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

www.socialspacemag.org 

Social Space ISSUE EIGHT I

II Social Space ISSUE EIGHT

CONTENTS 

6 COMING 

TO TERMS 

AQuick 

Guide 

to Social Change 

Buzzwords 

16 FEATURE 

31 FEATURE 

50 CONVERSATIONS 

70 POP QUIZ 

4 SOCIAL 

STRATOSPHERE 

Hot Topics and 

8 FEATURE 

Collective 

The Strength of Giving Together 

Happenings 

in Social Innovation 

A Focus on Women’s Livelihoods 

58 FOOD FOR THOUGHT 

Understanding 

Social 

Finance 

SoFi 101 

24 CONVERSATIONS 

Philanthropy: Business 

The 

of Giving 

Pay for Success & 

SoCIAL Impact Bonds IN SINGAPORE: 

Measurably Improving the Lives of People Most in Need 

40 FEATURE Scaling Impact 

Investing through 

Innovative Finance: 

The Macro Behind 

Microfinance 

Cambodia's Financial 

Inclusion Success Story 

54 FOOD FOR THOUGHT Investing 

in Impact: A Perspective 

on Social Impact Bonds 

Venturing 

into Venture Philanthropy 

62 FOOD FOR THOUGHT 64 FOOD FOR THOUGHT 

Increasing 

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 

EDITORIAL TEAM 

Editor-in-Chief 

Jonathan Chang 

Deputy Editor 

Eunice Rachel Low 

Contributing Editor 

Christian Petroske 

General enquiries & feedback: hello@socialspacemag.org 

Editorial & submissions: editorial@socialspacemag.org 

Advertising: advertising@socialspacemag.org 

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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Social Space is a publication of the Lien Centre for Social Innovation, Singapore Management University, 

81 Victoria Street, Singapore 188065. Visit www.socialspacemag.org for more information. 

2 Social Space ISSUE EIGHT

EDITOR’S 

NOTE 

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 

Editor-in-Chief 

jonathan@socialspacemag.org 


SOCIAL STRATOSPHERE 

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) 

https://www.facebook.com/mydreamhomekh 

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. 

http://rabbit-ray.joytingle.com 

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. 

https://www.onehopewine.com 

Image of wine glass via Flickr 

(CC BY-SA 2.0) 

Image courtesy of Joytingle 


HOT TOPICS AND HAPPENINGS IN SOCIAL INNOVATION 

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 

$2 

Users can enjoy 

Koufu food vouchers by 

downloading the DingGo 

app. Redeem the vouchers 

via www.dinggo.co/ 

socialstratosphere 

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 

University. 

http://dinggo.co 

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. 

https://www.youtube.com/user/ 

RYOTFoundation 

http://www.ryot.org 

VR glasses, via Flickr 

(CC BY 2.0) 

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

Branchless Banking 

Kiva.org’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. 

https://branch.co 

If you have a hot social innovation news story to 

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

editorial@socialspacemag.org 


COMING TO TERMS 

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? 

JAY BOOLKIN of socialgoodstuff.com 

has come up with a handy guide that 

demystifies the myriad jargon and 

fanfare surrounding social change. 

BENEFIT CORPORATION (B CORP) 

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

to meet rigorous standards of social and environmental 

performance, accountability and transparency. 

https://www.bcorporation.net/what-are-b-corps 

BLENDED VALUE 

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. 

http://tdi.org.au/library/what-is-blended-value 

CHANGEMAKER 

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. 

https://www.ashoka.org/changemakers 

COLLECTIVE IMPACT 

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. 

http://www.fsg.org/ideas-in-action/collective-impact 

CORPORATE SOCIAL RESPONSIBILITY (CSR) 

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. 

http://www.wbcsd.org/work-program/business-role/previouswork/corporate-social-responsibility.aspx 

DESIGN THINKING 

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 

problems. 

http://www.bridgespan.org/Publications-and-Tools/Nonprofit- 

Management-Tools-and-Trends/Design-Thinking.aspx#. 

