and financial impact equally

in order to take into account the full costs of operating their

business. 10



10 Social Space ISSUE EIGHT


d.light 11


Founded in 2006, d.light aims to

bring solar lighting and power

systems to developing countries

not only through producing and

selling solar products, but also

through innovative financial

products. To date, d.light has sold

over 10 million solar products

across more than 60 countries,

and improved the lives of some

50 million people. A growing portion

of d.light’s sales come through its

pay-as-you-go system, which allows

customers to combine top-up

cards, microloans, savings groups,

employer sponsorship, cash and

mobile money to make d.light’s

solar products radically affordable. 12

South Africa’s Social

Impact Bonds 16

South Africa

Two government departments in

the Western Cape of South Africa

have committed 25 million rand

(US$1.62 million) for three social

impact bonds (SIBs) designed

to improve maternal and early

childhood outcomes. This is the

first time a middle-income country

has committed to a pay-for-success

scheme—to date, no low-income

country has done so.

SoFi 101

Brazil’s Social

Stock Exchange 15


Launched in 2003, the Social Stock

Exchange for BOVESPA (Brazil’s

Community Interest Stock Exchange) is the world's first

Companies (CICs) 13 social stock exchange. Focusing

United Kingdom

on education-based initiatives and

environment-related projects, it

was recognised by UNESCO as

The UK was one of the earliest

a pioneering model and adopted

countries to recognise social

by the United Nations Global

enterprises as a separate business

Compact Office as a case study to

entity. They designate social

be recommended to other stock

enterprises, legally, as “Community

exchanges. Unlike a traditional stock

Interest Companies”. Since 2005,

exchange, however, this one shies

more than 12,000 companies have

away from all valuation; instead, it

registered as CICs. These are

matches social ventures to investors

subjected to asset locks, dividend

in the style of online marketplaces

caps and interest caps to ensure

like Kiva or Kickstarter.

that their assets are used for the

benefit of society. Being a hybrid

form, CICs can get funding from

private philanthropy, public funding

and venture philanthropy firms

such as UnLtd, which supports

social entrepreneurs through

challenge grant awards, advice and

networking opportunities. 14

UBERIS Capital &

Coco Khmer




A true double- or triple-bottomline

investor, UBERIS invests in

Working across India, Dasra

early-stage social businesses

combines research, organisational that seek impact and financial

capacity-building and philanthropic sustainability. For instance, one of

networks in its mission to bring their investees, Coco Khmer, creates

800 million Indians out of poverty. fair trade coconut-based skincare

They report to have strengthened products while providing economic

the growth plans of over 200

empowerment for marginalised

successful non-profits and enabled Cambodians. When Coco Khmer was

over US$11 million in funding to breaking even but needed capital in

social businesses and non-profits order to grow, UBERIS provided early

in India. Dasra actively works to capital in the form of a convertible

bridge the gap between social loan, and paved the way for future

entrepreneurs and philanthropists investment and Coco Khmer’s

by providing research, support, and continued growth. 18

a platform for both. 17

Social Space ISSUE EIGHT 11


Social Financiers

# Name

Financial Resources

(US$ billion)

1 International Finance Corporation 45.3


Inter-American Development

Bank Group


3 Enterprise Community Partners 13.9




Morgan Stanley Institute for

Sustainable Investing

Netherlands Development

Finance Company

National Community

Investment Fund




7 Responsibility Investments AG 3.6

8 Capricorn Investment Group 3.5


Goldman Sachs Urban

Investment Group


10 Triodos Investment Management 2.2

Source: Adapted from Christa Hangl, "A Literature Review about the Landscape of

Social Finance", Table 1, 77–92. 19

The International Finance Corporation

Founded in 1956, the International Finance Corporation

(IFC) is the private investment branch of the World

Bank. Over US$45 billion in investments from the IFC

go towards loans and venture capital. In turn, most of

its funding comes from issuing triple-A rated bonds

in several different capital markets. Most of its bonds

are of the traditional variety, marking investments that

lack an exceptional focus on social impact. However,

certain innovative themed bonds such as Green Bonds,

Banking on Women Bonds, and Local Currency Bonds

also allow investors to target causes and communities

they want to support. The reach and financial power

of the organisation is impressive: a Google search for

“IFC” will typically yield headlines such as “IFC plans

to invest $75 million in Glenmark Pharmaceuticals”;

“IFC to invest $15 million in Vietnamese animal feed

firm Anova’s Bond”; or “IFC to invest $20 million in

Abraaj Group”. The IFC example foregrounds the

complexity of drawing hard-and-fast boundaries around

the field of social finance. Even though many of the

IFC’s investments are in private-sector businesses and

multinational corporations (i.e. investments that are

not particularly “social”), its ultimate mission is a social

one: to create jobs and seed economic growth in order

to advance development.


Othmar M. Lehner defines crowdfunding as the act of

“tapping a large dispersed audience, dubbed as ‘the

crowd’, for small sums of money to fund a project or

a venture” and one that is “typically empowered by the

social media communication over the Internet, through

for example embracing user-generated content as

guides for investors”. 20

Industrial machines featured in Open Source

Ecology’s GVCS, taken from the company’s website.

The idea of funding a project through small contributions

from a large audience is not new. However, due to its

informal and democratic nature, crowdfunding has

become more widespread in recent years. As its investors

generally care more about social rather than financial

returns, crowdfunding seems an appropriate tool for social

entrepreneurs to raise capital. The emergence of online

platforms, such as Kickstarter, Indiegogo and GoFundMe,

has aided social enterprises in raising both awareness

and capital for their ideas. Typically, out of the plethora

of initiatives, only a selected number of crowdfunding

projects receive adequate funding and see their ideas

turned into reality. Open Source Ecology is one particular

social enterprise that used crowdfunding for its Global

Village Construction Set (GVCS). Aimed to bring affordable

industrial machines to rural communities around the

world, the company has, to date, raised over US$60,000

for its GVCS project.

12 Social Space ISSUE EIGHT

SoFi 101


Looking Ahead

Going forward, social finance faces a broad set of

opportunities and challenges. Ellie Howard of Cicero

Group suggests that “in time, social finance will become

inherent to the practice of investing in line with the

progression to a conscious economy”, but that “the

sector first needs to establish itself”. 21 In other words,

what is now somewhat of a fringe concept—investing

to achieve measurable social impact—will eventually

become inextricable from “plain-old” normal investing.

When that happens, we’ll have an economy that includes

social impact in its core calculus; that incorporates more

of the full costs and benefits of doing business; and

that is more “conscious” of the impacts it has. Howard

goes on to call for “the creation of a platform to not only

attract the investment, but also the brightest minds and

expertise for the sector to flourish”. 22 The table below

presents a summary of the prospects and obstacles

facing social finance, and its potential to thrive.


• Population growth in emerging countries

• Innovative technologies that

- allow for global reach

- increase collaboration

- reduce transaction costs

• More collaborative efforts between businesses,

charities and governments

• Increased professionalism from impact investors

• New investment tools

• Growing legislative support

• Academic support (professional programmes,

incubators and competitions)

• High payback rates for micro-loans

• Positive mindset shifts and generational changes


• Returns from social instruments are on average

lower than those of traditional instruments

(for now)

• Insufficient education about and training in

social finance

Social enterprises still largely seen as charities

• Fragmented social enterprise market due to

varied agendas of organisations

• Lack of available quantitative data

• Lack of standards for measuring social impact

• Too little readily available funding

• More regulations that potentially curb the

growth of social enterprises

Now that we’ve examined the kinds of organisations that

receive social finance, discussed the financial tools used,

cited examples from around the world, and highlighted

some exciting opportunities ahead, we hope this “SoFi

101” has covered some important ground, albeit not

exhaustively, on the topic of social finance. Maybe

the next time someone asks, “What is social finance

anyway?”, this article can be a place to start.

All opinions expressed in this article, unless otherwise stated, are those of the

authors. Any errors or omissions are the authors’ own.



Rachel Kalbfleisch, “Social Finance Week: Social Finance 101”,

Charity Village.



MaRs Centre for Impact Investing, “Your Guide to Social Finance”.


Eva Varga and Malcolm Hayday, A Recipe Book for Social Finance

(Brussels: European Commission, 2016).





Investopedia, “Risk Definition”.



Cambridge Associates and Global Impact Investing Network,

“Private Impact Investing Funds Yielded Financial Performance

in Line with Similar Private Investment Funds with No Social

Objective, According to New Impact Investing Benchmark”, Thegiin.

org, 25 June 2015.


Anne Field, “New Study: Impact Investors Don’t Have to Sacrifice

Financial Returns”, Forbes, 26 June 2015.



Cambridge Associates and Global Impact Investing Network,

“Introducing the Impact Investing Benchmark”, 25 June 2015.



Adapted from Mark Florman, Robyn Klingler-Vidra, and Martim

Jacinto Facada, “A Critical Evaluation of Social Impact Assessment

Methodologies and a Call to Measure Economic and Social Impact

Holistically through the External Rate of Return Platform”, LSE

Enterprise Working Paper #1602 (February 2016). http://www.lse.


The Economist, “Triple Bottom Line”,, 17 November



Shell Foundation, “D.light Launches $5 Solar Lantern”. http://www.$5-



Esha Chhabra, “Bite-Size Payments Go Global: Solar’s Next

Challenge”, Forbes, 12 August 2014.



CIC Association, “What Is a CIC?”.



UnLtd UK, “About UnLtd”.


Chhichhia Bandini, “The Rise of Social Stock Exchanges”, Stanford

Social Innovation Review, 8 January 2015.


Social Space ISSUE EIGHT 13

SoFi 101


Sophie Gardiner and Emily Gustafsson-Wright, “South Africa is

the First Middle-Income Country to Fund Impact Bonds for Early

Childhood Development”, Brookings Institution, 6 April 2016.


AVPN, “About Dasra”.


UBERIS Capital, “Our Portfolio”.



Christa Hangl, “A Literature Review about the Landscape of Social

Finance”, ACRN Journal of Finance and Risk Perspectives 3, 4

(December 2014): 64–98.



Othmar M. Lehner, “Crowdfunding Social Ventures: A Model and

Research Agenda”, Venture Capital 15, 4 (2013): 289–311


Ellie Howard, Challenges and Opportunities in Social Finance in the

UK (London: Cicero Group, 2012).





Petroske is

an Assistant

Manager at the

Lien Centre for

Social Innovation.

He drives forward

a diverse range of projects,

including the Centre’s research,

capacity-building, partnerships,

events, and is Contributing

Editor for Social Space. Before

joining the Centre, Christian

helped Year Up build databased

feedback loops into its

core decision-making as Sales

Operations and Market Research

Fellow while participating in a

selective, applied management

training programme through

New Sector Alliance’s Residency

in Social Enterprise. Christian

holds a BA in Sociology with

Honours from Brown University,

where he chaired the state’s

biggest social enterprise

conference, worked with two

start-ups and founded one,

conducted both applied and

academic research, and wrote

an award-winning Honours

thesis on feedback and power in

social finance. He can be reached



Parzhuber is

a senior at the



University (SMU)

where he majors

both in Finance and Operations

Management. Presently a Data &

Operations Associate at the Lien

Centre for Social Innovation,

he has previously conducted

research on water access in Laos

(specifically the regional water

management along the Mekong

River), social entrepreneurship

in the Philippines, as well as

the social entrepreneurial

landscape around the globe.

His research interests include

water and sanitation systems

across different continents,

financial inclusion, as well as the

future outlook of crowdfunding.

He can be reached at

Originally from

Seoul, South

Korea, Haneol

Jeong is a student

at the Wharton

School of the

University of

Pennsylvania, and a member

of the Joseph Wharton scholars

program. He was a Summer

Research Associate at the Lien

Centre for Social Innovation,

where he conducted an

independent research project

on increasing energy access

in Southeast Asia through

investment in social enterprises.

He can be reached at haneolj@

John Kinsella

is a sophomore

at the University

of Pennsylvania.

Originally from

Houston, Texas,

he earned an

Eagle Scout award and received

the Princeton Prize Certificate

in Racial Relations. He was a

Summer Research Associate

at the Lien Centre for Social

Innovation, during which time he

conducted independent research

on interdisciplinary solutions to

issues facing the world. He can be

reached at

Maaya Murakami,

formerly a Summer

Research Associate

at the Lien Centre

for Social Innovation,

is a senior at the

University of

Pennsylvania, where she majors

in International Relations and

Economics. Born in Japan but

raised in the Netherlands and

Germany, Maaya’s research

interests include ASEAN’s

strengthening of social protection

measures in its member states,

and its challenges and implications;

social entrepreneurship in Cambodia;

and Germany’s dominance in the

management of the European

economic crisis. She can be reached



Laferriere was a

Summer Research

Associate at the

Lien Centre for

Social Innovation.

During this time,

he studied theory, strategy and

developmental curriculum for the

teaching of impact investing to

university students. His primary

research interests cover impact

investing, sustainable finance,

social entrepreneurship and

social innovation. He is currently

based in Manhattan, New York,

where he attends the Gabelli

Business School at Fordham

University. He can be reached at

Remi Cordelle is

a rising sophomore

at the University

of Pennsylvania,

where he majors

in Economics

and Computer

Science. Formerly a Summer

Research Associate at the Lien

Centre for Social Innovation,

Remi conducted research on

income inequality. His areas of

interest include social mobility

in emerging economies; financial

inclusion in Southeast Asia;

financial literacy in marginalised

communities; social enterprises

in Indonesia; microfinance

in developed and emerging

economies; and leadership in

social finance. He can be reached


14 Social Space ISSUE EIGHT


When others see a child in need,

You see people who can meet that need.

When others see social issues

that seem insurmountable,

you see hope and possibilities.

When others see the good being done,

We see You.


Collective By Rob John


The Strength of Giving Together

Giving to charity has never been a solitary

activity in any culture. People have joined

together to give for millennia. In Asia,

clan associations, religious groups or

just friends have enjoyed the benefits of

giving as a group. But there appears to

be a renaissance of collective giving with

the advent of more organised, strategic

and outcome-focused philanthropy. At the

Asia Centre for Social Entrepreneurship

and Philanthropy (ACSEP) where I am

presently based, our research team’s

curiosity about giving circles was first

piqued when investigating the nature

of innovation in Asian philanthropy in

2012. 1 In that study, we reported several

initiatives where individuals pooled

their resources and jointly selected

a non-profit organisation to fund. Since

then, the number and variety of giving

circle models have increased across the

region, leading me to believe that giving

circles will contribute significantly to the

development of philanthropy in Asia over

the coming decade.



Giving circles are presently

a well-established phenomenon

in contemporary American

philanthropy. Since the mid-

1990s, their numbers have grown,

especially through networked circles

such as Social Venture Partners

(SVP), The Women’s Collective Giving

Grantmakers Network and Impact

100. 2 Studies of US giving circles

generally support the view that they

are more than a fundraising tool,

but also an opportunity for

individuals to learn more about

giving, non-profits and social

needs in their own communities.

Most giving circle models require

individuals to donate quite modest

sums and engage their members

more deeply than casual “donation

tin” or “chequebook” giving. This

engagement and the multiplied

resources of pooled funds can

approach the level of philanthropy

more often associated with wealthy

individuals or managed charitable

funds. Angela M. Eikenberry, an

academic at the University of

Nebraska who has extensively

studied giving circles, calls them

“a transformation in the way we

[ordinary citizens] are attempting

16 Social Space ISSUE EIGHT

Collective Philanthropy

to address community problems

through giving and volunteering”.

Her definition of a giving circle

remains a helpful starting point in

understanding why they are

an important innovation in Asia.

Giving circles are hard to

define, are flexible in form and

nature, but typically exhibit

five major characteristics—

they pool and give away

resources, educate members

about philanthropy and issues

in the community, include

a social dimension, engage

members, and maintain their

independence. 3

While the most obvious characteristic of

a giving circle is syndication—the pooling of

capital to make larger donations—we know

from research that a giving circle also engages

its members to release human capital and

provides a learning experience that solitary

giving does not.

While the most obvious characteristic

of a giving circle is syndication—the

pooling of capital to make larger

donations—we know from research

that a giving circle also engages its

members to release human capital

and provides a learning experience

that solitary giving does not. A survey

of 341 members of 26 giving circles

supported the assertion that

participation had a positive impact

on individuals’ philanthropic and

civic engagement. Giving-circle

members gave more time and money

and in a more focused and strategic

way compared to those who did

not give collectively. The members’

knowledge of philanthropy, non-profit

organisations, and problems in

their community also increased

as a result of giving with others. 4

On the American landscape, it

appears that gender is a major factor

in the formation and dynamics of

giving circles: one study revealed

that 44 per cent of circles were

composed of women only, with two

per cent being exclusively male. 5

Many US giving circles are hosted by

other philanthropic organisations,

usually community foundations,

which enable circles to offer their

members tax exemptions without

having to independently file for

charitable status. In addition, a few

giving circle networks in North

America have opened chapters

internationally, or inspired others to

adapt their model and form circles

in Asia.


The 34 nations and special

administrative regions that

constitute Asia form a diverse and

complex patchwork of cultures,

languages, political systems and

economies spread across vast

distances. In the US and much of

Europe, philanthropy is relatively

well developed: there is a robust

regulatory environment for

charitable giving and taxation, and

a considerable body of academic

research on philanthropy and

its place in civic engagement

and culture. Ancient traditions

of charitable giving, such as the

clan associations of 19th-century

Chinese migrant traders, have

existed for centuries in Asia.

In 1915, 23 women formed the

Singaporean Chinese Ladies

Association. Most were the wives

of wealthy business leaders, and

together they pursued health and

education projects amongst the

island’s disadvantaged. Several

of the Association’s presidents

were to become instrumental in

establishing some of Singapore’s

most respected grant-making

foundations, such as the Tan

Foundation, Cathay Organisation

and Lee Foundation. 6

The concept, however, of organised

philanthropy in order to effect

specific societal benefit is relatively

new, emerging from post-colonial

wealth creation and private

foundations. These relatively

new expressions of philanthropy

are developing rapidly—even

in countries like China, which

has no modern tradition of

institutional philanthropy. Despite

the comparatively less robust

and underdeveloped philanthropy

“ecosystem” in Asia today, there are

many indications that organised,

strategic philanthropy will boom

in the next decade: we are seeing

an increased interest from middleand

higher-income earners in a

more engaged approach that adds

value and is focused on efficiency

and results. 7 The transfer of

family business and associated

philanthropy to a new generation

of foreign-educated children

is one driver of this evolution

from traditional giving to more

intentional, professionalised familybased

philanthropy. In this context

of rapidly evolving philanthropy in

Asia, models of collective giving

are likely to play an influential role,

as individuals and communities

seek to maximise the impact of

their donations and deepen their

experience of giving by learning

from one another.


In the first attempt to map their

growth in the region, my 2014 study

identified 37 giving circles in Asia, 8

which I broadly categorised as either

“transplanted” or “indigenous”

giving circles. 9

Social Space ISSUE EIGHT 17

Transplanted Giving Circles

These models can trace their origins

to a network outside Asia, usually in

the United States or United Kingdom.

Additionally, transplanted giving

circles are typically promoted by

a strong, locally based “champion”

who has personally understood the

potential benefits of collective giving

and can rally others to participate.

None of the transplanted circles from

my 2014 research resulted from any

aggressive international corporate

franchise, but rather were initiatives

driven locally and supported by circles

and their networks in the West.

For example, SVP was founded

in Seattle in 1997 and has to date

grown to 31 chapters in the US

and Canada. Each partner typically

donates US$5,000 a year, enabling

each city chapter to make several

large grants to local non-profits.

SVP’s venture philanthropy approach

encourages partners to engage

with the management team of the

supported non-profit as an active

“investor” rather than a passive

donor. As early as 2005, SVP inspired

the start-up of an affiliate group in

Tokyo, but it was not until 2012 that

the network significantly expanded

to Asia. There are presently SVP

affiliates in India, China, South

Korea, Japan and Australia, all led

by local individuals and supported

by the international network. Further,

SVP India has grown organically to

three city chapters, while SVP in

China plans to expand beyond its

first base in Beijing, which launched

in 2013 with 50 partners. However,

whereas SVP chapters in the US

are registered as independent

non-profits with tax deductibility

status, the onerous procedures for

registering a non-profit organisation

in India and China have led SVP to

choose an umbrella structure in

India, and for SVP China to launch

under the auspices of the Leping


In another case of adapting to local

conditions, SVP Melbourne set up

a dual fund structure to support the

country’s growing social enterprise

sector—a charitable fund offering


Ravi Venkatesan,

courtesy of SVP




raised nearly

half a million

US dollars



donated their

time to support

11 non-profits




SVP India plans

to help create

a million jobs

and mobilise

the resources of

1,000 partners




Ravi Venkatesan transformed Microsoft India during his

seven years as the company’s chairman, making India the

technology giant’s second largest market. Working for Microsoft

brought him into close contact with a unique community of

technologists and philanthropists, specifically the Seattle

chapter of Social Venture Partners (SVP), whose members

include several Microsoft executives. They sowed a seed in

Venkatesan’s mind that the collective giving model pioneered

by SVP could be relevant for the burgeoning professional

class in India’s own “Silicon Valley”. After stepping down from

Microsoft in 2011, he gathered technology entrepreneurs in

his home city of Bangalore, and SVP India started to take

shape. “You start small and insignificant,” he said, “but

particularly after my experience of Microsoft, I knew we had

to plan for scale—to be one of the largest and most influential

organisations on the Indian philanthropy landscape.”

SVP partners work

with agri-focused


to create better

livelihood impact

for farmers and


Photo courtesy

of SVP India.

Venkatesan planned to take the basic components of the

SVP model—individuals pooling their capital, and engaging

with promising non-profits in their locality to offer funds and

business advice—and adapt to the Indian context, where scale

of impact is key to addressing the country’s social issues.

The first adaptation was to reduce red tape: SVP India was set

up as a single registered entity, an umbrella structure where

city chapters would be added as each was launched. After the

Bangalore chapter was established in 2013 with 65 partners,

chapters in Mumbai and Pune joined the network, with further

expansion to other cities planned. Unlike US chapters, which

are independent from each other, the umbrella model in India

gave the city chapters an opportunity to collaborate and set

common objectives. The chairman of each chapter sits on the

SVP India board to help steer countrywide strategy. Livelihood,

including job creation and vocational training, is an overarching

national focus area for all Indian chapters. Each group will then

choose additional localised social and environmental challenges

that particularly touch on the well-being of their communities.

The Bangalore chapter has chosen waste management as its

local issue, one that is critical for a city whose population size

has grown rapidly to 10 million people without sustainable

policies on the sorting, collecting and disposing of domestic

waste. Bangalore produces over 2,000 tons of dry waste every

day, but only a fraction of that is processed in the city, most

of it being sent to landfills outside the area. Partners of SVP

Bangalore worked with multiple agencies to study the city’s

waste management and identify gaps and opportunities for

recycling, and in December 2015 presented an in-depth report

and roadmap to the municipal authorities.

During the first two years of the Indian chapters, 140 partners

raised nearly half a million US dollars and donated 4,000 hours

of their time to support 11 non-profits. By 2020, SVP India

plans to help create a million jobs and mobilise the resources

of 1,000 partners.

18 Social Space ISSUE EIGHT

Collective Philanthropy

Transplanted giving

circles are typically

promoted by

a strong, locally based

“champion” who has

personally understood

the potential benefits

of collective giving

and can rally others

to participate.

Lastly, when the Impact 100 network

of women-only giving circles in

the US inspired chapters to be

launched in Australia, it chose to be

mixed gender, thus illustrating that

transplanting is not a “cookie cutter”

approach, but one that adapts to local

circumstances and preferences.

Indigenous Giving Circles

The number of giving circles in

Asia, apparently unconnected to

any model outside of the region, is

growing. In the globalising field of

philanthropy, they are likely to be

influenced, even if unconsciously,

by established models elsewhere.

The founder of New Day Asia (NDA)

had her first experience of collective

philanthropy in her home country

of South Africa. After relocating to

Hong Kong, she wanted to kickstart a

giving circle amongst the expatriate

business community to respond

to sex trafficking in Asia. Although

NDA requires its members to pledge

a modest monthly donation, it has

leveraged the pooled funds with cash

and in-kind donations from corporate

partners, and works strategically

alongside established grantmakers

in Hong Kong.

tax deductibility so that partners can

give grants to non-profits; and an

operating company that is permitted

to make impact investments in social







The Funding Network (TFN) is

another transplanted model that

is gaining traction in Asia. TFN

originated in London in 2002 as

an events-driven variation of

collective philanthropy that uses

“live crowdfunding”. The network’s

funding events are open to the

public and feature short pitches by

preselected non-profits, which elicit

pledges from the floor. Unlike most

giving circles, funds are not pooled.

Rather, individuals commit direct

donations during the pitching events,

with some offering beyond their

donations (their time and skills).

Since 2012, TFN has supported

“affiliate” events in North America,

South Africa, continental Europe and

three countries in Asia: Singapore,

New Zealand and Australia. TFN

Australia has placed engagement

with corporate partners at the centre

of its strategy, with firms hosting

events, and encouraging staff and

clients to participate. Corporatefocused

events give the company an

opportunity to match funds pledged

by its staff or offer gifts in kind to

early stage non-profits. During

the pitching sessions, companies

pledge cash, or offer desk space or

volunteers to young non-profits.

Co-founder Chris Green (right) visiting

a supported project in Cambodia in 2010.

Photo courtesy of New Day Asia.



Total Fund

was raised in

the middle of


Co-founder Liza Green visiting a supported project in

Cambodia in 2008. Photo courtesy of New Day Asia.

Liza and Chris Green are banking professionals in Hong

Kong who were troubled by the “dark undercurrent of poverty

in Asia and wanted to respond by giving intelligently”. Liza

researched the abuse of young women by sex traffickers and

made this the focus of what would become New Day Asia.

NDA crystallised as a giving circle when the Greens presented

their proposal at an informal dinner with eight friends in 2007.

One of the members, a lawyer, helped the initiative become

incorporated as a private company with tax-exempt status in

Hong Kong. Earlier, Liza had already contacted the local office

of the Asia Foundation, asking them to suggest a project that

NDA could support with a US$10,000 donation. Over five years,

membership grew organically to 86, through dinner parties,

word of mouth and articles in Hong Kong’s financial press.

Members pledge a modest monthly contribution of HK$500

(US$65), although many give far more, especially when they

receive their work bonuses. NDA members are generally

expatriate professionals, but many are Hong Kong Permanent

Residents. The total pooled funds raised by the middle of 2016

was around US$750,000, supplemented by approximately

US$200,000 in co-funding from corporate businesses donated

to projects in Cambodia, India, China and Nepal.

Social Space ISSUE EIGHT 19






New Day Asia

members take

part in a hike

fundraiser on

Lantau island in

2015 to support

the Matara

Girls Home in

Sri Lanka.

Photo courtesy

of New Day


New Day

member Dana

Barrett with

children from

the Kalki project

in India in 2010.

Photo courtesy

of New Day


India’s largest collaborative giving

effort, Dasra Giving Circles, emerged

out of the Indian Philanthropy

Forum, a platform for high net worth

donors convened by the Mumbaibased

philanthropy intermediary,

Dasra. A circle generally comprises

10 individuals who each commit one

million Indian rupees (US$20,000)

per year for three years. Most of

the funds support the growth of a

non-profit, but 15 per cent is used

to cover the cost of Dasra, delivering

250 days of non-financial support

through mentoring and technical

advice over the three-year funding

cycle. Dasra Giving Circles are

formed to address a specific social

problem only after Dasra’s research

team provides a comprehensive

mapping of a particular social sector

together with a shortlist of nonprofits

which are making innovative

efforts to address the chosen social

issue and have a scalable business

model. Since the launch of its first

giving circle in 2010, Dasra has

raised US$5.6 million of direct

member contributions from 11

giving circles. The impact has been

further leveraged by grantmakers

who contributed US$15.1 million to

projects that were initially supported

by the giving circles.



Initial Grant

offered by

New Day Asia



Girl’s Home

in China for


work at the


New Day Asia members gather twice each year to decide

which new projects to support. “If we fund anything new,

then a member must take that project on as a champion.

Ideally we want to support no more than three or four

projects because that’s what we can comfortably manage

as volunteers,” explained Liza Green. This giving circle

emphasises member involvement and is reluctant to hire

professional staff, thereby keeping costs as low as possible

through volunteerism. Members are involved at all stages

of grant management—evaluating potential projects,

making site visits, as well as posting videos online.

One of NDA’s earliest donations was to LOVEQTRA

Sengchemdrukmo Girl’s Home, a registered non-profit

organisation in China. Remotely situated on the Tibetan

plateau, the Home offers protection to young girls rescued

from domestic slavery and abuse. One member had

a personal connection with its founder and recommended

the project to the group. New Day Asia offered an initial

grant of US$12,600 for refurbishment work at the Home,

with follow-up grants for other capital expenditure in

subsequent years. Liza, who feels the circle model works

well, would like to see it replicated in other Asian cities.

“I’d like to see a New Day Singapore, a New Day Jakarta,

and so on; different cells run by people who want to do

that and working independently from us in Hong Kong, but

perhaps using our ideas and guidelines. We’ve created this

structure; we just want people to use it.”

Focus India Forum (FIF), a giving

circle that targets members of

the Indian diaspora in Singapore,

has 250 members, of whom 180

give regularly. Unlike Dasra’s

focus on relatively large member

donations, FIF requires its members

to give only S$20 (about US$16)

each month. Members are Indian

nationals living in Singapore or

people of Indian heritage who have

adopted another nationality. Since

its establishment in 2002, FIF has

distributed S$161,000 to Indian

non-governmental organisations via

grants that are typically less than

S$2,900. The group has a strong

social and educational focus: its

objective is to keep its diaspora

members informed about the

non-profit sector in India and of

the impact of their donations.

20 Social Space ISSUE EIGHT

Collective Philanthropy

The giving circles as described

above so far generally comprise

professionals who are in the middle

to late part of their careers, live close

to one another geographically—

usually in the same city—and their

giving is local, or sometimes regional.

One recently formed giving circle is a

community of interest: its members




are young professionals scattered

across Asia and further afield, and

their families usually own or manage

major businesses in the region.

These next-generation business

leaders and philanthropists formed

the 20/20 Social Impact Leaders’

Group as an opportunity to learn

about giving through collaboration.





As the giving circle movement gains

momentum across Asia, individuals

are finding imaginative ways of

learning-by-doing. There seems little

doubt that the number of circles is

increasing, and like an iceberg, there

is far more beneath the surface than

we are aware of. We will see the

growth of giving circles accelerate

as community foundations, wealth

managers and governmentsponsored

giving campaigns

promote collective giving.



Social Impact

Leaders Group

created in 2013

in partnership

with UBS Optimus


Members of the

UBS 20/20 impact

circle visit a school

in Daliangshan,

China. Photo

courtesy of UBS

20/20 Social Impact

Leaders Group.

Simon Feng Ou grew up in Taiwan, was educated in the US,

and helped in his family’s sports equipment business in China

before pursuing a career in the sustainable energy sector.

Singaporean En Lee worked for over a decade in finance and

law before moving on to pioneer impact investing in Asia,

which he has been involved in for the last six years. The two

met at the UBS global philanthropy forum in Switzerland, and

“lamented over how few philanthropy events are catered for

the younger generation”—as well as the fact that very few

of these events discussed innovative approaches like social

entrepreneurship and impact investing.

Deciding to change that, Simon and En gathered other likeminded

individuals in their twenties and thirties who wanted

their giving to create meaningful and sustainable impact.

In 2013, in partnership with UBS Optimus Foundation, 11 they

created the UBS 20/20 Social Impact Leaders Group, hoping

“to engage next-generation leaders through peer-to-peer

learning for the purposes of collective action”. The wider

purpose of the group is to support and incubate at least

20 new “social impact leaders” in Asia by 2020, empowered

by expertise, resources and networks, to create positive,

sustainable social impact through action. The giving circle

is the group’s first collective action. Its 20 or so members,

mostly from Hong Kong, Taiwan, Singapore and China, pool

their funds and commit to attending at least three of the four

physical meetings held each year.

Notably, the group is involved in a project to provide early

childhood development to the Yi ethnic minority community

in Daliangshan, China, through a “public–private philanthropy

partnership” involving local government and grassroots

organisations, and academic and international partners.

Simon described how involvement has been a more positive,

insightful experience than just passive giving alone: “It’s been

time-consuming and harder than we originally anticipated,

but it’s been more fun and collaborative … and despite

coordination difficulties, we were able to keep the circle

members fully engaged and updated on project progress.”

The kind of in-depth research on

giving circles in the US and UK has

not yet been duplicated in Asia,

leaving us uncertain as to how these

new models in collective giving are

impacting their members and the

non-profits they support. Academic

research is thus needed to help

us understand the place for giving

circles in the broader development of

contemporary philanthropy in Asia.

In an attempt to map activity in Asia,

document real-life examples and

encourage curiosity about collective

philanthropy, I have launched as Asia’s

first information portal about giving

circles. The website provides a

stream of news items and case

studies, and interactive map details

of known giving circles, country by

country. The table in the next two

pages shows a snapshot of active

giving circles in Asia. While the

number is still modest, it is likely to

grow as more are formed or become

more public about their activities.

The site has already helped giving

circles in different countries connect

and collaborate, and serves as a

platform where they can share news

and events.

Social Space ISSUE EIGHT 21

Giving Circles in Asia

Country City Name Affiliation Partnership

Australia Perth 100 Women

Australia Melbourne 10x10

Australia Adelaide Awesome Adelaide Awesome Foundation

Australia Melbourne Awesome Melbourne Awesome Foundation Pozible (crowdfunding platform)

TEDx Melbourne

Australia Sydney Awesome Sydney Awesome Foundation

Australia Sydney First Seeds Fund Little Black Dress Group Little Black Dress Group

Australia Fremantle Impact 100 Fremantle Impact 100 Fremantle Foundation

Australia Melbourne Impact 100 Melbourne Impact 100 Australian Communities Foundation

Australia Adelaide Impact 100 South Australia Impact 100 Australian Communities Foundation

Australia Perth Impact 100 Western Australia Impact 100 Australian Communities Foundation

Australia Melbourne Melbourne Women's Fund Lord Mayor’s Charitable Foundation

Australia Brisbane PICCA

Australia Melbourne SVP Melbourne SVP Network Affiliate ten20 Foundation (institutional member)

Australia Multiple cities TFN Australia TFN

Australia Brisbane Women & Change

Australia Sydney Impact 100 Sydney

Australia Melbourne The Channel

China Beijing SVP Beijing SVP Network Affiliate & SVP China Leping Foundation

China Hong Kong Future Funders

China Hong Kong New Day Asia Linklaters

India Delhi Awesome Delhi Awesome Foundation

India Mumbai Dasra Giving Circles (10)

India Mumbai Caring Friends

India Bangalore SVP Bangalore SVP Network Affiliate & SVP India

India Mumbai SVP Mumbai SVP Network Affiliate & SVP India

India Pune SVP Pune SVP Network Affiliate & SVP India

India Mumbai ToolBox India ToolBox Belgium

Japan Tokyo ARUN

Japan Tokyo SVP Tokyo SVP Network Affiliate

New Zealand Whangarei Awesome Whangarei Awesome Foundation

New Zealand Auckland Fabulous Ladies Giving Circle Auckland Community Foundation

New Zealand Auckland TFN New Zealand TFN Auckland Community Foundation

Singapore Singapore Awesome Singapore Awesome Foundation

Singapore Singapore Focus India Forum

Singapore Singapore Little Red Dot Giving Circle

Singapore Singapore SVP Singapore

Singapore Singapore 100 Women Who Care Singapore 100 Women Who Care

South Korea Seoul SVP Seoul SVP Network Affiliate

Taiwan Taipei TFN Taiwan (TBC) TFN




Rob John, Pauline Tan and Ken Ito, Innovation in Asian

Philanthropy, Entrepreneurial Social Finance: Working Paper

No. 2 (Singapore: Asia Centre for Social Entrepreneurship and

Philanthropy, NUS Business School, 2013).


Many giving circles in the US are members of networks, which

have very likely contributed to their popularity and growth.

These networks are either independent or affiliated in structure.

An independent network is a collection of giving circles without

any other relationship with each other. For example, The Women’s

Collective Giving Grantmakers Network comprises more than

10,000 women from 48 independent giving circles across the US.

An affiliated network is a franchise model that grows as “branded”

giving circles are added as new city chapters. Social Venture

Partners is an instance of an affiliated network with more than

3,500 partners in 31 North American and 9 international chapters.


Angela M. Eikenberry, Giving Circles: Philanthropy, Voluntary

Association and Democracy (Bloomington, IN: Indiana University

Press, 2009), 57.


Angela M. Eikenberry, Jessica Bearman, Hao Han, Melissa Brown

and Courtney Jensen, The Impact of Giving Together: Giving

Circles’ Influence on Members’ Philanthropic and Civic Behaviors,

Knowledge and Attitudes, Public Administration Faculty

Publications, Paper 42 (Omaha, NE: Digital Commons@UNO,


22 Social Space ISSUE EIGHT

Collective Philanthropy

































Research on giving circles in the US

has shown that they are an important

part of giving culture. Giving circles

provide powerful opportunities

for people of all financial means

to experience the satisfaction of

impactful giving. They also help

individuals engage more intelligently

with their communities, promote

better understanding of social

problems, and support the non-profit

organisations that address these

same social issues. We may be

witnessing the birth of a similar

movement in Asia.

Rob John is a Visiting Senior

Fellow at the Asia Centre

for Social Entrepreneurship

and Philanthropy at the

NUS Business School, and

an independent consultant

based in Cambridge, UK.

He was the first executive director of the

European Venture Philanthropy Association

(EVPA) and co-founded the Asian Venture

Philanthropy Network (AVPN). Following a

15-year career in international development,

his involvement with philanthropy began as

a director of a small venture philanthropy

fund and a Fellow at the Skoll Centre for

Social Entrepreneurship, Oxford Said Business

School. Rob's current research interests

include innovations in Asian philanthropy,

giving circles and angel investing for impact.

View his publications at

He can be reached at








Eikenberry, Giving Circles, 84.


Keith Chua, “Philanthropy in Singapore, Early Initiatives and Its

Influence on Current and Future Trends”, Speech given at the

Philanthropy in Asia Summit, Singapore, 10 September 2012.


The Economist Intelligence Unit, Something’s Gotta Give: The

State of Philanthropy in Asia, A Report from the Economist

Intelligence Unit commissioned by HSBC Private Bank (London,

New York, Hong Kong and Geneva: EIU, 2011).


Rob John, Virtuous Circles: New Expressions in Collective

Philanthropy in Asia, Entrepreneurial Social Finance in

Asia: Working Paper No. 3 (Singapore: Asia Centre for Social

Entrepreneurship and Philanthropy, NUS Business School, 2014).


I excluded one class of collective giving from this study: “donor

circles”. Established by a non-profit organisation as a means

of raising funds exclusively for its own work, donor circles

generally lack the element of independence in their choice of

organisations that will benefit from funds raised by the group.


The full case study is available at


An independent grant-making foundation set up by UBS in 1999

with a focus on children’s well-being.

Social Space ISSUE EIGHT 23


The Business

of Giving

Paul Dunn is shaping

a new generation of

socially conscious

businesses by providing

a sustainable platform

that connects company

with cause.

By Eunice Rachel Low and

Christian Petroske

When it comes to giving, Paul Dunn means

business—literally. As the chairman of Buy1Give1

(B1G1), the 72-year-old oversees a social enterprise

devoted to making business philanthropy

a more effortless process. A firm believer that it

is in giving that one receives (joy, that is), he tells


how joy, rather than duty or guilt, sustains giving


24 Social Space ISSUE EIGHT


From the UK to Australia, then to

Singapore, Paul Dunn has traversed

continents in the span of his fivedecade

career. However, it was a

chance encounter with a pastor from

Bangalore that led him to discover

his raison d'être: helping businesses

derive meaning and purpose through

the act of giving—made convenient

and accessible via a unique platform

linking causes with corporations.

Born and raised in Dover, Kent,

Paul’s first job was in the engineering

industry designing antennae for a

research lab. However, preferring

customer relations to desk-bound

work, he relocated to Brisbane at the

age of 21 to join Hewlett Packard’s

Australian start-up. During his

seven years there, he led the then

newly formed small computer

group. After HP, Paul moved on to

form one of Australia’s first locally

based computer companies. With

a natural flair for marketing, Paul

helped grow that company to a US$23

million enterprise. Following that,

he spent the next two decades in

corporate consulting, during which

he mentored companies in areas

like improving customer value and

increasing profits. In this time, he

built a succession of businesses

from scratch—including The Results

Corporation (TRC) and Results

Accountants’ Systems (RAS).

Then, in 2000, Paul decided to “wind

down” and move to the south of

France. After selling his businesses,

he purchased an 18th-century

farmhouse in Provence, out of which

he wrote several books, including his

highly acclaimed Firm of the Future,

still regarded as a standard text for

professional service firms.

A turn of events in 2006, however,

made Paul emerge from his early

“retirement”. During a trip to

Bangalore, India, he was introduced

to a local pastor, whose personal

story touched him deeply. Two

years earlier, a tsunami struck

while the pastor was teaching at a

Sunday school. Fortunately, he and

his class of 12 children managed

to escape to higher ground, but

they watched on helplessly as their

homes and families were washed

away. Moved by their plight and

the pastor's struggle to help these

children rebuild their lives, Paul

donated the US$3,500 needed to

build a new house for them, which

they completed and even christened

“Paul Dunn Home”. Through this

experience, not only did Paul begin to

feel more empathetic towards social

causes, he derived immense joy from

the act of giving per se.

Serendipitously, Paul’s newfound

desire to give materialised when

he met Masami Sato almost exactly

a year later. While mentoring a group

of entrepreneurs in Bali, he

connected with the 42-year-old

future co-founder of B1G1 over

a shared vision to create a community

of giving businesses based on a

refreshingly simple premise: each

time a customer purchases a

particular product or service, the

company makes a donation to a

designated global cause. The rest,

as they say, is history.