Vz0wfud97u1 

EFFECTIVE ALTRUISM 

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”. 

https://www.ted.com/talks/peter_singer_the_why_and_how_ 

of_effective_altruism?language=en 

http://www.amazon.com/The-Most-Good-You-Can/ 

dp/0300180276/&tag=collpart-20 

GREENWASHING 

Used to describe the act of misleading consumers 

regarding the environmental practices of a company or 

the environmental benefits of a product or service. 

http://www.stopgreenwash.org 


A Quick Guide to Social Change Buzzwords 

SHARED VALUE 

A set of corporate policies and practices that enhance 

the competitiveness of a company, while simultaneously 

advancing social and economic conditions. 

http://www2.deloitte.com/au/en/pages/about-deloitte/articles/ 

social-innovation-shared-value.html 

SOCIAL CAPITAL 

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. 

https://twitter.com/Senscot 

SOCIAL ENTREPRENEUR 

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. 

http://www.schwabfound.org/content/what-social-entrepreneur 

SOCIAL ENTERPRISE 

An organisation that applies commercial strategies to 

maximise social impact rather than profits. 

http://socialgoodstuff.com/2015/11/wtf-is-social-enterprise 

SOCIAL INNOVATION 

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. 

http://www.gsb.stanford.edu/faculty-research/centersinitiatives/csi/defining-social-innovation 

SOCIAL INTRAPRENEURSHIP 

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. 

http://www.forbes.com/sites/ashoka/2014/02/24/the-innovativebeat-of-corporate-social-intrapreneurs/#2ba149e156a5 

SOCIAL RETURN ON INVESTMENT (SROI) 

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. 

http://socialventures.com.au/assets/SROI-Lessons-learned-in- 

Australia.pdf 

SYSTEMS THINKING 

The ability to understand interconnections in such a way 

as to create sustained and meaningful social change. 

http://www.bridgewaypartners.com/WhoWeAre/Principals/ 

DavidPeterStroh.aspx 

http://www.chelseagreen.com/systems-thinking-for-social-change 

TRIPLE BOTTOM LINE 

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. 

http://www.economist.com/node/14301663 

VENTURE PHILANTHROPY 

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. 

http://www.psi.org.au/faq 

SOCIAL IMPACT 

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: http://bit.ly/1U0y6ws 

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

blog post at http://socialgoodstuff.com/2016/03/a-quick-guide-to-social-changebuzzwords-and-terminology. 

IMPACT INVESTING 

Investment with the intention to achieve both a positive 

social, cultural or environmental benefit, and some 

measure of financial return. 

http://www.socialventures.com.au/sva-quarterly/how-to-growimpact-investing/#_edn1 

Jay Boolkin blogs at Social Good Stuff 

(http://www.socialgoodstuff.com) and is founder 

of Promise or Pay (http://www.promiseorpay.com), 

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 jay@socialgoodstuff.com or 

connect with him on Twitter @socialgoodstuff and @promiseorpay 


FEATURE 

SoFi 101 

By 

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. 

1 

2 

3 

4 

5 

6 

Charity 

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”. http://impactinvesting.marsdd.com/knowledgehub/social-finance-guide 


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. 

Microfinance 

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. 

FINANCIAL 

RETURNS & 

SOCIAL IMPACT 

AT A GLANCE 

Form of Social Finance 

FINANCIAL 

It depends 

Grants/Donations 

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 

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 

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 METRE 

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. 


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. 