Since its launch in 2007, B1G1

has helped SME businesses achieve

81 million giving impacts, and is

on track towards reaching 1 billion

giving impacts by 2020.

EL: Your career has taken you

across the globe and you’re a

well-known international speaker.

What made you choose Singapore,

over other countries, as the

headquarters for B1G1?

PD: Shortly after launching B1G1

in 2007, we were in Brisbane having

a management meeting. During

one particular discussion, we were

studying a series of flipcharts which

read, consecutively: “Create a world

full of giving”—“Because that’s

a happier world”—“How?”—and

“By creating giving nations”. Just

as we were contemplating that bit

about the giving nations, one of our

latecomers strode in brandishing a

copy of one of the Sunday Australian

newspapers. Its headline read:

“Singapore’s President Says Singapore

Must Become A Giving Nation”. Right

there and then, we felt like we had

our answer.

However, there was a caveat.

The 2005 NKF scandal 1 was still

fresh on the people’s minds, and

public confidence in charities was

at an all-time low. The Singapore

government had also begun to put

stricter controls over anybody who

wanted to do anything in the charity

space. But President Nathan’s timely

quote made us see that there was

a great opportunity to make a huge

difference not just in Singapore but

globally. And taking that international

focus is so important.

Many people ask, “Is B1G1

a charity?” but no, we are a

registered society. There’s our

not-for-profit side, as well as the

operational side where all the giving

Social Space ISSUE EIGHT 25

B1G1 is in a sense

a customisable type

of giving engine for

businesses. You get to

tell your clients that

every time they do

business with you,

they made something

great happen.

takes place. Realising it’s natural to

wonder how much of one’s actual

donation reaches the end beneficiary,

we set up B1G1 in such a way that

fully one hundred per cent of what

you give goes to the charity, with no


Could we have set up our HQ in any

other country? Sure. But our choice

of Singapore, with its regulatory

environment and reputation for

being corruption-free, really bolstered

people’s confidence that they could

absolutely trust what is going on

with us.

CP: A core piece of B1G1’s model

is made up of businesses that

donate to hundreds of social

impact projects worldwide. What’s

different about these businesses,

and could every company engage

in giving like this?

PD: If you look at giving as a whole,

and use the US as an example, there

was something like US$380 billion

of giving in 2014. However, diving

into that number, you’ll find only

5.46 per cent of that amount comes

from businesses, and of that 5.46 per

cent, almost all are big companies

with CSR 2 departments. So where

are the SMEs? Statistics from most

developed nations can tell you that

SMEs comprise about 70 per cent

of their economy, so we identified

a huge potential market there. But

since these smaller companies can

be so focused on their day-to-day

business operations, they lack both

the time and resources to engage

in a sustainable pattern of giving

(even if they wanted to). B1G1 thus

comes in to make giving easy and

accessible for them.

Any type of business can engage

in giving via our platform. Is there

anything special about these

businesses? Perhaps it is this

common desire to derive deeper

meaning and purpose over and above

what they already do—something

that the act of giving is able to give

them. In our rapidly changing world,

we find increasingly that people are

leaving big corporations because

that work cannot bring them the

meaning and purpose that they seek.

As a case in point, there’s Rohan,

an ex-intern of B1G1. Rohan later

landed the “dream job” at a large

global consulting firm, and while it

might seem to most that he’d “made

it”, the work there did not fulfil him

on a deeper level.

26 Social Space ISSUE EIGHT


He resigned after only three months

to return to India, where he founded

a social enterprise devoted to

helping people get fit, and at the

same time providing people in need

with access to clean water.

B1G1 is in a sense a customisable

type of giving engine for businesses.

You get to tell your clients that every

time they do business with you, they

make something great happen.

Let’s say you’re a restaurant owner:

at the end of a meal, you approach

the diner and say, “We hope you

enjoyed the food. We didn’t tell you

at the start, but thought you’d like

to know—you dining with us tonight

has meant that seven children have

access to life-saving water.” Imagine

also the sort of multiplier effect

that the joy of giving can have on

that customer: who knows if that

might inspire him to go on giving just

because it makes him feel so good?

You’ll also be amazed at how

giving has the power to transform

businesses. A dentist shared how

it used to be such a challenge to

hire and retain talent in his clinic.

However, by incorporating giving

as part of the company ethos and

bringing up their involvement

with B1G1 during the recruitment

process, he saw increased

enthusiasm from candidates who

wanted to be part of an enterprise

with a giving spirit.

EL: What’s your giving philosophy

and how do you deal with


PD: Scepticism comes from

wondering where the money goes,

and thus we make every effort to be

transparent to our businesses by

enabling them to track where their

money goes. When people say giving

feels good, it’s not so much quantified

by how much they gave, but that

impact it created. For example: it’s

less about “I just gave $10 or $50”,

and more about “I just gave 10 kids

access to clean water.”

I think so often people still see giving

as conditional, i.e. when you do X,

I will do Y. But I believe true and

Masami Sato, B1G1’s co-founder. Photo courtesy of B1G1.

sustainable giving doesn’t work that

way. The approach has to be soft,

subtle, and flow naturally. If you make

giving a part of who you are, rather

than some kind of add on, that’s when

it starts to transform. The other thing

is connection. It wouldn’t be the same

if the restaurant owner advertised at

the front of his establishment, “Come

dine with us because then so much

goes to X cause”—if you do that, the

giving becomes conditional.

Often when we tell our businesses

how we have over 800 projects, some

think it’s a good idea to let their

customers choose which to support.

But we don’t recommend doing that:

once you ask customers to choose,

they think it’s all about charity, and

will question what makes one

particular cause more special over

others, and wonder why they couldn’t

just donate directly to a charitable

organisation. We’re coming at it from

a different angle: the businesses

should instead reference the projects

as an expression of gratitude—like

in my earlier example of how the

restaurant owner thanks his patron

for dining with them because it helped

give children access to water. That

way, people are then more inclined to

think, “Hey, that is cool, maybe I can

start doing something like that too.”

We also never want to guilt-trip

anyone into giving because B1G1 is

all about the joy of giving. If you show

me pictures of emaciated children

on the basis that I’m going to feel

bad and then make a donation, that

is simply not sustainable. The reason

is that nobody likes to feel guilty! On

the other hand, if you've experienced

the joy of giving, wanting more of

that joy fuels you to keep on giving.

CP: How did you arrive at such

a clear vision of what works for

charity and what doesn’t?

PD: [laughs] All the credit goes to

Masami Sato. As co-founder of B1G1,

she is one of those thinkers who will

turn an obvious solution on its head

and force you to approach an issue

from a radically different angle.

Before we met at a mentoring

session I was conducting in Bali,

my background was in marketing,

so I was seeing most things through

that lens. When Masami first shared

her concept of B1G1 with me,

I remarked how it was one of the

best marketing ideas I’d ever heard,

and she took offence at that.

Her exact words were, “This is not

a marketing idea. It’s about creating

a world full of giving because

a giving world is a better world.”

Social Space ISSUE EIGHT 27

If you show me pictures of emaciated

children on the basis that I’m going to feel bad

and then make a donation, that is simply not

sustainable. The reason is that nobody likes to feel

guilty! On the other hand, if you've experienced

the joy of giving, wanting more of that joy fuels

you to keep on giving.

At the time, she was running a

company dealing with gluten-free

frozen food. Even back then, every

business she created was her way

of finding some way to give back.

I remember her placing this package

of frozen food on the table in a room

full of people, and its label read:

“Every time you buy this nutritious

food, you help us support a soup

kitchen in India.” However, when

someone saw that and quipped, “Oh,

buy 1, give 1”, her eyes instantly lit up.

A week after the seminar, she called

me to say she hadn’t slept well for

the past seven days because she

was so moved by the idea of

“buy 1, give 1”. My understanding

of the phrase was something else,

then: I thought it meant every time

I bought something, I’d get a freebie.

But she enlightened me with a few

examples: each time you buy a TV,

someone who cannot see gets the

gift of sight; or every time you buy

you a book, a tree gets planted.

I was so impressed that I asked if

I could be her mentor for the rest

of her life. She said no, by the way

[laughs]. Anyway, we arranged to

meet over coffee the next day, and

she showed me a movie slideshow.

Against the soundtrack of John

Lennon’s “Imagine”, the short film

comprised phrases and images

depicting the various ways in which

businesses can facilitate giving.

It moved me to tears, and I was

entirely sold on the idea.

Many years on, our team will be

celebrating B1G1’s ninth birthday

at the very conference room in Bali

where Masami first conceived the

idea of “buy 1, give 1”.

CP: That’s such an amazing story.

What are some obstacles B1G1 has

had to overcome to get to where

it is today, and what are some of

your immediate future plans?

PD: B1G1 was such a simple idea

at the time. However, its execution

hasn’t been quite so straightforward.

How do you select the projects

and ensure the money reaches the

beneficiary? How do you build a

business model that allows B1G1

to be sustainable? It took us three

years to figure it out, and to date,

we’re still refining our processes.

We’ve just hit the 81 million giving

impacts milestone, and our goal

is to reach 1 billion by 2020. To

achieve that, we’ll need to bring

more businesses onboard. We’ve

invested a fair bit in technology

that enables us to track every cent

that the companies are giving; for

instance, we have a tracking map

that updates the number of giving

transactions in real time, and we

provide special banners and widgets

that businesses can upload to their

websites, showing how their giving

impacts the beneficiaries. Of course,

all this technology comes at a cost,

so businesses have to pay an annual

membership fee: a typical SME pays

something like US$340 a year—

a very affordable sum that helps

offset our operational costs.

EL: Some people feel emotionally

disconnected from social causes

because they’ve never personally

experienced poverty or hardship.

Is it possible to be a social

entrepreneur or changemaker

without empathy?

PD: Let’s just suppose the opposite

of empathy is “only thinking about

yourself”. If you’re only thinking about

you, and join B1G1 with the sole

motive to attract more customers,

it’s never going to work out. So the

answer is no. I think empathy is

only born out of experience, and not

something that can be taught.

To help the businesses really

emotionally connect with the various

causes, we bring them on yearly

study tours, where we visit existing

and would-be projects. On this one

trip, we went to an Indian village

where the rural kids were given

e-learning tools. One of our business

members, Roger, had been reluctant

to come along, as he would’ve

preferred to spend the holidays

back home boating with his mates.

But he grudgingly made the trip at

the request of his wife. However,

by the end of the tour, there was a

noticeable change in him.

At dinner on the final day of the trip,

Roger came up to do a sharing.

28 Social Space ISSUE EIGHT


Speaking against the background of

a beautiful photo of him and a tribal

elder, he said, in between tears,

“I was talking to this guy and we

couldn’t understand each other, but

whilst I was standing there, I realised

that I was him, and he was me.”

This incident reminded me of what

Brené Brown said at her famous

2010 TED talk on vulnerability:

“Connection is why we’re here. It’s

what gives meaning and purpose to

our lives.”

EL: Let’s talk about your own

life-changing encounter with the

Indian pastor. How did this event

influence how your life and career

played out subsequently?

PD: I was on a trip to Bangalore,

shortly after selling off all my

businesses and buying an 18thcentury

farmhouse in France.

One night, I went to dinner with

a friend, who introduced me to

Pastor Selva. But when I innocently

asked what brought him here,

I had no idea how his answer would

forever change my life.

Pastor Selva, who

had a profound

impact on Paul’s life

and desire to give.

He told me how, two years ago,

while teaching at a Sunday school

on an island off the coast of India,

he heard an incredible noise.

He rushed out to see a wall of water

rushing towards them, about to

engulf them all. Thinking quickly

on his feet, he said to the 12 kids,

“We’re going to play a game. Let’s

hold hands and run to high ground.”

Thankfully, they managed to escape

to safety, but had to watch their

beloved church and the kids’ parents

being swept away by the tsunami.

Following that, it took them four

weeks to get off the island, and

16 months on, Pastor Selva had

been travelling around India with

these 12 children in search of a

place to live and a school for them to

attend. He told me they’d just found

a place to stay but not yet a school

for the kids because they couldn’t

afford the insurance, uniforms and

books. Without hesitation, I helped

pay the US$3,500 needed.

Then, about five weeks later, he

emailed me several photos featuring

their house and the children—but

next came the shot that changes it

all. It’s a close-up of the house, and

at the top of it, written in great

big letters is: “Paul Dunn Home”.

I guess you could say I had a

“Roger” moment.

Up until then, what had driven me

in business was: (i) how do I add

honest value to you as a customer;

and (ii) how do I have fun doing

that? But at that precise moment,

I realised I was connected with

these people forever. You know how

people become products of their

ecosystem? Through my experience,

I became part of what was to be

B1G1’s ecosystem.

CP: Speaking of ecosystems,

how do you think the social change

ecosystem is evolving?

PD: Change is happening at a level

and speed we cannot comprehend—

did you know that every second,

there are something like 6,000

tweets, 2,000 Skype calls, and 55,000

Google searches taking place? 3

There are more people who stayed

at Airbnb last night than at the

Marriott and Ritz Carlton combined,

and yesterday in New York City, more

people have taken Uber instead of

yellow cabs. Yet at the same time,

whilst living in such an environment,

people are also wondering about

“meaning and purpose”.

So I very much do think that we’re

going to see a world where people

will find innovative ways to bring

about social change. Think about it:

not too long ago, using credit cards

to make donations was unheard

of, but now we even have what you

call micro-donations, whereby your

donations can be reflected as part of

your phone bill.

The model of “giving” will also likely

become more democratised. When

B1G1 first started, 100 per cent of

donations would reach beneficiaries,

but with an asterisk: bank charges

applied. We’ve since done away with

that (bank charges are now offset by

businesses’ membership fees), and

we can confidently say that, with no

asterisk, everything you give gets

channelled to a project.

Going forward, I also believe we’ll see

more realism in the corporate giving

space. Currently, companies’ CSR

departments still issue guidelines

that make giving a sort of KPI to be

met. But who’s to say if, sometime

in the near future, a global bank

wouldn’t approach B1G1 because

they wanted to connect with our

SMEs, and as a result get onboard

with giving on a larger scale?

A few years ago, some local

university students researching

social innovation in Singapore

interviewed me, and they asked,

“Should the government make

it easier and offer incentives for

people to create social innovation

projects?” To which I replied,

“I understand why you’re asking

this, but I don’t think in five to ten

years it’d be a relevant question,

because all businesses will be

social enterprises by then.”

My observation is that corporate

philanthropy will make a very

significant shift away from

government involvement to business

responsibility. I get that it would be

nice to receive financial support

from the government, but it’s more

important to think about how to

make a business sustainable, with

an added social giveback, rather

than to be entirely dependent on

external funding.

Increasingly, businesses will also

recognise that social responsibility

is an important part of their ethos

that will positively impact the lives

of others as well as on their own

businesses—and find that this is

what customers, employees and

suppliers expect of them.

Social Space ISSUE EIGHT 29


EL: There was an SSIR article 4

discussing how teams with more

women on them are more creative

and innovative. What are your

thoughts on the role that women

can play in social change?

PD: I am so glad you asked that

question: I am just in awe of women.

How do you do all that you do and be

all that you are? Most men will tell

you their wives are way more intuitive

than they are. As author Bernadette

Jiwa says in her book, Meaningful:

The Story of Ideas That Fly: “The best

products and services in the world

don’t simply invite people to say ‘this

is awesome’; they remind people how

great they themselves are.” I’m not so

sure if a man could’ve expressed this

fact quite as masterfully as she did.

Frequently in my mentoring sessions

with entrepreneurs, I get them to

complete this sentence: “I get up

every morning to …”

The men would typically say:

“I get up every morning to find

innovative ways to improve my

business” or something general

and straightforward, rarely involving

children. However, the women

frequently say something to the

effect of: “I get up every morning to

be a great example to my children

so that they in turn can inspire those

kids they meet, and together we can

make a dent in the universe.” They

really get it: that if I’m thinking only

about myself, my circle is inherently

small; but if I’m thinking of others,

it becomes inherently bigger and as

a result, I can meet people I need to

meet to create a more giving world.


Bottom line is, giving requires you to

be empathetic and to understand that

we are all connected; that the smallest

action from me can create the largest

ripple for you. And women have

such a natural capacity for empathy

that makes them so well placed

to effect social change. Masami’s

a great example of someone who

understands the power of tiny stuff to

have huge impacts.

EL: Speaking of whom, has Masami

since consented to letting you

mentor her for the rest of her life?

PD: Since you asked: about exactly

two years ago, after returning from

a trip, I knocked on her door, fell on

one knee and said, “You know how

I wanted to be your mentor for the

rest of your life and you said no?

Well how about this: can I instead

be your husband?”

EL: I knew it! I saw that coming!

That’s incredible.

CP: Wow, I sure didn’t!

Congratulations on your


PD: [laughs] Thank you so much.

EL: One final question: what are

some misconceptions about giving

that you’d like to debunk?

PD: In 2014, billionaire James

Packer started a $200 million

philanthropic fund to support

arts and indigenous education in

Australia. Now when somebody

reads a news report like that,

they might think, “Oh when I get

200 million dollars, or become

‘successful’, then I’ll start giving



“Corporate social responsibility, often abbreviated ‘CSR,’ is a corporation’s initiatives to

assess and take responsibility for the company's effects on environmental and social

wellbeing. The term generally applies to efforts that go beyond what may be required by

regulators or environmental protection groups.” Definition taken from Investopedia at



back.” But hang on, giving back is

not the destination but the journey.

The truth is, you can give at any

amount, and wherever you’re at in

life. At B1G1, we’ve seen modest

amounts, even one cent, make

a significant difference. Our average

giving is less than $100, yet it’s all

these tiny $100s that have contributed

to our 81 million giving impacts.

So give. It literally does make

an amazing difference.

Eunice Rachel Low is the

Editorial Consultant for the Lien

Centre for Social Innovation and

Deputy Editor of Social Space.

She is also Adjunct Editor with

the Centre for Liveable Cities

at the Ministry of National

Development, where she sees to the content

development of urban studies publications.

With 14 years of editorial experience, and

a specialisation in academic and research

publishing, Eunice was previously based

at the National University of Singapore for

seven years: as Editor at the Energy Studies

Institute; and prior to that, as Editor and

Head of the Journals Division at NUS Press.

She was previously Team Leader (Journals

Content Management) at John Wiley and

Sons, and Assistant Senior Editor at Marshall

Cavendish. Eunice obtained her BA (with

merit) from NUS’s Faculty of Arts and Social

Sciences, majoring in Sociology and European

Studies (French). A published author under

the pen-name “Rachel Tey”, her middle-grade

action adventure novel, Tea in Pajamas, was

featured in The Straits Times and is into its

second printing. When not busy editing, writing,

or conducting book readings, Eunice enjoys

classical music and medieval European history.

Connect with her at

Christian Petroske is an

Assistant Manager at the

Lien Centre for Social

Innovation. He drives forward

a diverse range of projects,

including the Centre’s research,

capacity-building, partnerships,

events, and is Contributing Editor for its

flagship publication, Social Space. Before

joining the Centre, Christian helped Year Up

build data-based feedback loops into its core

decision-making as Sales Operations and

Market Research Fellow while participating

in a selective, applied management training

programme through New Sector Alliance’s

Residency in Social Enterprise. Christian holds

a BA in Sociology with Honours from Brown

University, where he chaired the state’s biggest

social enterprise conference, worked with two

start-ups and founded one, conducted both

applied and academic research, and wrote an

award-winning Honours thesis on feedback

and power in social finance. He can be reached


30 Social Space ISSUE EIGHT






By Richard Edwards and Kevin Tan

Measurably Improving

the Lives of People

Most in Need

Social Space ISSUE EIGHT 31



Two developments are transforming the social sector

around the world. The first is the rise of impact

investment. Today’s investors care about the good

that they are doing, and philanthropies are searching

for more sustainable ways to give. Second is the

proliferation of data and tools to analyse it. Instead of

relying on guesswork and anecdotes, it is now possible

to use data to rigorously determine whether a social

programme is working.

Pay for Success (PFS) and Social Impact Bonds (SIBs)

are an exciting tool for governments and philanthropies

to combine the use of finance and data to improve

outcomes for those most in need. To see why, let us

start with an example of a real PFS/SIB project that is

currently operating in the US.

In the Commonwealth of Massachusetts, USA, youth

recidivism is a problem. That is, when juvenile prisoners

aged between 18 and 24 finish their sentences, a large

percentage of them re-offend. Examining the top 4,000

highest-risk individuals, you would find that 64 per

cent return to prison within five years of their release.

On average, each individual who goes back to prison

costs the Commonwealth US$47,500 a year. Given that

each person who returns to jail does so for 2.3 years on

average, this means that the government is paying a total

of US$280 million in incarceration expenses just for this

group of 4,000 individuals. 1 This excludes the social cost,

such as lost productive employment opportunities, and

the harm to victims of crime.

Given the size of the problem, a range of government

and philanthropically funded programmes exist to tackle

the issue, all of which are well intentioned and deliver

innovative interventions. Yet, in spite of the millions of

dollars spent a year on these programmes, the needle is

not moving on the rate of youth recidivism.

Why is this so? The core problem is that funding is not

directed to the programmes that work. There are many

potential explanations for this state of affairs, but these

three interrelated factors present in many social sectors

worldwide are likely to have played a big role:

1. Lack of outcomes data: Long-term outcomes are

often not tracked, and when they are, are not shared

with providers. In addition, where providers can see

the outcomes of the people whom they have treated,

they do not know whether those outcomes were due

to their work or if some other factor had caused

those outcomes. As a result, each provider can only

offer anecdotes about their programme’s supposed

success, and it is difficult to tell which programme

really works.

2. “Frozen recipe funding”: Since government and

philanthropy cannot tell which programme has the

best outcomes, the norm is to fund those based on

some combination of inputs that resemble a recipe.

Too often, these recipes are not based on current

evidence—at worst, they are based on political

preference, and at best, on outdated studies in very

different contexts. This ends up funding providers

who are focused on conforming to these “recipes”

instead of incentivising new ways to improve


3. Inability to fund data infrastructure: As funders

have difficulty knowing which programmes work,

they spread their funding thin between many

organisations, resulting in each organisation being

underfunded. In addition, one common funding

“recipe” is to fund organisations with the lowest level

of overheads. The result is that providers find it very

difficult to build capacity and invest in infrastructure

to track data. In the long run, this perpetuates the

cycle of not knowing what works and therefore being

unable to fund what works.

If this diagnosis is accurate, then the solution is to find

a way to rigorously evaluate organisations and direct

funding towards the ones that work. A PFS contract

is one way to do this—and SIBs can circumvent some

issues inherent in PFS contracting.

Pay-for-Success Contracting


Outcomes-based contracting measurably

improves the lives of people most in need

by driving resources towards more effective


Social Impact Bond Financing


Financing that bridges timing gap between

outcome payments and upfront capital

needed to run PFS-contracted programmes

32 Social Space ISSUE EIGHT


The rise of impact investors and philanthropies looking

to give loans has been another enabling factor in the creation

of Social Impact Bonds.


PFS refers to an outcomes-based contract. That is,

instead of the current “cash-upfront” method by

which most social service organisations are funded,

a PFS contract is “cash-on-delivery”. Crucially, what

is “delivered” in a PFS contract is an “outcome”—

something that we really want—rather than inputs

that may or may not lead to those outcomes.

In Massachusetts, most providers of services tackling

recidivism were being reimbursed on a cost

reimbursement or per-person-served basis. With

Pay-for-Success contracting, the government is now able

to pay only for the number of jail days that a provider

actually helps a participant avoid. To accurately calculate

the impact of the programme, the government would

track the results of participants over four years against

a similar comparison group. Doing this kind of tracking

at a reasonable cost has only become possible recently,

due in large part to the increasing amounts of data,

new statistical techniques and cheap computation.


What then is the role of a Social Impact Bond? In short,

PFS contracts create a cashflow and risk issue for service

providers. “Cash-on-delivery” might be permissible for

a billion-dollar organisation, but many smaller service

providers cannot afford to provide services upfront in the

hopes of getting repaid down the line, especially when

multiple factors outside of their control can affect that

repayment (e.g. policy changes, government transition,

and so on). To solve these issues, third-party funders

can play an important role in offering bridge financing

while the results of a programme are being observed,

and in absorbing some of the financial risk should the

programme not work.

In Massachusetts, Third Sector Capital Partners, Inc.

raised US$16 million from a variety of third-party

funders to help an especially promising service provider

called Roca expand its services. Roca has 20 years

of experience providing intensive services for very

high-risk youth. The terms of the project were this:

for each day in jail avoided amongst individuals in the

project’s treatment group versus those in a comparison

group, the Commonwealth would make success

Roca has 20 years of

experience providing

intensive services for

very high-risk youth

payments to repay third-party funders. If Roca hit its

targets to reduce recidivism, funders would get their

money back plus a small return. Funders included the

impact investing arms of commercial banks such as

Goldman Sachs, philanthropic aggregators such as

Living Cities, and national foundations that wanted their

grants returned should the programme succeed. Thus,

the rise of impact investors and philanthropies looking

to offer loans has been another enabling factor in the

creation of Social Impact Bonds.

Let us pause for a second to take stock of what happens

as a result of the PFS/SIB structure. In the short run,

programming improves because service providers are

given the freedom to innovate. If the programmes work,

funders get repaid, and can direct their capital towards

another high-performing intervention, functioning like

a catalyst. This means that in the long run, the nozzle of

government and philanthropic funding will be focused

on the highest performing organisations, allowing them

to scale. With incentives and capital aligned to drive

performance, we should expect greatly improved services

for those in need.

Now that we have described the overall principle of

PFS/SIBs, we will examine how a they actually function in

more detail.


One useful analogy to describe PFS/SIBs is a “line dance”.

The main dancers are: 1) an outcomes payer who

decides what outcomes to pay for; 2) a set of private

funders who provide upfront financing; 3) a service

provider who uses the upfront financing to deliver services;

and 4) an evaluator who measures results. This is how

the dance looks step by step:

Social Space ISSUE EIGHT 33

Pay for Success Mechanics



Government identifies a critical social

issue with historically poor outcomes such as

recidivism, chronic homelessness, or early

childhood education.







Private Funders such as foundations,

banks, and businesses, provide upfront capital

to a high-performing social service provider that

is helping a specific, at-risk target population.

SERVICE PROVIDERS deliver services to

key at-risk communities, in an effort to reach or

exceed predetermined outcomes for success.

Evaluator rigorously measures

outcomes to ensure providers achieve impact.

Project Manager

At the centre of this complex

dance, there is an organisation

that acts as a conductor,

facilitator and advisor to

the overall process. This

is sometimes called the

Intermediary, Project Manager,

or Technical Assistance

Advisor (like Third Sector).



Government repays private funders initial

investments only if the project is successful in

achieving positive outcomes.

These stakeholders are not used to dancing together.

Few other initiatives require policymakers, financiers,

non-profits and academics to collaborate in such close

fashion. As a result, the first time the “music” comes on,

there is usually confusion. Third Sector plays the role of

“dance instructor”, bringing these different stakeholders

together and coaching each through the moves. In due

course, everyone is synchronised and moves to the same

beat. While this is complex, there are good reasons to

believe that PFS and SIBs are worth doing in Singapore.


PFS/SIBs have been growing quickly. The first PFS/SIB

was launched in the UK in 2010. By 2012, there were

12 launched projects, growing to 44 worldwide by 2015. 2

PFS/SIB projects are now being explored in varied

jurisdictions from the US to Australia to tackle issue

areas as diverse as early childhood education, healthcare

and recidivism.

The Singaporean context differs in important ways.

For example, Singapore faces less immediate budgetary

constraints than governments of other developed

nations, and the Singapore government provides many




launched projects




launched projects


34 Social Space ISSUE EIGHT


social services in-house. However, the country’s unique

status as a financial hub and its “Smart Nation” push

may mean that PFS/SIBs could be particularly beneficial.

Chiefly, these benefits could include:

1. Accelerating development of a performance-driven

social sector: There are hundreds of social sector

organisations in Singapore. The National Council

of Social Service (NCSS) is the main coordinator

of local Voluntary Welfare Organisations (VWOs),

and had 443 VWO members in 2014. 3 PFS/SIB

contracting can be used to further enable the

development of these organisations to deliver

long-term outcomes.

2. Driving government resources to innovations that

work: NCSS disbursed S$242 million to VWOs in

2014. Beyond VWOs, the Singapore government also

deploys millions of dollars in delivering healthcare,

prisons and other socially beneficial services.

By specifying outcome targets rather than inputs,

PFS/SIBs can help the government steward taxpayer

resources for maximum effect by directing them to

the best interventions.

3. Increasing impact of philanthropic dollars:

Singapore’s philanthropic sector is growing in size.

In 2014, individuals donated a total of S$1.25 billion

to philanthropy, a 14 per cent rise from 2012. 4

A SIB can help philanthropists maximise their impact

in the short run by leveraging commercial capital

to make a bigger impact: each philanthropic dollar

committed in a SIB is often accompanied by capital

from sources, such as commercial banks, that would

not have invested otherwise. Furthermore, funders

stand to get their capital back if the intervention

succeeds. This allows for the same philanthropic

funding to be deployed multiple times towards

high-performing organisations.

4. Building Singapore as a regional hub for non-profits

and impact investment: Singapore is at the centre

of an exciting growth region of the world, and SIBs

could position it as a leader in the social sector and

impact investing field. First, SIBs could be used

to enhance the capabilities of local organisations

with best practices of the social sector worldwide.

Given its strong regional brand, this could eventually

be another “export” area for Singapore. Second,

SIBs could also jumpstart the product market

for impact investments and further increase the

sophistication of the philanthropic ecosystem.

Third, SIBs will additionally help create demand for

impact evaluation and specialised legal services—

both potential growth areas in Singapore’s service

industry portfolio.

Ultimately, PFS/SIBs are an exciting tool to stimulate

innovation and the creation of a performance-based

ecosystem. The key is to find the correct area to apply

this tool.



A successful SIB requires several key pieces to be in

place: an intervention with a promising evidence base;

a solid cost-benefit proposition; well-defined and

measurable outcomes; funder interest; and coherence

with the existing policy landscape.




with Policy


Intervention with


Evidence Base


and Trackable




The process of determining whether these pieces

exist to a sufficient degree in any given issue area in

order to construct a SIB requires intensive diligence

work over several months—what we call a “Feasibility

Study”. However, it is possible to quickly filter out which

interventions are non-starters and to zoom in on which

issue areas are worth further investigation. In this

vein, Third Sector has had ongoing conversations with

Singaporean stakeholders in the government, non-profit,

and funder arenas. Our research indicates that the

following issue areas may be worth investigating further

for a SIB.

Diabetes Diagnosis and Management

The NUS School of Public Health estimates that the

annual cost of diabetes in Singapore was US$787 million

in 2010. By 2050, this cost will increase to US$1.8 billion

and there will be one million diabetics, potentially leading

to an over-burdening of the healthcare system. 5 In Israel,

a SIB is already underway to help individuals who are very

likely to develop diabetes—“pre-diabetics”—not succumb

to the disease. In Singapore, our discussions indicate

that a SIB could be valuable in two related angles:

diagnosing undiagnosed diabetics, and in managing the

health outcomes of diagnosed diabetics. Third Sector is

currently working with a promising provider in the US

Social Space ISSUE EIGHT 35

2010 2050



annual cost

of diabetes in

787 Singapore 1.8





annual cost

of diabetes in


that helps diabetics manage their diets. The positive

outcomes we hope to see from their intervention are a

decrease in patients’ blood sugar levels and a reduction

in emergency hospitalisation events. What would make

this or a similar programme promising for a SIB in

Singapore is that the outcomes are objective and can be

measured in a reasonable timeframe. The intervention

is also cheap relative to the high cost of hospitalisation.

With the recent launch of the “War on Diabetes” and the

Diabetes Prevention and Care Taskforce, this is clearly a

priority issue area for the Singapore government.

Exercising to Prevent Elderly Falls

International trials have shown that resistance and

balance training for the elderly has a significant positive

effect on health outcomes, in particular a reduction in the

rate of dangerous falls. A SIB would be an effective way

of taking this promising intervention to scale, improving

the health of the elderly, and reducing healthcare costs

resulting from falls.

A key advantage of this programme is the presence of

a clear outcome metric (elderly falls) that can be

rigorously measured and on which there is an evidence

base. The prevention of elderly falls can lead to

significant benefits. Elderly falls often lead to serious

injury, hospitalisation, the need for a caretaker, and the

cost/lost productivity related to that caretaker. The Lien

Foundation is currently implementing a multi-site pilot

of Gym Tonic, a specialised gym programme for seniors. 6

Should this show promising results, the track record

could be built upon to attract funders for a SIB.

Reducing Youth Recidivism

An average of 1,600 juveniles (aged between 7 and 16

years) were arrested each year from 2008 to 2014. 7

A SIB could deploy several proven evidence-based

therapies that could break this cycle, thereby helping

youth turn their lives around, reduce incarceration

costs, and increase the number of productively

employed members of society. While local service

delivery organisations may not be currently delivering

these evidence-based therapies (e.g. Moral Reconation

Therapy), training and certification to do so can be

obtained for a reasonable cost abroad. A SIB could

hence be a capacity-building opportunity for local


Many jurisdictions have started with SIBs targeting

recidivism (e.g. Massachusetts in the US). This is because

involving recidivism is extremely high (involving the police,

courts, jail, lost productivity, harm to victims), and the

effects of a successful programme can be measured in

a very short timeframe.

Helping Abused Children and Youth Graduate from

the Residential Care System

There are presently 22 Children and Young Persons

Homes providing residential care programmes for

children and youth in Singapore who suffer from family

violence, abuse or neglect. 8 A SIB could help these

abused children and youth graduate from the residential

care system by providing them with foster homes.

It could even help these children leave the foster system

altogether by providing the necessary services to

reunite them with their families.

In Cuyahoha County, Ohio, USA, Third Sector is

implementing a SIB that reunites children in foster care

with their mothers. The programme concentrates on

stabilising the family’s home environment using

a mixture of trauma reduction therapy and transition

therapy, with the aim to significantly reduce the number

of days a child spends away from his or her family.

Research has shown that this leads to better outcomes

for the child, and it also helps the government free up

scarce foster care slots for other children who may be

unable to reunite with their families.

Helping to Improve the Skills of the Unemployed/


Skills are a big concern of the Singapore government,

with the Committee on the Future Economy underway.

A SIB could help spur innovation in the types of

programmes, and direct government funding towards

the best programmes.

36 Social Space ISSUE EIGHT


What is most intriguing about this particular area is

the ability to help funding—that was already going to be

spent—be deployed for the greatest possible impact.

In the US, Third Sector is helping the federal government

conduct five different Feasibility Studies to better direct

existing spending on their US$870 million per year youth

workforce programming. 9 A Singapore SIB in this area

could focus on a different age group if more appropriate.

This list is by no means exhaustive. Many areas where

significant social benefits can be captured might be

amenable to a SIB: the US has looked at providing

pre-natal care; Israel is looking into SIBs to

tackle highly unique areas such as ultra-orthodox

employment; and some African countries are looking

at malaria. The key is to conduct a rigorous study to

ensure that the success factors for a SIB are in place

before constructing a project.


Q: Are Pay For Success and Social Impact Bonds

only useful for non-profits?

A: PFS contracting is beneficial not just for

non-profits, but also for for-profits and

social enterprises. Third Sector has advised

smaller social enterprises and billion-dollar

internationally listed corporations on how to

utilise Pay For Success contracting to scale.

Q: Is Pay for Success only about cost savings?

A: Pay for Success is ultimately about improving

performance and directing resources towards

programmes that work. Some governments are

indeed looking to fund preventative programmes

so as to save money on emergency services

down the line. However, Pay for Success is also

a useful tool for governments who want to

spend money they were already going to spend

better, even if no cost savings result.

Q: Are governments the only ones able to initiate

a Pay-for-Success project?

A: No. Any party willing to pay for outcomes can

initiate a PFS project. In our experience, we

have seen PFS projects initiated by private

philanthropies, hospitals and insurers, and

multinational institutions.


SIBs are a promising means to the end of outcomesoriented

service contracting. In our experience, there are

several challenges that stakeholders must tackle when

creating a SIB.

SIBs Are Complex

A SIB has many moving parts, and requires the

cooperation of a range of stakeholders from very

different fields. Project stakeholders must understand

risks such as operations, payment and referrals.

However, as more projects are implemented, we are

seeing more opportunities for “templatisation” around

common issue areas, as well as a shortening of project

development timing as project parties become more


At Third Sector, our first project (Commonwealth of

Massachusetts) took three years to turn from idea to

reality. We consciously created a learning community

around this major Pay-for-Success project and ensured

that all project parties shared lessons learned. We

have managed to reduce that time with each one of

our projects since, through a combination of prior

experience, tight project management, and simplifying

the essential components of a SIB.

Transaction Costs Are High

The SIB mechanism can require a substantial amount

of ancillary expertise. An intermediary is needed to put

the project together: a lawyer to draft the contracts;

an independent evaluator to measure the results; and

a programme manager to ensure that the project is on

track. These add costs beyond those of service delivery.

The key question that the outcomes funder should ask

is whether these additional transaction costs are worth

the benefits—in the short run of only spending money

if the programme works; and in the long run to create

a performance-driven ecosystem. In most cases, the

answer is yes. After one catalyst SIB project imbeds

valuable knowledge and process, governments are able

to continue outcomes-oriented innovation without the

need for the SIB architecture.

Third Sector has put together full projects much smaller

than Massachusetts, of about a US$4–5 million upfront

raise size. Elsewhere in the world, upfront raises of

"pilot SIBs" have been even smaller: in Canada, a SIB

was launched with US$900,000; US$320,000 in Belgium;

and US$150,000 in Portugal.

Social Space ISSUE EIGHT 37

The Need for a Committed Champion

SIBs can represent a profound change from business

as usual. Many SIBs also face a “wrong-pocket

problem”—that is, benefits accrue across many different

government agencies or other parties, resulting in no

single party being willing to sponsor a SIB. In the many

jurisdictions where we have worked, the number one

differentiator between a successful and unsuccessful SIB

is the presence of a forward-thinking champion who can

unify the success payers and drive the project forward.

The internal skill of working across departments, thinking

early about the need for resources, research and funding

are critical for a champion.

Given these challenges, one should always honestly ask

if the use of SIBs in financing is necessary to achieve PFS

contracting. SIBs are not always the right choice for

a jurisdiction. The distinction between a Pay-for-Success

contract and the type of upfront financing used to achieve

it is critical—it is possible to have a PFS contract without

a SIB.


Having spent some time delving into SIBs, let us regoup

and remember the objective of PFS contracting and of

SIB financing. The end goal of PFS is to direct resources

towards what works for those in need. SIBs are one way

to enable PFS contracting by overcoming cashflow and

risk issues for the service provider. But it is not the only

way. There is yet other example of an innovative financing

mechanism, which can help achieve the goals of PFS.

PFS contracting generates cashflow and risk issues

for the service provider if the payer withholds payment

until outcomes are seen. From a payer’s perspective, the

advantage of withholding payment is twofold: first, it only

spends money if the programme works; and second, it can

reap the benefits of the programme now while only paying

later. In short, it is similar to a two-in-one package of a

“money-back guarantee” and a “layaway” plan.

However, not all governments need the two-in-one

package. For payers who would like to have

a money-back guarantee but who do not need the

layaway plan, a Social Impact Guarantee (SIG)

may be more suitable than a SIB.

The distinction between

a Pay-for-Success contract and

the type of upfront financing

used to achieve it is critical—it is

possible to have a PFS contract

without a SIB.


Here’s an overview of how a SIG works:

The government/philanthropic payer funds a given

social programme upfront, just like it currently does

• At the same time, it purchases a “money-back

guarantee” insurance policy from willing insurers

The programme is delivered and its outcomes are


• If the programme is successful, no payout occurs from

insurers to the government/philanthropy

• If the programme is unsuccessful, however, insurers

repay the government/philanthropy for the cost of


• At the end of the day, the government/philanthropy

will have only paid out if a programme works, thus

accomplishing the aim of PFS contracting

The great advantage of the SIG is that it can be

easily applied to existing spending. A government or

philanthropy can take out this kind of “money-back

guarantee” on any of its current spending. Third Sector

is currently working to implement SIGs in several

jurisdictions in the US. 10

There are many other ways to achieve the goals of PFS, but

an initial study is important to help figure out whether

a SIB, SIG, or some other tool works best in each

particular context. There is much innovation left to do in

this area that can help address the pressing problems

of those in need.


Taking PFS from idea to launch requires commitment

from multiple stakeholders and considerable process

expertise. Our initial exploration has led us to believe

that many critical ingredients for a SIB in Singapore

are already in place. Two concrete “next steps” are

needed to bring this exciting innovation to fruition

in Singapore.

38 Social Space ISSUE EIGHT


Commission a PFS Feasibility Study

To launch a PFS project, it is necessary to find a capable

service provider, define outcomes, build data systems

and structure upfront finances. We have seen in other

jurisdictions that a PFS Feasibility Study can be an

important jumpstart in refining how a PFS project

should be executed, and in bringing the right parties

to the table. We often find the process of doing this

study helpful in and of itself, whether or not it leads to

a project—ultimately, outcome payers, investors and

service providers learn to coordinate the outcomes they

are trying to achieve, gain a better understanding of the

population they are trying to serve, and learn more about

best practices in delivering services.

Sponsor Successful Outcomes in a PFS Project

Both the government and private philanthropy can play

the role of outcome payer for a PFS project. By only

paying for successful outcomes, sponsoring a PFS

project allows for every dollar to achieve a clear “bangfor-buck”

in impact and innovation. Our experience has

taught us that identifying a committed and innovative

outcomes sponsor is indispensable for project success.

Private philanthropy can take the lead in sponsoring

a pilot PFS project to convince the government that this

type of innovative structure is feasible. For example, in

the State of Utah, USA, a group of private philanthropic

donors promised to pay for the outcomes of one year

of a PFS project for a high-quality kindergarten. The

government subsequently sponsored three more years.