People 

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 

PLANET 

PROFIT 


SOCIAL FINANCE: AN AROUND-THE-WORLD GLANCE 

d.light 11 

USA 

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 

Brazil 

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 

Cambodia 

Dasra 

India 

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 


Biggest 

Social Financiers 

# Name 

Financial Resources 

(US$ billion) 

1 International Finance Corporation 45.3 

2 

Inter-American Development 

Bank Group 

14.0 

3 Enterprise Community Partners 13.9 

4 

5 

6 

Morgan Stanley Institute for 

Sustainable Investing 

Netherlands Development 

Finance Company 

National Community 

Investment Fund 

10.6 

8.4 

5.8 

7 Responsibility Investments AG 3.6 

8 Capricorn Investment Group 3.5 

9 

Goldman Sachs Urban 

Investment Group 

2.4 

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. 

Crowdfunding 

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. 


SoFi 101 

Conclusion: 

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. 

Opportunities 

• 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 

Challenges 

• 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. 

Notes 

1 

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

Charity Village. https://charityvillage.com/Content.aspx?topic=Social_ 

Finance_101#.V5cCl2R97u2 

2 

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

http://impactinvesting.marsdd.com/knowledge-hub/social-financeguide 

3 

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

(Brussels: European Commission, 2016). http://ec.europa.eu/social/ 

main.jsp?catId=738&langId=en&pubId=7878 

4 

Ibid. 

5 

Investopedia, “Risk Definition”. http://www.investopedia.com/ 

terms/r/risk.asp 

6 

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. https://thegiin.org/assets/Benchmark%20PR.pdf 

7 

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

Financial Returns”, Forbes, 26 June 2015. http://www.forbes.com/ 

sites/annefield/2015/06/26/new-study-impact-investors-dont-haveto-sacrifice-financial-returns/#3c33ebe66853 

8 

Cambridge Associates and Global Impact Investing Network, 

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

https://thegiin.org/assets/documents/pub/Introducing_the_Impact_ 

Investing_Benchmark.pdf 

9 

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. 

ac.uk/businessAndConsultancy/LSEConsulting/pdf/Assessing-socialimpact-assessment-methods-report.pdf 

10 

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

2009. http://www.economist.com/node/14301663 

11 

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

shellfoundation.org/Our-News/News-Archive/d-light-Launches-$5- 

Solar-Lantern 

12 

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

Challenge”, Forbes, 12 August 2014. http://www.forbes.com/sites/ 

eshachhabra/2014/08/12/bite-size-payments-go-global-solars-nextchallenge/#13c490d773fe 

13 

CIC Association, “What Is a CIC?”. http://www.cicassociation.org.uk/ 

about/what-is-a-cic 

14 

UnLtd UK, “About UnLtd”. https://unltd.org.uk/about_unltd 

15 

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

Social Innovation Review, 8 January 2015. http://ssir.org/articles/ 

entry/the_rise_of_social_stock_exchanges 


SoFi 101 

16 

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. 

https://www.brookings.edu/2016/04/06/south-africa-is-the-firstmiddle-income-country-to-fund-impact-bonds-for-early-childhooddevelopment 

17 

AVPN, “About Dasra”. https://avpn.asia/organisation/dasra 

18 

UBERIS Capital, “Our Portfolio”. http://www.uberiscapital.com/ 

ventures-portfolio 

19 

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

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

(December 2014): 64–98. http://www.acrn-journals.eu/resources/ 

jofrp201404b.pdf 

20 

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

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

21 

Ellie Howard, Challenges and Opportunities in Social Finance in the 

UK (London: Cicero Group, 2012). http://www.cicero-group.com/ 

Research-Analysis/Pain_in_spain_report.pdf 

22 

Ibid. 

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 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 

at cpetroske@smu.edu.sg 

Florian 

Parzhuber is 

a senior at the 

Singapore 

Management 

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 

fparzhuber.2013@smu.edu.sg 

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 


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@ 

wharton.upenn.edu 

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 jkin@sas.upenn.edu 

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 

at maayam@sas.upenn.edu 

Mitchell 

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 

mlaferriere1@fordham.edu 

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 


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 

at remicor@sas.upenn.edu 


You. 

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.

FEATURE 

Collective By Rob John 

Philanthropy 

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 IN 

NORTH AMERICA 

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 


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 ASIAN CONTEXT 

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. 