Third Sector Capital Partners

Third Sector leads governments, high-performing

non-profits, and private funders in building evidencebased

initiatives that address society’s most persistent

challenges. As experts in innovative public–private

contracting and financing strategies, Third Sector is

an architect and builder of the United States’ most

promising Pay-for-Success projects, including those in

Commonwealth of Massachusetts, Cuyahoga County,

Ohio, and Santa Clara County, California. These projects

are rewriting the book on how governments contract

for social services: funding programmes that work to

measurably improve the lives of people most in need

while saving taxpayer dollars.

A 501(c)(3) non-profit based in Boston, San Francisco,

and Washington DC, Third Sector is supported through

philanthropic and government sources, including a

grant from the Corporation for National and Community

Service’s Social Innovation Fund.



A case study of the project with more details can be found here: “Preparing for a Pay

For Success Opportunity”.



Brookings Institute, “The Potential and Limitations of Impact Bonds”. http://www.


National Council of Social Services, NCSS Annual Report 2014.



National Volunteer and Philanthropy Center Individual Giving Survey 2014.


For estimated costs of diabetics, see May Ee Png, Joanne Yoong, Thao Phuong Phan and

Hwee Lin Wee, “Current and Future Economic Burden of Diabetes among Working-Age

Adults in Asia: Conservative Estimates for Singapore from 2010–2050”, BMC Public

Health 16, 1 (2016). doi:10.1186/s12889-016-2827-1


Gym Tonic’s website and press release contain more details of the pilot and evidence




Ministry of Social and Family Development, “Juvenile Delinquents: Juveniles

Arrested”, 2015.



Ministry of Social and Family Development, “Children and Young Persons Homes”,



Third Sector is conducting these services as part of a federal Social Innovation Fund



George Overholser, “An Alternative to the Social Impact Bond?”. http://www.

Richard Edwards is Partner,

Capital Markets, at Third

Sector. He has led project and

business development efforts for

investment banking, insurance

brokerage and entrepreneurial

businesses for over 20 years. As

the former Global Head of Project Finance and

Advisory for JP Morgan Chase based out of

Singapore, he has extensive global experience

in structuring and syndicating funding for

projects in the private and public sectors.

Rick has a particular passion for working on

child abuse prevention. He has been President

and/or board member of numerous civic

organisations, including the Exchange Club

Foundation, Pilgrim Towers Housing, and the

Parenting Skills Center. He can be reached


Kevin Tan is a Singaporean

based at Third Sector’s Boston

office. He is the project lead

for several Pay for Success

strategic advisory, feasibility

assessment, and project

construction engagements

across the US. Prior to Third Sector, he

spent time working on Social Impact Bonds

in Israel and did his graduate work with

the National Council of Social Service

on implementing Social Impact Bonds in

Singapore. Kevin graduated with an MPP

from the Harvard Kennedy School and

from the University of Oxford with First-

Class Honours in Philosophy, Politics and

Economics. He can be reached at

Social Space ISSUE EIGHT 39








A Focus on Women’s


By Durreen Shahnaz

40 40 Social Space ISSUE EIGHT


I embarked on a

journey from the first

steps of my career to

utilise finance to do

good for the world.

This journey has now

turned into a global

movement that is

taking the world

by a storm, known as

impact investing or

social finance.

It is Highly Personal

I am often asked what motivated

me to start IIX (Impact Investment

Exchange Asia). My answer is

a simple one: my life—where

I came from and what I experienced.

Like any other entrepreneur, the

companies I created are extensions

of my life’s defining experiences,

and my attempt to find solutions

and answers to the insurmountable

problems I have witnessed. The

1970s and 80s for Bangladesh,

my country of birth, faced an

excruciating nation-building struggle

mired with limited resources,

national calamity, political unrest,

and unending donor dependency.

Throughout this time, streams of

“development experts” tried to find

the right path of the country, and

while these efforts resulted in some

much needed social outcomes, the

needle of self-sufficiency hardly

moved. All this translated into my

very personal struggle to break the

poverty cycle with new tools—tools

that would bring about financial

sustainability as well as meet

development goals.

Thus, I embarked on a journey

from the first steps of my career

to utilise finance to do good for

the world. This journey has now

turned into a global movement

that is taking the world by a storm,

known as impact investing or social

finance. Impact investing is now

taking shape in different ways in

numerous countries across the

globe. While different stakeholders

are slowly entering the space, the

question still remains: how do we

mainstream impact investing and

how can we scale the movement?

Impact Investing:

An Emerging Paradigm

Impact investments are investments

made into companies, organisations,

and funds, with the intention to

generate social and environmental

impact alongside a financial return.

Impact investing is therefore the

manifestation of two emerging

trends in the development space:

an increased focus on programmes

that deliver sustainable value; and

a desire to support collaboration

between the public and private

sectors. The practice of impact

investing is further defined by the

following four core characteristics:

• Intentionality: An investor’s

intention to have a positive social

or environmental impact through

investments is essential to

impact investing.

• Investments with return

expectation: Impact investments

are expected to generate

a financial return on capital or at

a minimum, a return of capital.

• Range of return expectation

and asset classes: Impact

investments target financial

returns that range from belowmarket

to risk-adjusted market

rates, and can be made across

asset classes, including but

not limited to cash equivalents,

fixed income, venture capital and

private equity.

• Impact measurement:

A hallmark of impact investing

is the commitment to measure

and report the social and

environmental performance of

underlying investments, which

ensures accountability.

While impact investing aims to

mobilise the supply of missionoriented

capital, it is equally

important to develop the demand

side of the equation. The recipients

of impact investments are referred

to as Impact Enterprises (IEs),

and these are classified either as

mission-driven for-profits (such

as high-impact Small Medium

Enterprises or Social Enterprises)

or revenue-generating non-profits

(such as NGOs that are financially

sustainable). While traditional

development approaches alleviate

symptoms of social issues, IEs

diagnose the issue and create

paths to address the root causes

of these problems. The growing

impact investment market provides

capital to IEs operating in highimpact

sectors such as sustainable

Social Space ISSUE EIGHT 41

agriculture, clean technology,

microfinance, and affordable and

accessible basic services including

housing, healthcare, energy, water,

and education.

However, as the impact investment

movement consolidates, several key

issues have emerged. These include:

scalability of enterprises, the ability of

the industry to mobilise large-scale

capital, and the need to have

a mechanism to provide liquidity to

the impact investors. Thus, along with

the growth of the supply and demand

of the capital, it is now time to push

on innovative financing to embrace

scale and innovation. Without

embracing these two essential

elements, it will be impossible to

have effectively working social capital

markets that can truly democratise

capital markets. Figure 1 below

demonstrates the effective supply

and demand of impact investing

capital that remains a key balance

for sustainable growth in the impact

investing space.

Asia’s Growth Irony

Over the last five decades, Asia has

enjoyed one of the highest economic

growth records in the world, despite

a multitude of political challenges

and economic shocks. With the

support of global organisations such

as the United Nations (UN), Asia has

led the world in its drive to achieve

the Millennium Development Goals

(MDG): the proportion of people

living on less than US$1.25 per day

is projected to have fallen from

53 per cent in 1990 to 12 per cent

at the end of the 2015.

Figure 1 Supply and Demand of Impact Investment Capital

Level of Demand Developed to Create Demonstrable Impact


• IEs able to scale impact using technology

(via Competition and Accelerator);

• SMEs equipped to achieve double bottom line

(via Impact Magnifier)


• IEs are more investment ready and

can create sustainable impact (via Revolving

Credit Facility and Accelerator)


• NGOs are less dependent on grants

(via financial sustainability program)

• IEs deepen impact (via incubator

and M&E tool)


Early Stage

Level of Supply of Mission-Oriented Capital Mobilised

Source: IIX Advisory work.


• Private capital funds

upfront cost of resilience

(via Humanity Bond)

• Increased liquidity

(via Outcomes Fund)


Growth Stage


• Malaysia considered

attractive impact

investment destination

(via Social Investment

Tax Rebate)




• Capital markets are

democratised and

impact investors enjoy

increased liquidity

(via social stock


42 Social Space ISSUE EIGHT


The proportion of people

IN ASIA living on less than

US$1.25 per day




end 2015



However, there is still much to

do to maintain the momentum

for the post-2015 era. Asia is at a

crossroads with many of the MDG

targets still unmet. Rising inequality

poses a dire threat to continued

prosperity in the region, where an

estimated 500 million people remain

trapped in extreme poverty, most

of whom comprise women and

girls. The huge gap between the

rich and the poor hinders holistic

growth, undermines democratic

institutions, and magnifies the risk

of conflict—making these not just

social problems, but also significant

economic and political concerns.

In the global context, the world has

entered the age of the Anthropocene,

in which the consumption of natural

resources is on an unsustainable

trajectory, climate change is

creating irreversible damage to the

environment, and the future of our

planet and humanity as a whole is in


Traditional development players

(governments, donor agencies,

foundations, INGOs, among others)

continue to face a funding gap,

with many endemic social and

environmental issues competing

for a limited pool of resources.

It is thus imperative to mobilise

new resources that can achieve

scalable and sustainable impact,

and address large-scale, persistent,

and emerging social and

environmental problems that are

straining the economy. Without

creating capital markets that

allow for the convergence of social

progress and economic growth,

Asia's ability to achieve the new

Sustainable Development Goals

(SDG) targets will be compromised.

This mandates a need to redefine

Asia’s current development

narrative and rethink the way the

region leverages the power of

finance to generate holistic value.

Impact Investment Exchange

Asia: REGIONAL Market Leader

Impact Investment Exchange Asia

(IIX) has been at the forefront of

the impact investing movement

in Asia—to date impacting the

lives of over 10 million people

across Asia by bridging the gap

between development and finance.

As the regional market leader, IIX

has created a robust ecosystem

to effectively mobilise supply of

mission-oriented capital, develop

demand to absorb and deploy

the capital, and bridge the gap

between the two. At present, IIX is

facilitating over US$40 million in

impact investing capital, and has

developed a network of over 30,000

ecosystem partners, including the

UN, to support the eradication of

poverty and create resilient nations.

In addition, leveraging its expertise in

innovative finance, IIX has developed

a new financial product that seeks

to close the current gap between

development and finance: the IIX

Sustainability Bond (ISB).

IIX Sustainability Bonds:

An Overview

IIX Sustainability Bonds (ISBs) are

innovative financial instruments

that effectively mobilise largescale

private-sector capital by

pooling together a basket of Impact

Enterprises (IEs), which include

revenue-generating non-profits

or mission driven for-profits and

Microfinance Institutions (MFIs).

Both IEs and MFIs are key drivers

of change owing to their ability

to create scalable impact in a

financially sustainable manner.

ISBs are debt securities that bring

together this group of underlying

borrowers (IEs and MFIs), depending

on their financial needs, repayment

abilities, risk profiles, and impact

potential. ISBs are replicable

instruments that can be structured

and issued around different

Social Space ISSUE EIGHT 43

themes—depending on the target

beneficiary (low-income women,

at-risk youth, among others)—

or sectors (livelihoods, energy,

education, among others).

Figure 2 Structure of THE Women’s Livelihood Bond

Key Objectives of

IIX Sustainability Bonds

• Availability of mission-oriented

capital: To open the floodgates

of mission-oriented investment

capital available to high-impact

organisations that are equipped

to create sustainable impact.







• Accessibility of mission-oriented

capital: To bring together

capital supply from investors

with demand from high-impact

organisations through an

innovative, replicable financial



Issuer SPV

$$$ to service coupon & principal

• Affordability of mission-oriented

capital: To provide high-impact

organisations access to relatively

low-cost capital that is more

affordable than capital available

from public debt markets.







Bond Mechanism

This section provides a brief overview

of the bond mechanism and how ISBs

coalesce diverse stakeholders from

both the public and private sectors to

create an innovative new instrument

that effectively unlocks private capital

and redirects it towards achieving

development outcomes.

Group of underlying borrowers (MFIs and IEs):

Selected based on Impact Potential and Financial Strength


Monitors performance

Writes impact reports

As Figure 2 demonstrates, ISBs

pull together a basket (Special

Purpose Vehicle, SPV) of MFIs and

IEs. This basket is carefully selected

so that the entities combined can

maximise social and financial

returns and minimises the default

risk of the SPV. The bond can be

further strengthened if there is a

third party, usually a foundation or a

donor agency, to partially guarantee

the bond. A guarantee is useful

because it brings more comfort

to the prospective buyers (impact

investors) of the bond. Once the

proper due diligence is completed

and the bond is structured, the





An SPV issues a US$20 million bond to impact investors, which will include

institutional investors, foundations and high net worth individuals. The bond will

be listed on the Impact Exchange

Proceeds of the bond will be lent to a group of pre-identified borrowers

comprising MFIs and IEs focused on women’s livelihoods. FX hedging measures

will be taken to mitigate currency risk of any non-USD loans

An international development agency provides a pari passu guarantee of

50% of the principal amount of the loan portfolio

Shujog will monitor the performance of the borrowers and create periodic

impact reports

Source: IIX Women’s Livelihood Bond deck

44 Social Space ISSUE EIGHT


banks can then sell the bond to

their clients (institutional investors,

high-net-worth individuals, Family

offices). The ISB is the first impact

investing financial instrument to

be in the market that effectively

addresses the need to scale both

the supply and demand sides of

the impact investing capital and

creates liquidity, as ISBs can be

publicly listed and traded). It is

also forging the much needed path

of establishing impact investing

instruments as a new asset class.

The Women’s Livelihood

Bond (WLB) 1

The first ISB will be the Women’s

Livelihood Bond (WLB), which aims

to empower women to make the

transition towards sustainable

livelihoods by infusing a large

amount of capital through debt

structuring and the public market.

As an ISB, the WLB is replicable

and can be customised to suit

different geographic contexts from

both a regulatory and needsbased

standpoint. In other words,

although the WLB is the first bond

to focus on women’s livelihoods in

Southeast Asia, it can be replicated

in different geographies, sectors

or focus areas. For instance, ISBs

can be customised to address a

region’s most pressing development

issues in high-impact sectors

such as sustainable agriculture,

clean energy, access to education,

affordable healthcare, water and

sanitation, among others.

WLB’s focus is to create sustainable

livelihoods for women through

effective financing. Although

many organisations like IEs and

MFIs recognise the importance of

targeting women, existing funding

channels fall drastically short of

development goals focused on

women. The WLB sets out boldly to

bridge this funding gap, by providing

high-impact entities with the capital

they need to support women in the

most vulnerable communities today.

The proceeds of the bond will be

used to make loans to IEs and MFIs

As an ISB, the WLB is replicable and can

be customised to suit different geographic

contexts from both a regulatory and needsbased


that are part of the sustainable

livelihoods spectrum. Underlying

borrowers will have a proven

revenue-generating, high-impact

business model.

Officially announced at the 2014

Clinton Global Initiative (CGI) annual

meeting, the WLB represents

IIX’s commitment to the CGI. The

structuring of the WLB was funded

with support from the Rockefeller

Foundation and Japan Research

Institute. With its focus on Southeast

Asian nations, namely Cambodia,

Indonesia, the Philippines and

Vietnam, the WLB is making its

multi-country span an even more

unique feature in the world of capital


IIX is anticipating a bond size of

US$20 million, a tenor of four

years and a target coupon rate

of between six and seven per

cent that will be paid to impact

investors who purchase the bond.

The WLB mitigates risk via credit

enhancement features including

a guarantee facility and an inbuilt

debt service reserve account, to

reduce financial risk and protect

investors. For the WLB, this

guarantee facility is supported by

USAID (US government) and DFAT

(Australian government).

Inclusivity, Customisation and


The three key features of the

WLB are: inclusivity, customisation

and replicability. Prior to structuring

an ISB like the WLB, the impact

investment intermediary structuring

the bond will have to diagnose the

market need and relevant value

chain to assess key gaps that can

be addressed by the ISB, estimate

the profile of the potential pipeline

of underlying borrowers, and

identify regulatory constraints while

designing the mechanism. This

ensures that the ISB is aligned to

address local needs, is designed to

bring in private-sector investors from

both within and beyond the region,

and is well-positioned to mobilise

large-scale capital to accelerate the

region’s development agenda.

Innovative Financial


If the impact investing sector is

going to grow, then we need a lot of

innovative financial structuring.

The goal of this sector is to channel

large amounts of private-sector

capital to the development and

environment sector. But without

innovative financial structuring,

this goal will be unattainable.

ISB needs to be the first of many

such innovative financial structuring

that the traditional financial

industry can embrace and market.

One perennial challenge for IEs

is access to capital. ISBs aim to

address this very issue by unlocking

greater amounts of investment

capital for these enterprises. By

pooling high-impact enterprises into

a basket of entities and incorporating

various mechanisms to alleviate

risk for investors, ISBs present

a groundbreaking solution that

overturns conventional investment

approaches towards IEs.

Social Space ISSUE EIGHT 45

There are four innovative aspects

of ISBs that, upon replication and

scale, promise to bridge the

“pioneer gap” facing IEs (Figure 3).

Pooling Together a Basket

of Entities

The WLB will pioneer bringing the

IEs and MFIs together in a single

structure to allow impact investors

to leverage on the strengths of both

entities to mitigate risk, maximise

returns, and catalyse impact. By

pooling a group of underlying IEs

and MFIs together, ISBs open up

investment opportunities that were

previously excluded, and provide

a channel to attract greater amounts

of impact investment capital than

these entities could have otherwise

accessed on their own. Additionally,

the basket of borrowers consists of

financially sustainable entities that

are able to repay the loan amount

along with interest.

Achieving a Double

Bottom Line

The ISBs focus not only on

unlocking large amounts of capital

from new participants, but also on

effectively utilising this capital to

create scalable and sustainable

impact. This mandates balancing

social impact with financial returns

throughout the bond structuring

process, starting with pipeline

development and continuing

throughout the life of the bond.

Pre-Bond Issuance: Dual

Due Diligence on Underlying


An effective ISB requires the

appropriate risk-return-impact

targets of the instrument. The

impact investment intermediary

and the Measurement & Evaluation

(M&E) partners should coordinate

to conduct rigorous due diligence

on potential borrowers ahead of

finalising the portfolio, to assess

performance on both business- and

impact-related criteria.

Mitigating Risk

ISBs view risk from a dual

perspective—financial risk, and

mission failure or social risk. This

section outlines how ISBs leverage

the strength of partnerships with

diverse stakeholders to adequately

avoid such perils.

• Mitigating Financial Risk

through Guarantee Facility

Provided by Donor or

Government Partner: ISBs

should include a guarantee

aspect, where the partnering

government or donor agencies

will cover a portion of the losses

in case of default. This guarantee

effectively improves the risk–

The ISBs focus not

only on unlocking

large amounts of

capital from new

participants, but

also on effectively

utilising this capital

to create scalable and

sustainable impact.

Women are at the very

heart of development ...

If half of the population

is underdeveloped

or underutilised, an

economy will never

reach its full potential.

Figure 3 Innovation at every stage of ISB development

Pooling Together a Basket

of Entities

Aligning supply and demand to

unlock capital at scale

Achieving a Double

Bottom Line

Building a portfolio that generates

both social and financial returns

Mitigating Risk

Identifying and addressing both social

and financial risk

Listing on Social Stock Exchange

Creating secondary liquidity and

mission protection

Source: IIX.

46 Social Space ISSUE EIGHT


return profiles of IEs and

compensates for the operational

challenges that young IEs have

to overcome. By incorporating

aspects of blended finance, the

ISBs aim to leverage on public

funds from donor agencies

to trigger and unlock larger

amounts of private capital into

the impact investment space.

If borrowers do not default, the

funds allocated by the guarantor

can potentially be redirected for

subsequent bond issues or other

projects, allowing for a more

efficient use of donor funding.

• Mitigating Social Risk and

Linking It to Financial Risk:

M&E experts should focus on

pre-empting and addressing

social risks during the social due

diligence process by proactively

identifying and finding solutions

to issues that could create

negative externalities, cause

mission drift or in any way

compromise the impact potential

of the WLB. This includes

governance-related issues,

negative environmental impact

and social issues faced by

beneficiaries or employees, and

so on. The ability of borrowers to

use social outcomes as a way to

diminish long-term financial risk

deepens the sustainability of the

instrument and increases the

probability of success.

Listing the Bond

ISBs can be listed on a public

exchange and the Bloomberg

terminal. The public exchange can

be a social stock exchange such as

the Impact Exchange (the world’s

first social stock exchange operated

by the Stock Exchange of Mauritius

in cooperation with IIX, regulated by

the Financial Services Commission,

Mauritius) or a regular public

exchange which allows for the bond’s

financial and social features to be

showcased and reported.

Listing on an exchange provides

a unique opportunity for high-impact

entities to raise investment capital

to scale and deepen their social

and environmental commitments,

while offering investors a means

to invest in and trade securities

issued by organisations that reflect

their values and can be judged on

their values. Thus, this enables the

creation of a liquid market—the holy

grail of working capital markets.

Why Women?

It was a conscious decision to make

the first ISB focus on women. Over

the course of financial history, women

have been excluded from the creation

and operation of financial markets.

However, women are at the very heart

of development, and provide the

underpinning of any economy.

If half of the population is

underdeveloped or underutilised,

an economy will never reach its full

potential. Discrimination against

women can hinder economic growth

by essentially cutting out half the

population's contributions towards

a country’s demographic dividend.

There is a bidirectional relationship

between economic development

and women’s empowerment

(defined as improving the ability of

women to access the constituents

of development, including the

resources and opportunities to

participate in the labour force).

Women are at the heart of

development in Asia: playing

a pivotal role in supporting their

households and communities in

achieving food security and overall

natural resource management,

they are the backbone of rural

enterprises, fuelling local and global

economies. Research reveals that

economically secure women are

more likely to have healthier and

better-educated children, creating

a positive, virtuous cycle for the

broader population. However, women

around the world face four main

challenges, namely:

• Poor Access to Credit and

Finance: This results in

vulnerability to economic shocks

and stresses. By unlocking

women’s access to capital,

the WLB will make significant

progress in creating a positive

impact on women’s ability to

obtain financing. Women will

be able to take control of their

immediate borrowing and

consumption, and invest in

income-generating activities

or household assets. More

importantly, with this initial

access to credit and financial

services, women can start

building credit histories that

can help them borrow larger

amounts of capital to expand

their businesses in future. There

is great potential for successful

women-run enterprises to

create follow-on impact through

employment and expanded

supply chains, further providing

sustainable livelihoods for more


• Absence of Market Linkages:

This restricts women to

the informal workforce. By

strengthening women’s access to

market linkages and educating

them on available opportunities in

the market, WLB borrowers can

empower women to negotiate for

more equitable market relations.

Besides strengthening women’s

bargaining positions, exposure

to and integration with marketoriented

models, the WLB will

also enable them to identify niche

areas in the market where they

can capture opportunities to earn

higher incomes.

• Limited Availability of

Affordable Goods: This

limits women’s ability to

maximise productivity. By

providing access to goods and

services (such as education,

training, basic healthcare and

household goods) through

low-cost instalment finance,

WLB borrowers can effectively

unlock purchasing power

and bridge the affordability

gap for female workers in

developing economies. Access

to this market platform can

Social Space ISSUE EIGHT 47


also lead to improved spending

behaviour—engineering a shift

away from informal borrowing

and facilitating greater savings.

Through the WLB, female

workers will be provided with

access to affordable lifeenhancing

products and services

to help them transition to a more

economically secure and socially

stable life.

• Lack of Reliable Power Supply:

There is a need for women to

access a cost-effective and

reliable power supply in remote

or rural locations. Considering

the long hours they typically

spend on household activities,

such as cooking and running

home-based micro-enterprises,

improvements such as solar

home systems can increase

their productivity and immensely

empower them. Besides the

direct benefits from improved

health and increased disposable

incomes, women will be able to

ensure a stable and sustainable

environment for their families,

the wider community and future


The social impact of these women

will be measured and reported by

Shujog, IIX’s sister entity that focuses

on impact measurement.

Call to Action

Asian countries need strong

leadership from national heads,

political leaders and policymakers

to create a robust impact investing

ecosystem that is equipped to

address development goals

and empower the people at the

grassroots. However, it is imperative

to adopt a structured approach with

clearly defined goals, customised

interventions and inclusive

implementation strategies. The

ISB can be replicated in different

countries and customised to the

local context as required.

Five recommended actions are

listed below that countries can

implement in the short term with

the objective to unlock private

capital for development.

I. Replicate innovative financial

instruments, such as the ISB,

that are designed to mobilise

large-scale capital from

private-sector participants.

II. Allow for the creation of more

impact investing funds that are

designed to provide scalable

IEs with access to capital

required to magnify their impact

and sustain results over the

long term.

III. Optimise allocation of existing

sources of mission-oriented

capital to de-risk investments.

For instance, governments or

donor agencies can provide

guarantees in order to

effectively leverage resources

multiple times over the

committed amount, and attract

significantly larger amounts of

private-sector capital.

IV. Encourage linking impact-related

performance with financial

returns by emphasising the need

for outcomes-focused models

and strong focus on impact

measurement and reporting,

which will create greater

transparency and accountability

towards achieving results.

V. Coalesce diverse stakeholders

and empower them to redefine

the dominant development

narrative through forums,

conventions and conferences

that promote cross-border

knowledge-sharing and

create a platform to catalyse

South–South cooperation.

In summary, impact investing is set

to revolutionise the development

narrative, redefine the way capital

markets create value, and position

Asia at the vanguard of the global

dialogue on creating resilient nations,

serving as the voice of progress

across the world. With impact

investing ready to scale and go

mainstream, we now need to have

the desire to make it happen.

Durreen Shahnaz,

a social entrepreneur from

Bangladesh, is the founder

of Impact Investment

Exchange Asia (IIX), home

of the world’s first social

stock exchange and the

largest equity crowdfunding

platform for impact investing. She also

founded Shujog, an impact assessment and

knowledge platform for impact investing

in Asia and Africa. Based in Singapore,

Shujog and IIX’s work have impacted over

10 million people across Asia. Durreen

has previously worked at Morgan Stanley,

Grameen Bank, World Bank, Merrill Lynch,

Hearst Magazines, and Reader’s Digest, as

well as taught and conducted research on

impact measurement and ran the Programme

for Social Innovation and Change at the

Lee Kuan Yew School of Public Policy at

NUS. Additionally, Durreen founded, ran,

and sold oneNest, a global e-marketplace

for handmade goods which impacted more

than half a million women globally. The 2014

recipient of the prestigious Joseph Wharton

Social Impact award, her research interest

focus is on scaling impact investing. She can

be reached at



For more information on the WLB, read the Blueprint Paper at


48 Social Space ISSUE EIGHT

Social Space ISSUE EIGHT 49


The Macro



Cambodia’s Financial Inclusion

Success Story

By Jonathan Chang

50 50 Social Space ISSUE EIGHT


Financial inclusion refers to the delivery

of affordable financial services to

disadvantaged and low-income segments

of society. However, as it also involves

striking a fine balance between managing

businesses’ credit risks and improving

customers’ access to credit, different

countries have made varied progress in

their financial inclusion efforts. To date,

across both developed and developing

nations, SMEs and individuals still struggle

in the face of limited access to adequate

financing. Yet there is one country that

has made considerable strides in this area:

judging from the tremendous success of

its microfinance sector, Cambodia seems

to have found the sweet spot where

businesses can confidently offer affordable

loans to low-income individuals—under

the watchful eye of the nation’s central

bank. Serey Chea, Director General of the

National Bank of Cambodia, chats with

JONATHAN CHANG, Executive Director of

the Lien Centre for Social Innovation and

Editor-in-Chief of Social Space, on how

careful regulation, financial literacy

and technology are key to improving

financial inclusion.

JC: Let’s start with the definition

of financial inclusion, because

it seems that people have their

own understanding of what it is.

When you hear the term “financial

inclusion”, what does that mean

to you?

SC: Financial inclusion is the access

to financial services at an affordable

price. The “affordable” bit is very

significant although most people

don’t pay much attention to the part

about pricing. Rather than offering

financial services to everyone

without considering their costs,

financial inclusion instead places

importance on making a range

financial services—including credit,

deposit, money transfer and micro

insurance—accessible to people at

an affordable price.

JC: Why do you think there has

been a lot of talk lately about

financial inclusion?

SC: Financial inclusion is crucial

to achieve equity in society; in

other words, it can provide equal

opportunity for everyone to access

financial services. In the aftermath

of the 2008 financial crisis, G20 gave

more focus to financial inclusion and

made it an item on its main agenda.

In developed countries, SMEs’

access to financing is limited,

thereby hampering the scale of

their contributions to economic

development. And in both developing

and underdeveloped countries,

not only SMEs but low-income

individuals find it difficult to get

access to adequate financing.

As a result, living standards

cannot be improved and poverty

is not reduced.

Serey Chea, Director General of the

National Bank of Cambodia

Social Space ISSUE EIGHT 51

There is yet another obstacle standing in the

way of better financial inclusion: the lack of

affordable rates. Microfinance services are

still expensive compared to bank services,

and this is mainly because the institutions

are operating in remote areas and have

very high overheads.

the Bank. For instance, they are

required to have a certain minimum

capital and to adhere to certain

governance systems. With these

regulations in place, microfinance

in Cambodia has received lots of

funding from foreign investors,

especially those with social

missions, making it one of the most

successful microfinance sectors in

the world.

Microfinance is usually associated

with providing low-income

individuals with access to finance.

The United Nations declared 2005

as the Year of Microcredit, while

Cambodia declared 2006 as its Year

of Microfinance. Currently, there

are many institutions working to

push forward the financial inclusion

agenda, including the Consultative

Group to Assist the Poor (CGAP) and

the Alliance for Financial Inclusion

(AFI), among others.

JC: Why do most low-income

individuals have limited access to

financial services?

SC: By and large, banks only want

to finance “bankable people”—those

with a steady income or, if not,

then at least a property that they

can pledge with the bank. Lowincome

individuals are not bankable

because they have very little: they

generally cannot afford a large loan,

and they usually live in a remote

area that is far removed from any

conventional banking branch.

As such, there is a need for the

likes of what we call microfinance

institutions (MFIs). Although there

is no conventional definition of

MFIs, they set themselves apart

from typical profit-making finance

companies by offering small loans,

and being attached to particular

social missions.

JC: In your role at the National

Bank of Cambodia, what steps

are you taking to ensure financial


SC: Presently, the Bank has been

very successful in the introduction

and implementation of microfinance

in Cambodia—in fact, we are among

the first countries in the world to

regulate microfinance. There have

been prevailing global sentiments

that central banks should look after

the nation’s financial stability instead

of devoting so much attention

and resources to supervising and

regulating microfinance. However,

this has been our approach when

it comes to financial stability: how

much will it impact Cambodian

society as a whole versus just the

financial system? Even though the

success or failure of microfinance

won’t have a significant impact

on the functioning of Cambodia’s

financial system as a whole,

microfinance does serve a large

customer base here. That is to say,

if it does not succeed, there is the

potential for social instability—

and that is something which we

take seriously and want to avoid.

The Bank’s practice of regulated

microfinance has also worked very

well in terms of boosting investor

confidence in what can otherwise

be seen as a risky sector involving

lending money to people of low


Unlike in other countries, where the

microfinance industry comprises

small organisations that operate

independently, in Cambodia these

companies (MFIs) are regulated by

JC: Do you consider empowering

women-owned enterprises as

a form of financial inclusion?

SC: Yes. Supporting women-owned

enterprises is already on our agenda,

though interestingly there’s not

much work to do in this area. As it

stands, in terms of the borrowers

in Cambodia’s microfinance sector,

80 per cent consists of women.

Moreover, it is usually women who

dominate the small businesses

here: in a typical Cambodian family,

the ladies are the ones who go

out and borrow money, and who

manage the finances and overall

business. However, the challenge,

for them, is how to graduate from

what we call a “survival business”

to one that is profit-making. I don’t

have any specific statistics on this,

but from what I have observed in

general, the women operate well

in “survival mode”—when they’re

earning just enough to cover their

daily expenses—and relatively few of

them want to or have been able to

grow their businesses to SME size

and beyond.

JC: Do you feel like there’s still

more that can be done to increase

financial inclusion?

SC: Definitely. It’s an ongoing effort,

but there are certain challenges

ahead. The microfinance sector has

become so large, but customers

have not yet caught up in terms

of financial literacy, and may not

always know what they’re getting

into. Moreover, new microfinance

companies, especially those that do

not necessarily have social missions

in mind, have also entered the sector.

In the past, NGOs would transform

52 Social Space ISSUE EIGHT


themselves into MFIs with social

missions. More recently, however,

microfinance companies are

increasingly profit- rather than

socially driven, and have private

shareholders. There are also

predatory organisations out there

claiming to be NGOs, and they offer

easy loans without much requirement

on the borrowers’ part, albeit at very

high interest rates.

The Bank is now preparing a

national strategy, involving the

government agencies, on financial

inclusion. For instance, we are

working with the Ministry of

Education to promote financial

literacy among the people through

formal education. Additionally, we

are running a free camp aign called

Consumer Financial Capability

Development, which teaches people

how to negotiate, choose, use, and

communicate if they are in doubt

about finance-related issues.

Ultimately, we want people to know

that they should not borrow if they

don’t have a proper or fixed source

of income, and that they should not

use financial services recklessly.

Finally, this campaign will drive

home the message that when it

comes to their finances, people

should not be passive, but actively

communicate with both financial

service providers as well as the

authorities in charge.

JC: Let’s switch gears for

a moment. If you look through

the policy lens, what are some of

the challenges faced when it comes

to pushing the financial inclusion

agenda further?

SC: Regulations-wise, most of

what is needed is in place. The

microfinance sector currently

constitutes about 20 per cent of

Cambodia’s whole financial system,

so we are definitely looking at it more

seriously than we used to in terms of

its impact on overall financial stability.

Microfinance was previously a small

sector in terms of the value, but today

it is increasing rapidly. We now have

to watch our financial regulations

closely, and we routinely supervise

these MFIs, though we are careful not

to overburden them with regulations.

Ultimately, we see them as important

vis-à-vis the whole financial system,

and want them to be able to continue

doing what they are doing, but in a

safer manner, considering that their

failure can have implications for the

overall financial system.

Demand and supply factors are also

at play here. While microfinance

companies can set up operations in

different places, they do not always

consider the demand for their

financial services—and the level of

financial literacy among the people.

People from rural areas are usually

very intimidated by formally dressed

office workers in professional

business settings. As such, they

might refrain from asking too many

questions. However, as mentioned

earlier, the Bank wants to stress to

the people the importance of asking

questions—e.g. to better understand

the terms and conditions of a loan,

or to see how different interest

rates compare—and that it is the

institution’s responsibility to address

their queries.

The Credit Bureau of Cambodia

(CBC), of which I am chairwoman,

was set up to reduce credit risks

for businesses and to improve

customers’ access to credit. It

is the world’s first credit bureau

that services both the banking

and microfinance sectors: besides

designing an internal price structure

that is fair to all parties (both

high- and low-income groups), the

Bureau also assesses customers,

their credit histories and behaviors,

etc., for the benefit of businesses.

To this end, it is presently developing

a K-Score (or Khmer Score)—a client

with a very high K-Score can use

it as leverage to bargain for a

cheaper loan, and similarly,

companies can use the K-Score to

more readily identify clients with a

good track record of repaying their

loans on time, and so on.

There is yet another obstacle

standing in the way of better

financial inclusion: the lack of

affordable rates. Microfinance

services are still expensive

compared to bank services, and this

is mainly because the institutions are

operating in remote areas and have

very high overheads. For instance,

MFIs have to invest more heavily

in staff who are willing to travel to

rural villages and understand the

people’s needs, on top of managing

the business side of things. In the

near future, technology may be able

to alleviate some of the institutions’

high operational costs, and give rise

to more affordable financial services.

But for now, we’ll just have to wait

and see.

Jonathan Chang is Executive

Director of the Lien Centre for

Social Innovation. He is also

the Harvard Kennedy School

Ambassador to Singapore, and

a member of the HKS Alumni

Board of Directors. Prior to

moving to Singapore, Jonathan founded and

co-founded four start-ups across multiple

industries, including a Y-Combinator incubated

social venture, in Silicon Valley and Manhattan.

As a Fellow at the Earth Institute of Columbia

University, Jonathan taught and conducted

research on entrepreneurship as a tool for

social change in Rwanda. His other research

includes case studies on an impact-investing

fund in India for Stanford, a social enterprise

in Bali for SMU, and a book on government

and innovation with Esko Aho, former Prime

Minister of Finland. Jonathan also gave a TEDx

talk at Harvard about the importance of a

mission-driven life. He earned his degrees from

UC Berkeley, Stanford, and Harvard. He can be

reached at

This article is adapted from the November

2016 edition of Asian Management Insights


Social Space ISSUE EIGHT 53



A Perspective on Social Impact Bonds

By Rashika Ranchan

C o m m i s s i o n e r

Typically a government agency, foundation or relevant entity;

individually or as a partnership

Establish outcomes/

service contract


Pay for successful


Savings to the

government from

the intervention

I n t e r m e d i a r y

Manages the arrangement, funds, service

providers, and provides advisory services

Services contracts and

gives operating funds

Capital provision

Repayment of

capital plus

returns based

on successful


I n v e s t o r

S e r v i c e p r o v i d e r

Social sector organisations, charities or

social enterprises

Runs intervention

for meeting social


Service users,


54 54 Social Space ISSUE EIGHT


In a landscape of rising social needs,

coupled with an uncertain economic

climate, Social Impact Bonds (SIBs)

offer an exciting opportunity to test

innovative models of impact within

social service provision. With the

shrinking of global public spending,

SIBs enable the public sector to

commission preventative services,

and help tackle deep-rooted social


SIBs bring together a partnership of

commissioners, investors and service

providers to resolve intractable social

issues. In this financial mechanism,

investors pay for an intervention

at the beginning to improve social

outcomes. These social outcomes are

pre-defined, and the intervention—if

effective—should result in public

sector savings and wider benefits to

society. The commissioner makes

returns to investors only when the

specified outcomes are achieved.

When the world’s first SIB—the

Peterborough Social Impact Bond—

launched in the UK in 2010, it was

heralded as a groundbreaking

intervention. It funded rehabilitation

services for short-sentence

prisoners released from prison, with

the aim of reducing post-release

re-offences. The UK Ministry of

Justice, supported by the Big

Lottery Fund, entered into an

agreement to pay a return to

investors if targets for reducing

reconvictions were achieved. 1

The space for social investment,

which blends social and financial

returns, has grown over the past

few years: it supports investment

in charities and social enterprises

to tackle social issues—and is also

significant in promoting models

like SIBs. The launch of Big Society

Capital in UK in 2012, as the

first-of-its-kind social investment

wholesaler in the world, brought

about greater momentum to this

impact investing space.

By blending entrepreneurship, social

investment and public funding, SIBs

are a pioneering way to achieve

social impact. They illustrate the

impetus to rethink public service

delivery through innovative financial

mechanisms. Now more than

six years after the launch of the

Peterborough SIB, social impact

bonds continue to garner the interest

of many policymakers, academics

and practitioners worldwide.

Globally, there are over 50 SIBs

that have been developed, with the

UK accounting for around half of

these, followed by the US. 2 Many

commissioners and investors across

various countries have shown

interest in the potential of SIBs,

including the Netherlands, South

Korea and Australia. To date, SIBs

aim to improve services that focus

on various social issues, including:

children in care, young people not in

education, employment or training,

adoption, homelessness, and


Presently, there is interest to find

out if SIBs are really working.

However, it is still early days for their

evaluation, and most SIBs do not

yet have a proven “track record” to

speak of. However, while there has

been some scepticism over what

really “works”, some early successes

or progress have been reported.

For instance, one of the initial SIBs

to tackle youth unemployment,

delivered by the London-based youth

charity ThinkForward, has reported

generating a return for investors. 3

It has demonstrated that engaging

early with disadvantaged young

people can both improve the lives

and opportunities of these youth, and

provide savings to the public purse.

Implications for

Southeast Asia

In Southeast Asia, too, there is

growing recognition of the need to

look at models beyond traditional

grantmaking. A stronger social

enterprise and impact investment

space will harness greater

innovation, thereby encouraging

the emergence of new models like

SIBs. Although this space within

the region is relatively nascent, the

Innovation is

inherently risky: even

if not all interventions

work, social impact

bonds can help to

accelerate the rate of

learning about which

approaches work

better than others.

appetite is on the rise. For example,

in Singapore, support for the social

enterprise sector has been stepped

up over the past few years. In 2015,

raiSE (Singapore Centre for Social

Enterprise) was set up as a one-stop

centre—supported by the Ministry

of Social and Family Development,

Tote Board, National Council of

Social Service and Social Enterprise

Association—to increase support for

and promote awareness of social

enterprises in Singapore.

However, although the social sector

is getting more experimental, it is

fragmented and diverse. Raising

funds for innovation thus remains

a challenge. Additionally, services

that are centred on prevention are

harder to fund. Even if budgets

were available, public services are

typically designed to meet more

remedial rather than preventative

needs. A thin evidence base can

lead to significant delivery risk for

preventative programmes. SIBs can

therefore create pathways to harness

private or non-governmental capital

for innovation and preventative


Alongside the social policy

domains like juvenile delinquency,

homelessness and workforce

development, SIBs can also be

considered for social issues that

are on the rise, including ageing

and mental health. In developing

Social Space ISSUE EIGHT 55

economies, areas such as

education, health and poverty

alleviation are expected to become

more prominent. SIBs can thus be

developed for specific social needs

according to the country’s focus.

A key impetus in developing SIBs

is the progress towards social

outcomes. Rather than focusing on

inputs or outputs, SIBs are based on

achieving social outcomes to better

support the most vulnerable sections

of society.

A key impetus in developing SIBs is the

progress towards social outcomes. Rather

than focusing on inputs or outputs, social

impact bonds are based on achieving

social outcomes to better support the most

vulnerable sections of society.

Although many grantmakers are

moving towards outcomes-based

funding, non-profits still struggle

to embed an outcomes approach

fully within their services. Further,

traditional funding continues to rely

on delivering a set of services and

outputs rather than demonstrating

measurable outcomes. This means

that there is limited incentive

to innovate. SIBs contrast with

traditional funding in this regard.

The focus on outcomes supports

greater accountability and

transparency of public funds.