GIVING CIRCLES IN ASIA 

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 


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 

Foundation. 

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 

SVP INDIA 

Ravi Venkatesan, 

courtesy of SVP 

India. 

140 

Partners 

raised nearly 

half a million 

US dollars 

4,000 

hours 

donated their 

time to support 

11 non-profits 

By 

2020 

Goal 

SVP India plans 

to help create 

a million jobs 

and mobilise 

the resources of 

1,000 partners 

A “TRANSPLANTED” 

GIVING CIRCLE IN INDIA’S 

SILICON VALLEY 

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 

organisations 

to create better 

livelihood impact 

for farmers and 

producers. 

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. 



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 

enterprises. 

NEW DAY ASIA 

(HONG KONG) 

A DINNER TABLE CIRCLE THAT 

HAS IMPACTED THE LIVES OF 

TRAFFICKED WOMEN 

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. 

US$ 

750k 

Total Fund 

was raised in 

the middle of 

2016 

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. 


NEW DAY ASIA 

(HONG KONG) 

A DINNER TABLE CIRCLE THAT 

HAS IMPACTED THE LIVES OF 

TRAFFICKED WOMEN (cont'd) 

New Day Asia 

members take 

part in a hike 

fundraiser on 

Lantau island in 

2015 to support 

the Matara 

Girls Home in 

Sri Lanka. 


of New Day 

Asia. 

New Day 

member Dana 

Barrett with 

children from 

the Kalki project 

in India in 2010. 


of New Day 

Asia. 

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. 

US$ 

12,600 

Initial Grant 

offered by 

New Day Asia 

for LOVEQTRA 

Sengchemdrukmo 

Girl’s Home 

in China for 

refurbishment 

work at the 

Home 

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. 



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 

UBS 20/20 YOUNG 

LEADERS’ SOCIAL 

IMPACT GROUP 10 

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. 

A NEXT-GENERATION 

GIVING CIRCLE 

WHAT NEXT FOR GIVING CIRCLES 

IN ASIA? 

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. 

UBS 

20/20 

Social Impact 

Leaders Group 

created in 2013 

in partnership 

with UBS Optimus 

Foundation 

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 

www.givingcircles.asia 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. 


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 

Source: www.givingcircles.asia 

Notes 

1 

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). 

2 

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. 

3 

Angela M. Eikenberry, Giving Circles: Philanthropy, Voluntary 

Association and Democracy (Bloomington, IN: Indiana University 

Press, 2009), 57. 

4 

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, 

2009). http://digitalcommons.unomaha.edu/pubadfacpub/42. 