Greater rigour in performance

management and evaluation also

contribute towards building a broader

evidence base for what works. In

addition to savings to the public

purse, the real cost of a social

problem can be better analysed

and a stronger case can be made

for mainstreaming the intervention.

Through models like SIBs, the

capability of the social sector within

the area of impact measurement can

be built over time.

Another fascinating aspect of SIBs

is “collaboration”. For the region

of Southeast Asia, SIBs will help

build a “new social compact”

between public-sector funders,

service providers, investors and

philanthropists. It can, indeed, be a

win-win for all parties involved: for

public sector commissioners, SIBs

enable the influx of private capital to

fund preventative action on complex

and expensive social problems;

for the non-profit sector, they offer

additional and diversified sources

of funding to innovate; and for the

investors, SIBs provide both financial

and social returns.

This potential to create a multiplier

effect by a shared value to the

“public, private and people” sectors

is compelling. The Essex SIB in the

UK—an intervention to prevent youth

aged between 11 and 17 years from

entering care or custody, and safely

remain with their families—is one

such partnership that brings together

a range parties: investors (Big Society

Capital, Bridges Ventures Social

Entrepreneurs Fund, King Baudouin

Foundation, The Tudor Trust, Barrow

Cadbury Trust, Esmée Fairbairn

Foundation and Ananda Ventures

[Social Venture Fund]); outcome

payer (Essex County Council); delivery

organisation (Action for Children); and

manager (Social Finance Ltd). 4

While there are clear benefits to SIBs,

there is still much to learn about

how best to structure them and their

added value as opposed to a simple

funding arrangement. Some issues

need to be considered carefully

before developing a SIB. First, SIBs

are not relevant for all types of social

projects. It can be successful only

in areas where outcomes can be

measured and where it is possible

to monetise savings from a social

intervention. The cashable savings

must outweigh the higher cost

of capital and the considerable

set-up costs. Further, there is a

strong need to understand the

dynamics of the market, including:

identifying the right issue, beneficiary

group, bringing rigour in data, and

monetising it. At present, many social

projects continue to require more

traditional forms of funding.

Second, SIBs have complex financial

and contractual mechanisms, which

are costly to design and implement.

Expenditure on evaluation is

also higher, as making a case for

attribution of an outcome to the

intervention calls for sophisticated

evaluation techniques. However, over

time, models of replication can bring

some of these costs down.

Finally, there is the added complexity

of structuring a project that involves

up to five different stakeholders,

typically: i) the government, ii)

investors, iii) non-profits, iv)

intermediaries, and v) an evaluator.

There is also usually an intermediary

to support this partnership, help

raise capital, and manage the

performance of service providers on

behalf of the investors.

Overall, the new opportunities

that SIBs offer—co-designed and

outcome-focused preventative

services—outweigh the challenges

involved. Innovation is inherently

risky: even if not all interventions

work, SIBs can help to accelerate

the rate of learning about which

approaches work better than others.

As countries across the world

develop their pipeline of projects, it

will support a better understanding

of SIBs’ risk–return profile, and in

turn help to build the market.

56 Social Space ISSUE EIGHT


Ecosystem Building

For markets new to this area, the

creation of a stronger ecosystem

can facilitate the emergence of

SIBs. A more favourable social

investment policy environment will

help to catalyse the market for

impact investing and new innovative

financing models.

More support is also needed for

capacity-building and investment

readiness. Policymakers, publicsector

funders and foundations play

a key role in driving this agenda

forward. For instance, in the UK, the

Office for Civil Society introduced

the Investment and Contract

Readiness Fund in 2012, and

supported social ventures’ efforts

at capacity-building, to enable them

to receive social investment or bid

for public service contracts. 5 An

example of support for SIBs is the

Big Lottery Fund’s “Commissioning

Better Outcomes” to encourage the

development of more innovative

approaches to improving social

outcomes. 6 The early stage of

SIBs also requires some financial

backing in the form of grants

to support the cost of feasibility

studies and evaluation.

In Singapore, capacity and capabilitybuilding

initiatives are increasingly

being rolled out (supported by

funders such as the Tote Board)

to strengthen the non-profit and

social enterprise sectors. Through

training, knowledge-sharing,

impact measurement, skills-based

volunteering and social enterprise

accelerator programmes, a more

fertile ground for learning can be

nurtured alongside the development

of innovative financing tools.

For social impact bonds to emerge

in Southeast Asia, the dialogue

between various stakeholders

needs to be accelerated, alongside

awareness-building efforts.

A stronger ecosystem can be

supported by the development

of intermediary organisations

providing support to the sector.

And greater buy-in can be sought

from investors through risk-sharing

among investors, commissioners

and service providers; and investor

return profiles that are proportionate

to the outcome improvement.

In conclusion, there is no onesize-fits-all

approach when it

comes to SIBs. While the core

principles of SIBs remain consistent

across geographies, different

commissioning practices and

structuring can be adopted to

suit a country’s local needs. SIBs

can be piloted for a certain social

issue, to better understand the

impact before scale-up and wider

implementation. As we move

towards embracing more innovation

and entrepreneurship, there is scope

for replication of good practices

across the region.

With funders looking to achieve

greater impact from their funding,

this can be done through strategic

grantmaking that builds into the mix

evidence-based funding, outcomes,

impact measurement and capacitybuilding,

or—where appropriate—

through experimentation with

various funding models like SIBs.

It is also possible to adapt models

like SIBs and venture philanthropy

to create new and hybrid models of

philanthropy and finance, based on

the needs of a sector and relevant to

a local context.


Rashika Ranchan is

Head of Funding and

Partnerships (Social) at the

Singapore Totalisator Board

(Tote Board), where she

helms the social and health

funding portfolio. With

global experience in both

social investment and grant management,

such as with organisations like Big Lottery

Fund and Big Society Capital in the UK, she

has pioneered several new and strategic

programmes, policy initiatives, innovative

impact investments and multi-sector

collaborations—in addition to developing

capacity-building initiatives for the

non-profit and social enterprise sectors.

She can be reached at Rashika_RANCHAN@

Models like SIBs have the potential

to transform public sector delivery.

Depending on the social needs of

each country, governments can

invest in the most appropriate

and cost-effective preventative

programmes to meaningfully solve

or reduce social issues, as well as

reap potentially large cost savings to

the public purse.

Ultimately, different models of

“innovation and impact” are needed

to address diverse and complex

social problems. By exploring new

and more powerful ways to address

these social challenges effectively,

positive and lasting social change

can be created, and the lives of

many can be improved.


RAND Corporation, “Evaluating the World's First Social Impact Bond”, at


Instiglio database, 2016, at


City Philanthropy, “Social Impact Bond Delivers Financially for Investors and Socially

for NEETS”, 29 October 2015, at


Big Society Capital, “Our Investments”, at


Social Investment Business, “Investment and Contract Readiness Fund”, at


Social Space ISSUE EIGHT 57




By Martina Mettgenberg-Lemière and Kevin Teo

Grantmakers and social investors

(funders) are successful only to

the extent whereby their grantee

or investee organisations—

collectively known as social

purpose organisations (SPOs)—

achieve sustainable social impact.

More often than not, we hear of

SPOs caught in the daily grind of

responding to urgent beneficiary

needs, and not having the

opportunity to introduce more

effective practices. The foundation

for sustainable social impact

arises through engagement from

grantmakers and social investors

in capacity-building and impact

assessment of the SPOs.

Capacity-building and impact

assessment are two key venture

philanthropy (VP) practices. In

the last year, the Asian Venture

Philanthropy Network (AVPN)

documented trends in these

two areas, with the objectives

of helping novices acquire best

practices in a shorter time, and

enabling seasoned practitioners to

share their knowledge and develop

new insights.

58 Social Space ISSUE EIGHT


Building Capacity of SPOs

to Increase Effectiveness

Making capacity-building effective

involves a few steps. First, it is

critical to understand what is truly

required for the SPO to build its

sustainable social impact.

After funders understand the

needs of the SPO, the second step

is to delineate how support can be

organised. For some funders, such

as Social Ventures Hong Kong,

they do this with in-house teams.

Others bring in external service

providers—paid, pro-bono, or skillsbased

volunteers. When funders

work with skills-based volunteers,

they also often bring in an external

provider to help them manage these,

e.g. the Singaporean intermediary

Empact or the Indian organisation

Toolbox Foundation. As can be seen

from most case studies in AVPN’s

collection, the main trend is to

manage service provision in-house

with skills-based volunteers, rather

than developing in-house teams or

working with service providers.

A final core step to capacity-building

is assessing whether it has made

a difference to the investee. This

remains in the early stages with

some efforts having been made by

private entities offering their system

for a fee. The impact assessment

is similar to organisational impact

assessment insofar as the funder

Capacity-Building Services Access to Networks

Coaching and Mentoring of


Fundraising or Revenue Strategy

Financial Management and



Strategy Consulting

Marketing and Communication

Human Resources

Operational Management

Legal Support

Use of Facilities

Information Technology

Source: AVPN

has to develop a theory of change,

and collect and analyse the data

they think they need. From our case

studies, funders tend to employ three

methods to this end: i) measuring

the organisation’s progress in total

and seeing the entire impact as an

outcome of the capacity-building;

ii) measuring what is supposed

be changed before and after; and

iii) measuring the extent to which

the organisation has built critical


With assessing impact of the

capacity-building, most funders

close the loop to understand what

works and adjust their offerings.

In a recent AVPN membership

survey of 111 members on venture

philanthropy practices, the capacitybuilding

services offered most

often included access to networks,

coaching and mentoring, fundraising

and revenue strategy, and financial

management and accounting.

Assessing Impact: Another

Core Venture Philanthropy


In that same survey, 72 per cent of

the 111 AVPN members measured

impact at various intervals through

the engagement.

There are now many methodologies

in impact assessment ranging in

complexity and robustness. Next

There are now many

methodologies in

impact assessment

ranging in complexity

and robustness.

to offering an analysis of the major

approaches in which framework to

choose, how to get started, how to

implement and finally how to present

the findings, we recently interviewed

13 leading practitioners in Asia about

their approach for our Effective

Guide to Impact Assessment. Two

major trends from the literature

review and practitioner portraits

are: standardisation, customisation

and comparability; and usage for

performance management and

external presentation.

Comparability of solutions can be the

stated aim of impact assessment.

However, most of the organisations

in our sample felt they were unable

to compare organisations’ results

as each had a different business

model to address social issues and

therefore had different indicators and

outcomes. Even within the portfolio

of one social investor, standardising

measurement and indicators was

often impossible, and every social

organisation was measured in a

highly customised way and on its

own merit. Some social investors,

such as Nexus for Development,

Microsoft Japan and Epic Foundation,

were able to standardise and

compare for a few reasons.

Nexus for Development requires

the measurement of carbon

efficiency and applies international

standards. Microsoft Japan

fine-tuned its Social Return on

Investment (SROI) approach over

a number of years and is now able

to compare different interventions

in the same field. Epic Foundation

already selects organisations in

the due diligence phase according

Social Space ISSUE EIGHT 59

… many social investors use impact assessment

mostly for performance management and

only some data for external presentation and

reporting to funders, such as public donors

or investors into their funds. This is perhaps

unsurprising, but worth highlighting as impact

assessment data can be seen as a marketing

tool or “vanity metrics” and, like financial data,

can therefore be a victim of manipulation.


to 15 parameters and continues

monitoring these as impact.

These three approaches allow


Interestingly, we also found that

many social investors use impact

assessment mostly for performance

management and only some data for

external presentation and reporting

to funders, such as public donors

or investors into their funds. This is

perhaps unsurprising, but worth

highlighting as impact assessment

data can be seen as a marketing

tool or “vanity metrics” and, like

financial data, can therefore be a

victim of manipulation. Using it

as performance metrics indicates

that organisations rely on it behind

closed doors, which suggests that

they are interested to learn about

what works and what does not.

While we may be impatient to see

results and compare, this curiosity

is one of the strongest findings in

our research on impact assessment

and certainly one of the core areas of

venture philanthropy.

Capacity-Building and

Impact Assessment: Two Out

of Five Core Practices in

Venture Philanthropy

Venture philanthropy’s main focus

is that of an engaged relationship.

On the spectrum between investing

and donating, VP occupies both,

as well as the entire middle ground

of convertible finance options,

grants with capacity-building

support, and wealth allocations in

terms of investment.

Venture Philanthropy Organisations

(VPOs) range from foundations,

overfunds, family offices and angel

investors, to corporations and

governmental sovereign wealth

funds. Similarly in terms of target

of investment, there is great

flexibility. VPOs can invest in any

business model from non-profit

and donations-based over revenuebased

to supply chain corporates.

For instance, a quick look at AVPN’s

membership reveals the diversity

of resource providers and their

funding targets. At the same time,

not all funders are VPOs, nor would

they consider their activities to be

venture philanthropy.

AVPN considers a VPO as one that

practises capacity-building and

impact assessment, as well as

pre-engagement, portfolio

management and multi-sector

collaboration. VPOs are different

from other funders in that they

are engaged for the long term and

emphasise the partnership with

SPOs in creating impact. This is

different from writing a cheque or

investing, agreeing on the term

sheet, and then sitting in quarterly

board meetings. Both of these

modes are fine, but we found that

it is more effective, when creating

sustainable social impact, to

co-create social impact closely

with the SPO.


of SPOCs







Source: AVPN

60 Social Space ISSUE EIGHT


In the pre-engagement phase,

funders develop their mission,

strategy and a potential deal

pipeline. They then use this to raise

funds from other funders as well as

to shortlist organisations according

to this. After investing, they work

closely with the organisation to help

them make the most of the finances

disbursed, as well as increase the

organisation’s skill level in meeting

its social mission.

The impact assessment practice

already starts in the pre-engagement

phase, where the social investor and

the investee negotiate their vision for

impact and what can be achieved.

Fundamentally this carries through

during the engagement, and also

allows the investee organisation

to benefit and learn from it in the

long run, even after this investment

period has ended.

Portfolio management is

predominantly done on the side

of the funder, but builds on the

areas of impact assessment and

influences pre-engagement,

capacity-building and multi-sector

collaboration. Beyond risk and

return equations in the financial

realm of portfolio management,

VP portfolio management needs

to account for social mission

achievement, and different funders

have different strategies.

Finally, multi-sector collaboration

acknowledges that most funders

have to work across sectors and

with many different stakeholders to

see their solutions come to fruition

and carried by more people than

themselves. Together, these five

practices span the entire arc of

social investing—the most central

of which are capacity-building and

impact assessment.

Pulling Together Various

Silos to Build Up Expertise

around the Capability

Development Model (CDM)

To increase the efficiency of AVPN

members' efforts to build social

impact, AVPN is holding a number of

events, workshops and learning labs,

the largest of which being the AVPN

Conference. Attended in 2016 by 650

participants in Hong Kong, it brought

together government officials,

funders from impact investing

funds, foundations, VP funds and

others, corporates and multilaterals

and non-VP funders to discuss the

trends in social investing. Spread

over 24 sessions, the talks covered

all five areas of VP, as well as sector

and country focus or hot topics

including faith-based philanthropy,

philanthropy and sustainable

development goals (SDGs), and

human capital in social investing.

Other initiatives, e.g. the Asia Policy

Dialogue and workshops in capacitybuilding,

are more focused on

sharing specific knowledge in such

areas as how to foster the social

economy through policy or to discuss

with experts and peers selected best

practices of capacity-building. These

are offered throughout the year and

provide a platform for engaging all

stakeholders within the ecosystem of

social investing.

As social issues across the globe

become increasingly complex and

multifaceted, and faced with limited

resources, funders have little choice

but to increase the effectiveness

of SPOs to address these issues.

Focusing on capacity-building and

impact assessment are two key

areas that can provide significant

gains on effectiveness. Across Asia,

AVPN is witnessing a burgeoning

community of practitioners who are

embracing this mindset and working

collaboratively to deliver sustainable

social impact.


participants attended the

2016 AVPN Conference in

Hong Kong


Dr Martina Mettgenberg-

Lemière is Head of Insights and

Capacity-Building at the Asian

Venture Philanthropy Network

(AVPN). She builds on a decade

of experience in leading applied

research for businesses and

non-profits with a focus on human capital,

education and impact. Most recently in

Singapore, she led projects at INSEAD and

the Human Capital Leadership Institute,

and mentored students at the micro-business

school Aidha. Previously, she worked in

business research and consulting in India,

and taught at the Universities of Manchester

and Sussex. She can be reached at

Kevin Teo is Managing Director

of AVPN’s Knowledge Centre.

His previous appointments

include: Co-Founder of Volans,

a Social Innovation company

with offices in London and

Singapore; Head of East and

Southeast Asia at the Schwab Foundation

of Social Entrepreneurship; and Global

Leadership Fellow at the World Economic

Forum. Kevin is a Trustee of the Southeast

Asian Service Leadership Network (SEALNet),

a non-profit he co-founded in 2004, and sits

on the evaluation panel of the Ministry of

Social and Family Development’s ComCare

Social Enterprise fund. He can be reached


Social Space ISSUE EIGHT 61


a private partner, but this can

often be impossible for developing

countries with restricted finances.

In such cases, the government can

use its legal framework to provide

social enterprises with easier access

to private, low-cost capital.

Increasing Energy

Access in Southeast

Asia through

Social Enterprises

By Haneol Jeong

The 21st century has seen cars go

driverless and virtual reality become

a reality—yet one fact remains: one

in seven people still do not have

access to electricity. 1 In an age

where more people have access to

mobile phones than toilets, 2 electricity

has become as vital a necessity as

clean water. To address this issue,

social enterprises such as M-KOPA

and Sunlabob have pioneered efforts

to provide renewable energy for

off-grid communities, and yielded

innovative energy alternatives and

financing solutions. Southeast Asia,

however, remains a largely untapped

market, with approximately 19 per cent

of its population still without access

to consistent electricity. 3

For the social enterprises focusing

on energy access, securing earlystage

financing to cover the initial

costs of product development,

manufacturing and delivery

determines the future of the

company. However, the current

financial marketplace in Southeast

Asia lacks patient, early-stage

capital to support such social

enterprises. In order to translate

the projects into self-sustaining,

profitable companies, it is crucial

that public and private sectors

collaborate to create an ecosystem

with a low barrier to entry and

financial support for social

entrepreneurs with innovative

ideas for energy access.

Support from the public sector can

come in the form of early-stage

development capital, low-cost debt,

or subsidised offtake agreements.

Governments can directly provide

development capital for the

social enterprises by forming a

collaborative venture capital with

Developed countries with active

impact investments, such as the

UK or US, have specific business

categories in place for social

enterprises to provide protection

and allow easier access to capital

than for non-profit organisations,

while requiring of them transparency

in their processes and delivery

of their social mission. These

categories—known as Community

Interest Company (CIC) in the UK,

and Low-Profit Limited Liability

Company (L3C) in the US—allow

social enterprises to register

inexpensively and enjoy the flexibility

of a traditional LLC to a certain

extent, as well as the benefits of

non-profits. Additionally, subsidised

offtake agreements will ensure

that the social enterprises are

profitable in the short term and

stay self-sufficient in the long term.

While the government will have to

work with limited resources and

potentially lower revenues, attracting

more private capital to provide

initial funding for social enterprises

at a low cost and creating an

environment that can ensure their

survival will have lasting impacts

on a country’s economy. The funding,

however, is only successful when

supply can meet the market demand,

the latter of which is limited due

to the low-income nature of

a population without energy access.

The target market for energy

access is often not able to afford

hi-tech renewable energy solutions.

Traditionally, non-profit organisations

and charities have aimed to mitigate

this problem by supplying the

technology free of charge. Although

feasible in theory, supplying free

energy has led to certain problems,

most notably the decrease in

quality of the electricity. As such,

off-grid communities no longer

want free, inconsistent electricity

62 Social Space ISSUE EIGHT

Increasing Energy Access in Southeast Asia through Social Enterprises

from cheap equipment; they instead

demand a safe, consistent supply of

electricity with proper maintenance

and updates, even if at a cost.

Therefore, the challenge for social

enterprises is ensuring that the

high-quality equipment is affordable

to even the most financially isolated

communities. Certain social

enterprises, including M-KOPA, have

overcome this challenge through

innovative asset financing structures.

M-KOPA, a social enterprise based

in Kenya that provides portable

solar panels to off-grid households,

successfully adapted asset financing

to their business model. It requires

its customers to pay an upfront

deposit and then the remaining cost

of equipment over a year at a flexible

schedule. Once the deposit is paid,

customers top up their account

through a mobile transaction service,

M-PESA, and enjoy a consistent

supply of electricity at US$0.49 per

24 hours. Each device is remotely

controlled by the centralised

computer system, and automatically

shuts off if the account is empty.

This type of asset financing differs

from conventional microfinancing

in that it does not enforce a strict

payment schedule or amount. This

flexibility ensures that the widest

socio-economic range of target

markets is reached, while the

company still remains profitable.

Although M-KOPA’s system works

because of its centralised, remotecontrolling

computer system

and the existence of the mobile

transaction company M-PESA, its

asset financing structure is one

that can be adapted to the context

of Southeast Asia. Instead of

controlling each device remotely,

social enterprises providing a

similar energy solution can set

up regional service centres with

sales and customer service

representatives integrated in each

community to monitor repayments

and provide regular maintenance

service. This method has proved

to be successful by Sunlabob,

an off-grid renewable energy

provider in Laos. When launching

Off-grid communities no longer want

free, inconsistent electricity from cheap

equipment; they instead demand a safe,

consistent supply of electricity with proper

maintenance and updates, even

if at a cost.

its operations, Sunlabob invited 70

people from various ethnic groups

to receive technical and business

operations training. 4 The trainees

then returned to their respective

off-grid communities with rented

equipment from Sunlabob to

establish micro-enterprises to

manage maintenance and payment

collection. Although Sunlabob

later expanded to large-scale

projects with government offtake

agreements for financial reasons,

the initial approach tailored to the

market was effective in reaching the

target customers.

In conclusion, securing early-stage

funding for energy-focused social

enterprises is not possible without

proper support from the public

sector. Whether in the form of

venture capital through a public–

private partnership or a change in

regulations, the public sector must

fill the gaps in order to translate

projects into sustainable businesses

that are scalable in the long run.

Additionally, in order to ensure that

the low-income target market can

afford the high-quality products and


services, social enterprises could

implement innovative financing

instruments, such as asset

financing tailored to the regional

and cultural characteristics. Such

a financing structure, accompanied

by a proper support system and

new technologies that can bolster

economic activities, will allow

the financially isolated off-grid

communities to become

a self-sustaining and expanding

participant of the global economy.

Originally from Seoul, South

Korea, Haneol Jeong is

a student at the Wharton

School of the University of

Pennsylvania, and a member

of the Joseph Wharton scholars

programme. He was a Summer

Research Associate at the Lien Centre for

Social Innovation, where he conducted

an independent research project on increasing

energy access in Southeast Asia through

investment in social enterprises. He has

previously worked as a renewable energy

project research assistant in Bangkok, and

as a private equity summer analyst in Seoul.

Haneol’s primary research interests include

renewable energy, impact investing and

development banking. He can be reached



World Bank and International Energy Agency, “Sustainable Energy for All 2015:

Progress Toward Sustainable Energy”, at



Yue Wang, “NewsFeed: More People Have Cell Phones Than Toilets UN Study Shows”,

Time, 25 March 2013, at


Rexel Foundation, “Study on Access to Efficient Energy in South-East Asia”, at


Ravi Chidambaram, “Sunlabob Case Study: From Lights Out to Lights On”, Asian

Management Insights 3, 1 (2016): 50–5

Social Space ISSUE EIGHT 63


By Mitchell Laferriere


Investment Banks as the Next Step for Impact Investing

Investment banks are in a unique

position to lead in impact investing

and resolve some of the biggest

challenges facing the space today,

due not least to their vast reserves

of capital and clout. Chief among

these challenges are: 1) a drought of

growth capital for social enterprises;

and 2) the lack of a consistent

impact measurement system for

use by investors. Investment banks

are in a position to solve these

challenges by both consolidating

impact accounting standards and

mobilising significantly more capital

in investments that seek social,

environmental and financial returns.

Though the practice of impact

investing began nearly two decades

ago, it was not until recent years

that it gained prominence. Advances

in digital technology and increased

interconnectivity have given rise

to a generation of socially aware

individuals. 1 With social and

environmental issues constantly

amplified by mainstream news,

global movements have arisen

to address these problems—

movements often led by what are

known as social entrepreneurs.

Sometimes, they establish social

enterprises (SEs), understood

broadly as businesses that produce

positive social and environmental

outcomes. The growth of SEs in

recent years has led to a demand

for purpose-driven investment

capital focused on achieving social

or environmental impact alongside

financial returns.

For their size, investment banks

have comparatively little to do

with the rising practice of impact

investing. They make up only

nine per cent of all assets under

management (AUM) in the impact

investment industry. 2 That totals

about US$1 trillion in investments

in an US$11 trillion market. 3

For the most part, the world of

impact investing is managed by

individual fund managers and

diversified financial institutions

(DFI), but investment banks have

the capacity to repair some of the

biggest challenges in the impact

investing industry. Investment banks

in particular have an unparalleled

opportunity to supply much-needed

capital while instilling proper

structure in terms of impact


For the last three years, investors

and business owners have named

For their size,

investment banks

have comparatively

little to do with the

rising practice of

impact investing:

They make up only

nine per cent of all

the assets under

management (AUM) in

the impact investment

industry. That totals

about US$1 trillion

in investments in an

US$11 trillion market.

64 Social Space ISSUE EIGHT


insufficient capital as the number one

problem facing SEs. 4 Like any startup,

SEs require capital to scale up.

In most cases, angel impact

investors—affluent individuals who

provide start-up funding, usually

in the form of grants, convertible

debt or ownership equity—have

the seed and early-stage capital

support covered. However, what

SEs need after this point is capital

from non-concessionary investors,

i.e. those who are not willing to lose

returns for impact. These investors

generally provide the required capital

for investment at the scale and

growth stages of a start-up, when the

business is about to be profitable. 5

And just like any business, SEs need

to appeal to these non-concessionary

investors in order to tap into their

large pools of growth-stage capital.

Put simply, investment banks have

funds that could be used to scale

social enterprises. Of course, investing

for social and environmental impact

can and does produce a financial

return on investment at or above

market rates. 6 More importantly,

the scaling of SEs can catalyse an

entire market environment through

the opening up of new supply chains

and consumer markets, creating

positive spillover effects for other

enterprises. 7 Beyond attaining

financial returns from the SEs that

scale up and become profitable,

investment banks can catalyse the

growth of entire markets by injecting

strategic capital and refining impact

investing processes.

Currently, the impact investment

market is having some difficulty

measuring and analysing social and

environmental impact. This problem

stems from impact’s varying nature.

When impact spans so many different

sectors—education, housing, energy,

clean water, poverty, and many

others—there are therefore widely

differing measurements for success.

And while some business solutions

can help to catalyse a market, the

question remains: how can its

market- or sector-wide impact be

measured? Moreover, with many

different bodies vying for the authority

to create an all-encompassing system

to measure impact, 8 this has led to

non-consolidation of measurement

systems among impact investors

in general.

Investment banks can solve this

problem by voting with their capital.

Useful evaluations of risk, return

and impact demand consistency, 9

so the banks will require a set of

level metrics to evaluate these

businesses. If one consistent set

of standards and procedures, like

the Generally Accepted Accounting

Principles (GAAP), can be used

to record and report social and

environmental impact across all

social enterprises, then that impact

can be communicated and compared

across businesses and investors.

This is a critical precondition of any

investment market that can source

and allocate capital with efficiency

and transparency. 10 Investment

banks are in a unique position to lead

by using their field-wide influence

to establish one set of level metrics,


consolidate the field, and streamline

the process of impact investing.

I believe that impact investing—

financial investing that incorporates

people and planet—is truly the

way of the future. For investment

banks to remain competitive, they

will need to change the way they

view investing. They can do so by

seizing this unique opportunity to

play a leadership role in the impact

investing space.

Mitchell Laferriere was

a Summer Research Associate

at the Lien Centre for Social

Innovation. During this time,

he studied the theory, strategy

and developmental curriculum

for the teaching of impact

investing to university students. His primary

research interests cover impact investing,

sustainable finance, social entrepreneurship

and social innovation. Presently an

undergraduate at Gabelli Business School at

Fordham University, Mitchell is originally

from Londonderry, New Hampshire, where he

attended Boston College High School. He can

be reached at


Nielsen Press Room, "Global Consumers Are Willing to Put Their Money Where Their

Heart Is When It Comes to Goods and Services from Companies Committed to Social

Responsibility", Nielsen Market Research, 17 June 2014, at



Abhilash Mudaliar, Hannah Schiff and Rachel Bass, “Annual Impact Investor Survey”,

2016 GIIN Annaul Impact Investor Survey, May 2016, at

GIIN Annual Impact Investor Survey_Web.pdf, p. 33.


Global Impact Investing Network, “What You Need to Know About Impact Investing”,



Mudaliar, Schiff and Bass, “Annual Impact Investor Survey”, p. 33.


Paul Brest and Kelly Born, “Unpacking the Impact in Impact Investing”, Stanford Social

Innovation Review, 14 August 2013, at



Cambridge Associates and The Global Impact Investing Network, Introducing the Impact

Investment Benchmark (Boston, MA: Cambridge Associates, 2015), at





Mark Florman, Robyn Klingler-Vidra and Martim Jacinto Facada, “A Critical Evaluation

of Social Impact Assessment Methodologies and a Call to Measure Economic

and Social Impact Holistically through the External Rate of Return Platform”,

LSE Enterprise Working Paper #1602 (February 2016), at



Yasemin Saltuk and Ali Idrissi, “A Portfolio Approach to Impact Investment: A Practical

Guide to Building, Analyzing and Managing a Portfolio of Impact Investments”, Global

Social Finance (1 October 2012).


Clay Shirky, “How Priceline Became a Real Business,” Wall Street Journal, 13 August 2001,


Social Space ISSUE EIGHT 65


Just as professional athletes mould their bodies into lean, mean

performance machines, so too is there a need for social entrepreneurs

to get their brains in shape. In fact, research shows that the brain works

like a muscle which grows and gets stronger as you learn—and one of

the best ways to boost one’s brainpower is by reading. So if you’re an

aspiring changemaker, what are some titles to add to your book list?

JAY BOOLKIN reviews the literature and narrows it down to just eleven.



Best Books

for Social

Entrepreneurs and


By Jay Boolkin

The Art of Social Enterprise:

Business as if People Mattered

By Carl Frankel and Allen Bromberger

Available in paperback via Amazon

“To change something, build

a new model that makes the existing

model obsolete.”

A practical guide that supplies

all you need to know about the

mechanics of social entrepreneurship

including: start-up (envisioning and

manifesting intention); strategic

planning (balancing social and

monetary value); and maintaining

balance (despite the inevitable

challenges associated with being

an entrepreneur). Aimed at both

emerging and established social

entrepreneurs, for-profit leaders

who want to introduce an element

of social responsibility into

their companies, and non-profit

organisations who want to increase

their stability by generating income,

The Art of Social Enterprise is the

definitive guide to doing well while

doing good.

51 Questions on Social

Entrepreneurship: Social Impact

Through Business, An Actionable


By Neetal Parekh

Available in paperback via Amazon

There is the potential to work beyond

subsets of entrepreneurship and focus

on redefining the future of business

as a whole and to consider impact

as a norm.”

51 Questions on Social

Entrepreneurship is an actionable

Q&A, written as a story, that takes the

reader from wherever they are at, and

introduces game-changing concepts

around social entrepreneurship

and social innovation. If you have

ever been curious about, or even

overwhelmed by, the options, terms,

possibilities and potential in creating

and scaling social ventures, this book

was designed especially for you.

66 Social Space ISSUE EIGHT


The Promise of a Pencil:

How an Ordinary Person Can

Create Extraordinary Change

By Adam Braun

Available in paperback via Amazon

“In moments of uncertainty, when

you must choose between two paths,

allowing yourself to be overcome by

either the fear of failure or the dimly lit

light of possibility, immerse yourself in

the life you would be most proud to live.”

The Promise of a Pencil chronicles

the author’s quest to find his calling:

each chapter explains one clear step

that anyone can take to turn his/

her biggest ambitions into reality,

even if starting from as little as $25.

Braun’s story takes readers behind

the scenes with business moguls

and village chiefs, world-famous

celebrities and hometown heroes.

Driven by compelling anecdotes and

shareable insights, The Promise

of a Pencil is a vivid and inspiring

book that provides readers with the

tools to make their own lives a story

worth telling.

Getting Beyond Better: How

Social Entrepreneurship Works

By Roger L. Martin and Sally Osberg

Available in hardcover via Amazon

Social entrepreneurs feel confident

in their understanding of the world

but also recognise that there is much

they don’t know. Rather than being

paralysed by the significant gaps in

their knowledge, they design and run

experiments to fill in these gaps.”

In this compelling book, strategy guru

Roger L. Martin and Skoll Foundation

President and CEO Sally R. Osberg

describe how social entrepreneurs

target systems that exist in a stable

but unjust equilibrium and transform

them into entirely new, superior, and

sustainable equilibria. All of these

leaders—disrupters, visionaries, or

changemakers—develop, build, and

scale their solutions in ways that

bring about the truly revolutionary

change that makes the world a

fairer and better place. Getting

Beyond Better sets forth a bold new

framework, demonstrating how and

why meaningful change actually

happens in the world. It also provides

concrete lessons and a practical

model for businesses, policymakers,

civil society organisations, and

individuals who seek to transform

our world for good.

Systems Thinking for Social

Change: A Practical Guide

to Solving Complex Problems,

Avoiding Unintended

Consequences, and Achieving

Lasting Results

By David Peter Stroh

Available in paperback via Amazon

“Today’s problems were most likely

yesterday’s solutions.”

How do unintended consequences

come about and how can we avoid

them? By applying conventional

thinking to complex social problems,

we often perpetuate the very

problems we try so hard to

solve, but it is possible to think

differently, and get different results.

Systems Thinking for Social

Change will enable its readers

to contribute more effectively to

society by understanding what

systems thinking is and why it

is so important. The book also

gives concrete guidance on how

to incorporate systems thinking

in areas like problem-solving,

decision-making and strategic

planning, without needing to be

a technical expert.

Social Space ISSUE EIGHT 67

Chapter One

By Daniel Flynn

Available at

“High five the status quo in the face—

with a chair.”

Chapter One is a story of epic

proportions by Thankyou co-founder

Daniel Flynn, about the journey of

three Australians with zero business

experience—only their shared belief

in the power to “change stuff”. It’s

an entertaining read comprising gutwrenching

decisions, wild mistakes

and daring moves into business,

marketing, social enterprise and

beyond. Chapter One challenges

what one knows, and stresses the

fact that “crazy” ideas can become

a reality. It also invites readers to

seize the opportunity to be a part of

something big, which could perhaps

change the course of history.

Business Model Generation:

A Handbook for Visionaries,

Game Changers, and Challengers

By Alexander Osterwalder and

Yves Pigneur

Available in paperback via Amazon

“We need a business model concept

that everybody understands: one that

facilitates description and discussion.”

Traditional charities are no longer

the only way to effect social change.

With social sector organisations

becoming more business-like,

“profit” has become somewhat

of a dirty word—a mindset which

needs to change. Business

Model Generation is a handbook

for visionaries, game-changers

and challengers striving to defy

outmoded business models and

design tomorrow’s enterprises.

Co-created by 470 “Business

Model Canvas” practitioners from

45 countries, it explains the most

common Business Model patterns,

and helps readers reinterpret them

for their own context. Business

Model Generation is especially

suitable for businesses looking to

adapt to harsh new realities, but

which have yet to develop a strategy.

The Future Chasers

By Jan Owen

Available at via


“Our generation doesn’t have to be

trained to be global citizens. We are

global citizens.”

The Future Chasers is

a collection of stories featuring

15 extraordinarily talented, inspiring

and hardworking young individuals

from Australia. Turning generational

stereotypes on their heads, these

“agents of change” share how they

achieved amazing feats in fields as

varied as politics, industry, the arts

and technology.

68 Social Space ISSUE EIGHT


How to Change the World:

Social Entrepreneurs and

the Power of New Ideas

By David Bornstein

Available in paperback via Amazon

“An idea is like a play. It needs a good

producer and a good promoter even if

it is a masterpiece. Otherwise the play

may never open; or it may open but,

for a lack of an audience, close after

a week. Similarly, an idea will not move

from the fringes to the mainstream

simply because it is good; it must

be skillfully marketed before it will

actually shift people’s perceptions

and behavior.”

Like The Future Chasers, How to

Change the World provides vivid

profiles of social entrepreneurs.

This collection of stories highlights

a massive transformation that is

going largely unreported by the

media: around the world, the fastest

growing segment of society is the

non-profit sector. Millions of ordinary

people–social entrepreneurs–are

increasingly stepping in to solve the

problems where governments and

bureaucracies have failed. How to

Change the World shows that with

determination and innovation, even

a single person can make a surprising

difference. For anyone seeking to

make a positive mark on society, this

will be both an inspiring read and

an invaluable handbook, and will

possibly change your view of the world.

The Power of Positive Deviance:

How Unlikely Innovators Solve

the World’s Toughest Problems

By Richard Pascale, Jerry Sternin and

Monique Sternin

Available in hardcover via Amazon

“Its easier to act your way into a new

way of thinking, than to think your

way into a new way of acting …

Once positive deviance behaviours

have been discovered, the design must

provide those who seek to learn with

both the opportunity and the means

to practice the new behaviour. A focus

on practice rather than knowledge has

proven to be a key element in bringing

about lasting behavioural change.”

Think of the toughest problems in

your organisation or community.

What if they’d already been solved

and you didn’t even know it?

The Power of Positive Deviance

presents a counterintuitive new

approach to problem-solving by

leveraging positive deviants—the

few individuals in a group who

find unique ways to look at, and

overcome, seemingly insoluble

difficulties. By seeing solutions

where others don’t, positive deviants

spread and sustain needed change.

An inspiring and insightful read, The

Power of Positive Deviance unveils

a potent new way to tackle the

thorniest challenges in any company

and community.

Half the Sky: Turning

Oppression into Opportunity

for Women Worldwide

By Nicholas D. Kristof and Sheryl WuDunn

Available in paperback via Amazon

“A man goes out on the beach and sees

that it is covered with starfish that

have washed up in the tide. A little boy

is walking along, picking them up and

throwing them back into the water.

‘What are you doing, son?’ the man

asks. ‘You see how many starfish there

are? You’ll never make a difference.’

The boy paused thoughtfully, and picked

up another starfish and threw

it into the ocean. ‘It sure made

a difference to that one,’ he said.”

Half the Sky is a passionate call

to arms against this era’s most

pervasive human rights violation:

the oppression of women and girls

in the developing world. Drawing

on the breadth of their combined

reporting experience, authors

Kristof and WuDunn depict our

world with anger, sadness, clarity

and, ultimately, hope. This heartfelt,

pragmatic and inspirational book

reveals how a little help can

transform the lives of women and

girls abroad.

Jay Boolkin blogs at Social Good Stuff ( and is founder of Promise or Pay

(, an online platform that uses small promises to drive real, wide-scale social

change. Promise or Pay won the Social Startups MVP Program, a worldwide competition based on social impact

scalability. In mid-November 2014, it won the Deloitte Australia Social Innovation Pitch Competition and in early

2015 received funding from The Myer Foundation. Contact Jay at or connect with him

on Twitter @socialgoodstuff and @promiseorpay

Social Space ISSUE EIGHT 69




Are you a saver

or a spender?

Set up a

lemonade stand

You urgently

need money.

What do you do?

Borrow from

friends and family

It’s your friend’s

birthday. Do you buy

a gift or bake a cake?


a cake

Do you go for organic

or non-organic food?


Breakfast: Oatmeal

or Oreo cookies?

Buy a gift

Your friend owes you

a little money. How often

do you remind him or her?


Oreo cookies


If you want to renovate

your house, would you

pay an expert or do it


Do it



You see a beggar

on the street. What

do you give him?

What happens

when you do your

friend a favour?



What is your preferred

social financial



Pay an


When should a business

start caring about

producing social impact?

A few


Expect a

favour from


in return

Help them


You’re lost in a new city.

Do you ask for directions

or use a map?

After its


Before its






a map


Ask for



One Hope

Reese Fernandez-Ruiz




Nushelle de Silva

Building Bridges


Bill & Melinda Gates Foundation

Like Jake Kloberdanz, you

certainly possess business

acumen and the business

that you would run operates

independently of its social

mission. To be sure, One

Hope operates like most

other wineries in that it

aims to make a profit. What

makes it different is that

50 per cent of its profit goes

to a specific social cause.

When Reese Fernandez-

Ruiz first founded

Rags2Riches, she wanted

it to be a win-win situation

all around, including for the

environment. Like Reese,

you integrate your social

impact into a sustainable

business model, ensuring

that whatever you do in

your business will benefit

the community and not

compromise environmental


Anshu Gupta has

revolutionised giving in

India. He founded the nongovernmental


Goonj, which recycles used

clothing into other products

such as sanitary napkins.

Like Anshu, you also do not

believe that free lunches

exist in this world—Goonj’s

beneficiaries have to work

in exchange for the clothes

provided by Goonj.

Having experienced racism

first-hand, Nushelle de

Silva was inspired to get

involved on the ground. Her

enterprise, Building Bridges,

aims to bring together

ethnically diverse Sri Lankan

youths through free art

workshops. Like Nushelle,

you also believe that people

deserve unconditional

help, regardless of their


As a people’s person,

the organisational form of

a charity suits you the best.

Just like the Bill & Melinda

Gates Foundation, you

value strong interpersonal

connections and use your

social network to approach


Image credits: Jake Kloberdanz via One Hope website; Reese Fernandez-Ruiz screen grab from Project

Pagsulong’s Youtube video; Anshu Gupta via Goonj website; Nushelle de Silva screen grab from “OFID at One

Young World 2014” YouTube video; Bill and Melinda Gates via Wikipedia (CC BY-SA 3.0).

70 Social Space ISSUE EIGHT


m y

s o cia l

spa ce

Things to note


m y

s o cia l

spa ce

Things to note


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