Gender 

Women 

Mixed 

Mixed 

Mixed 

Mixed 

Women 

Mixed 

Mixed 

Mixed 

Mixed 

Women 

Mixed 

Mixed 

Mixed 

Women 

Mixed 

Mixed 

Mixed 

Mixed 

Mixed 

Mixed 

Mixed 

Mixed 

Mixed 

Mixed 

Mixed 

Mixed 

Mixed 

Mixed 

Mixed 

Website 

https://www.facebook.com/100womenaus 

https://www.facebook.com/pages/10x10Melbourne/549435665163395?ref=hl 

http://www.awesomefoundation.org/en/chapters/adelaide 

http://www.awesomefoundation.org/en/chapters/melbourne 

http://www.awesomefoundation.org/en/chapters/sydney 

http://firstseedsfund.com.au 

http://www.fremantlefoundation.com/impact-100 

https://www.facebook.com/impact100fremantle 

http://www.impact100melbourne.org 

http://www.impact100sa.org.au 

http://www.impact100wa.org.au 

http://melbournewomensfund.org 

http://picca.org.au 

http://www.socialventurepartners.org/melbourne 

https://www.thefundingnetwork.com.au 

http://www.womenandchange.com.au 

http://www.impact100sydney.org.au 

http://www.the-channel.org 

http://www.socialventurepartners.org/svp-beijing-site-coming-soon 

http://www.newdayasia.org 

http://www.awesomefoundation.org/en/chapters/delhi 

http://www.dasra.org 

https://sites.google.com/a/caringfriends.in/caring-friends/home 

http://www.socialventurepartners.org/bangalore 

http://www.socialventurepartners.org/svp-mumbai-site-coming-soon 

http://www.socialventurepartners.org/pune 

http://www.tbxi.org/home 

http://www.arunllc.jp/en 

http://www.svptokyo.org/english 

http://www.awesomefoundation.org/en/chapters/whangarei 

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 about.me/robjohn. 

He can be reached at rob.john@nus.edu.sg 

Mixed 

Mixed 

Mixed 

Mixed 

http://www.thefundingnetwork.org.nz 

http://www.awesomefoundation.org/en/chapters/singapore 

https://groups.yahoo.com/neo/groups/FocusIndiaForum/info 

Women 

Mixed 

https://www.facebook.com/100WomenWhoCareSingapore/info 

http://www.socialventurepartners.org/svp-seoul-site-coming-soon 

5 

Eikenberry, Giving Circles, 84. 

6 

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. 

7 

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). 

8 

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). 

9 

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. 

10 

The full case study is available at http://givingcircles.asia/casestudies-details.aspx?cs=12. 

11 

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

with a focus on children’s well-being. 


CONVERSATIONS 

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 

EUNICE RACHEL LOW and CHRISTIAN PETROSKE 

how joy, rather than duty or guilt, sustains giving 

corporations. PHOTOGRAPHY BY KEN KOH 


THE BUSINESS OF GIVING 

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 


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 

exceptions. 

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. 



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 

scepticism? 

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.” 


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. 



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. 



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. 

Notes 

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 

anniversary! 

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 

1 

http://eresources.nlb.gov.sg/infopedia/articles/SIP_2013-07-01_120748.html 

2 

“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 

http://www.investopedia.com/terms/c/corp-social-responsibility.asp#ixzz4CCR0vDwN. 

3 

http://www.internetlivestats.com/one-second 

4 

http://ssir.org/articles/entry/women_and_innovation_making_the_connection 

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 eunicelow@smu.edu.sg 

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 

at cpetroske@smu.edu.sg 


FEATURE 

PAY FOR SUCCESS 

and SOCIAL 

IMPACT BONDS 

in SINGAPORE 

By Richard Edwards and Kevin Tan 

Measurably Improving 

the Lives of People 

Most in Need 


PAY FOR SUCCESS & SOCIAL IMPACT BONDS: 

AN INTRODUCTION 

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 

outcomes. 

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 

PFS 

Outcomes-based contracting measurably 

improves the lives of people most in need 

by driving resources towards more effective 

programmes 

Social Impact Bond Financing 

SIB 

Financing that bridges timing gap between 

outcome payments and upfront capital 

needed to run PFS-contracted programmes 


PAY FOR SUCCESS AND SOCIAL IMPACT BONDS IN SINGAPORE 

The rise of impact investors and philanthropies looking 

to give loans has been another enabling factor in the creation 

of Social Impact Bonds. 

PAY-FOR-SUCCESS CONTRACTING 

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. 

THE ROLE OF SOCIAL IMPACT BONDS 

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. 

THE MECHANICS OF PFS/SIBs 

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: 


Pay for Success Mechanics 

STEP 

1 

Government identifies a critical social 

issue with historically poor outcomes such as 

recidivism, chronic homelessness, or early 

childhood education. 

STEP 

2 

STEP 

3 

STEP 

4 

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). 

STEP 

5 

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. 

THE VALUE OF PFS/SIBs FOR 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 

2012 

12 

PFS/SIBs 

launched projects 

2015 

44 

PFS/SIBs 

launched projects 

worldwide 



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. 

POTENTIAL ISSUE AREAS FOR A SINGAPOREAN 

PFS/SIB 

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. 

Cost–Benefit 

Proposition 

Alignment 

with Policy 

Priorities 

Intervention with 

Promising 

Evidence Base 

Well-Defined 

and Trackable 

Outcomes 

Funder 

Interest 

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 


2010 2050 

US$ 

estimated 

annual cost 

of diabetes in 

787 Singapore 1.8 

million 

US$ 

billion 

increased 

annual cost 

of diabetes in 

Singapore 

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 

organisations. 

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/ 

Underemployed 

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. 



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. 

FAQs 

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. 

CHALLENGES TO PFS/SIBs 

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 

sophisticated. 

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. 


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. 

PFS BEYOND SIBs 

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. 

SOCIAL IMPACT GUARANTEE 

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 

evaluated 

• 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 

services 

• 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. 

NEXT STEPS 

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. 



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. 

Notes 

1 

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

For Success Opportunity”. http://www.thirdsectorcap.org/wp-content/uploads/2015/02/ 

Third-Sector_Roca_Preparing-for-Pay-for-Success-in-MA1.pdf 

2 

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

brookings.edu/~/media/Research/Files/Reports/2015/07/social-impact-bonds-potentiallimitations/Impact-Bondsweb.pdf?la=en 

3 

National Council of Social Services, NCSS Annual Report 2014. https://www.ncss.gov.sg/NCSS/ 

media/NCSS-Publications/NationalCouncilofSocialServiceAnnualReportFY2014(1).pdf 

4 

National Volunteer and Philanthropy Center Individual Giving Survey 2014. 

http://knowledge.nvpc.org.sg/individual-giving-survey-2014-2 

5 

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 

6 

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

base. http://www.gymtonic.sg; http://lienfoundation.org/sites/default/files/Gym%20 

Tonic%20Press%20Kit%20Complete.pdf 

7 

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

Arrested”, 2015. http://app.msf.gov.sg/Research-Room/Research-Statistics/Juvenile- 

Delinquents-Juveniles-Arrested 

8 

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

2014. http://app.msf.gov.sg/Policies/Strong-and-Stable-Families/Nurturing-Protectingthe-Young/Child-Protection-Welfare/Children-and-Young-Persons-Homes 

9 

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

grant. http://www.thirdsectorcap.org/sifcohort2 

10 

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

thirdsectorcap.org/blog/social-impact-guarantee 

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 

at redwards@thirdsectorcap.org 

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 

ktan@thirdsectorcap.org 


FEATURE 

SCALING 

IMPACT 

INVESTING 

THROUGH 

INNOVATIVE 

FINANCE 

A Focus on Women’s 

Livelihoods 

By Durreen Shahnaz 

40 40 Social Space ISSUE EIGHT

SCALING IMPACT INVESTING THROUGH INNOVATIVE FINANCE 

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 


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 

LONG-TERM DEMAND 

• IEs able to scale impact using technology 

(via Competition and Accelerator); 

• SMEs equipped to achieve double bottom line 

(via Impact Magnifier) 

MEDIUM-TERM DEMAND 

• IEs are more investment ready and 

can create sustainable impact (via Revolving 

Credit Facility and Accelerator) 

SHORT-TERM DEMAND 

• NGOs are less dependent on grants 

(via financial sustainability program) 

• IEs deepen impact (via incubator 

and M&E tool) 

Short-Term: 

Early Stage 

Level of Supply of Mission-Oriented Capital Mobilised 

Source: IIX Advisory work. 

SHORT-TERM SUPPLY 

• Private capital funds 

upfront cost of resilience 

(via Humanity Bond) 

• Increased liquidity 

(via Outcomes Fund) 

Medium-Term: 

Growth Stage 

MEDIUM-TERM SUPPLY 

• Malaysia considered 

attractive impact 

investment destination 

(via Social Investment 

Tax Rebate) 

Long-Term: 

Maturity 

LONG-TERM SUPPLY 

• Capital markets are 

democratised and 

impact investors enjoy 

increased liquidity 

(via social stock 

exchange) 



The proportion of people 

IN ASIA living on less than 

US$1.25 per day 

1990 

53 

% 

end 2015 

12 

% 

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 

question. 

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 


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. 

3 

1 

$$$ 

Impact 

Investors 

Bonds 

• Accessibility of mission-oriented 

capital: To bring together 

capital supply from investors 

with demand from high-impact 

organisations through an 

innovative, replicable financial 

instrument. 

Guarantee 

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. 

MFI 

Loan 

2 

MFI 

Impact 

Enterprise 

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 

4 

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 

1 

2 

3 

4 

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 



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 

standpoint. 

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 

markets. 

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 

Replicability 

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 

Structuring 

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. 


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 

Borrowers 

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. 



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 

women. 

• 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 



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 

generations. 

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 dshahnaz@asiaiix.com 

Notes 

1 

For more information on the WLB, read the Blueprint Paper at http://www.asiaiix.com/wp-content/uploads/2016/04/Shujog_WLB- 

Interim-Blueprint-Paper_2016.compressed.pdf 



CONVERSATIONS 

The Macro 

behind 

Microfinance 

Cambodia’s Financial Inclusion 

Success Story 

By Jonathan Chang 


THE MACRO BEHIND MICROFINANCE 

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 


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 

inclusivity? 

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 

income. 

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 


THE MACRO BEHIND MICROFINANCE 

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 jonathan@smu.edu.sg 

This article is adapted from the November 

2016 edition of Asian Management Insights 

magazine. 


FOOD FOR THOUGHT 

INVESTING IN IMPACT 

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 

initially 

Pay for successful 

outcomes 

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 

outcomes 

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 

outcomes 

Service users, 

beneficiaries 



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 

problems. 

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 

reoffending. 

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 

services. 

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 


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. 



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. 

Notes 

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@ 

toteboard.gov.sg 

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. 

1 

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

http://www.rand.org/randeurope/research/projects/social-impact-bonds.html 

2 

Instiglio database, 2016, at http://www.instiglio.org/en/sibsworldwide 

3 

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

for NEETS”, 29 October 2015, at http://www.cityphilanthropy.org.uk/news/social-impactbond-delivers-financially-investors-and-socially-neets 

4 

Big Society Capital, “Our Investments”, at https://www.bigsocietycapital.com/what-wedo/investor/investments 

5 

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

http://www.sibgroup.org.uk/beinvestmentready 

6 

https://www.gov.uk/guidance/social-impact-bonds 



VENTURING INTO 

VENTURE PHILANTHROPY 

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. 


VENTURING INTO VENTURE PHILANTHROPY 

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 

Management 

Fundraising or Revenue Strategy 

Financial Management and 

Accounting 

Other 

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 

capabilities. 

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 

Practice 

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 


… 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. 

Pre-engagement 

to 15 parameters and continues 

monitoring these as impact. 

These three approaches allow 

comparability. 

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. 

Capacity-Building 

of SPOCs 

Impact 

Assessment 

Portfolio 

Management 

Multi-Sector 

Collaboration 

Source: AVPN 


VENTURING INTO VENTURE PHILANTHROPY 

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. 

650 

participants attended the 

2016 AVPN Conference in 

Hong Kong 

2016 

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 

martina@avpn.asia 

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 

at kevin@avpn.asia 



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 


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 

Notes 

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 

at haneolj@wharton.upenn.edu 

1 

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

Progress Toward Sustainable Energy”, at https://openknowledge.worldbank.org/ 

handle/10986/22148 

2 

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

Time, 25 March 2013, at http://newsfeed.time.com/2013/03/25/more-people-have-cellphones-than-toilets-u-n-study-shows 

3 

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

http://www.rexelfoundation.com/en/platform-social-entrepreneurs/connaissances-etsavoirs/study-access-efficient-energy-south-east-as-0 

4 

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

Management Insights 3, 1 (2016): 50–5 



By Mitchell Laferriere 

BANKING ON IT 

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 

measurement. 

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. 


BANKING ON IT 

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, 

Notes 

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 Mlaferriere1@fordham.edu 

1 

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 http://www.nielsen.com/ 

us/en/press-room/2014/global-consumers-are-willing-to-put-their-money-where-theirheart-is.html 

2 

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

2016 GIIN Annaul Impact Investor Survey, May 2016, at https://thegiin.org/assets/2016 

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

3 

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

at https://thegiin.org/impact-investing/need-to-know/#s1 

4 

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

5 

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

Innovation Review, 14 August 2013, at http://ssir.org/articles/entry/unpacking_the_ 

impact_in_impact_investing 

6 

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

Investment Benchmark (Boston, MA: Cambridge Associates, 2015), at https://thegiin.org/ 

assets/documents/pub/Introducing_the_Impact_Investing_Benchmark.pdf 

7 

Ibid 

8 

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 http://www.lse.ac.uk/ 

businessAndConsultancy/LSEConsulting/pdf/Assessing-social-impact-assessmentmethods-report.pdf 

9 

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). 

10 

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

A-12. 


THE SHORT LIST 

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. 

GOOD 

READS 

Best Books 

for Social 

Entrepreneurs and 

Changemakers 

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 

Q&A 

By Neetal Parekh 


“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. 


GOOD READS 

The Promise of a Pencil: 

How an Ordinary Person Can 

Create Extraordinary Change 

By Adam Braun 


“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 


“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. 


Chapter One 

By Daniel Flynn 

Available at http://chapterone.thankyou.co. 

“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 


“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 https://www.goodspender.com. 

au/foundationforyoungaustralians/the-futurechasers 

“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. 


GOOD READS 

How to Change the World: 

Social Entrepreneurs and 

the Power of New Ideas 

By David Bornstein 


“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 


“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 (http://www.socialgoodstuff.com) and is founder of Promise or Pay 

(http://www.promiseorpay.com), 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 jay@socialgoodstuff.com or connect with him 

on Twitter @socialgoodstuff and @promiseorpay 


POP QUIZ 

WHO’S YOUR INNER SOCIALPRENEUR? 

Saver 

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? 

Bake 

a cake 

Do you go for organic 

or non-organic food? 

Spender 

Breakfast: Oatmeal 

or Oreo cookies? 

Buy a gift 

Your friend owes you 

a little money. How often 

do you remind him or her? 

Non-Organic 

Oreo cookies 

Oatmeal 

If you want to renovate 

your house, would you 

pay an expert or do it 

yourself? 

Do it 

yourself 

Organic 

You see a beggar 

on the street. What 

do you give him? 

What happens 

when you do your 

friend a favour? 

Always 

Sometimes 

What is your preferred 

social financial 

instrument? 

Rarely 

Pay an 

expert 

When should a business 

start caring about 

producing social impact? 

A few 

coins 

Expect a 

favour from 

them 

in return 

Help them 

unconditionally 

You’re lost in a new city. 

Do you ask for directions 

or use a map? 

After its 

operations 

Before its 

operations 

Food 

Earned 

income 

Use 

a map 

Grants 

Ask for 

directions 

JAKE KLOBERDANZ 

One Hope 

Reese Fernandez-Ruiz 

Rags2Riches 

ANSHU GUPTA 

Goonj 

Nushelle de Silva 

Building Bridges 

BILL & MELINDA GATES 

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 

impact. 

Anshu Gupta has 

revolutionised giving in 

India. He founded the nongovernmental 

organisation 

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 

circumstances. 

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 

challenges. 

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). 


DD/ MM/ YYYY 

m y 

s o cia l 

spa ce 

Things to note

DD/ MM/ YYYY 

m y 

s o cia l 

spa ce 

Things to note

IV Social Space ISSUE EIGHT

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

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