David Renton, Director of Finance and Investment, Guy's and St Thomas' Charity
May 09, 2018
In recent years, impact investing has become a prominent global movement, attracting interest and participation from mainstream investors, such as global asset managers like Partners Group and leading endowed institutions like the Ford Foundation.
In the broadest sense, impact investing is about investments made into companies and funds with the intention to generate a measurable, beneficial impact to social or environmental issues alongside a financial return.
While still a young industry, in the UK alone the impact or ‘mission-related’ investment market is considered to be worth £150bn. In the UK, foundations and other institutions have for some time been considering impact investing to support their core missions. However, as the Global Impact Investing Network (GIIN), a champion for impact investments, recently observed, much more collective action is needed.
As one of the UK’s leading place-based health foundations, with over £800m of assets in our endowment, an ambitious new strategy and a drive to use every possible tool in our kit to improve health, we wanted to answer this call.
For over 500 years, Guy’s and St Thomas’ Charity has been making an impact in what are today the London boroughs of Lambeth and Southwark. We have put millions every year into improving local health using our assets and the returns from traditional investments to fund our charitable activity through philanthropic support, including hundreds of grants.
Under our new strategy, we are focusing our efforts on big health issues and looking for every chance to extend our impact. This applies both to the 4% of our endowment we spend each year, and to the other 96% we invest to fund our work.
On the former, one aspect of this has to been merge together our grants and direct investment teams, so that we can provide more flexible financial support to our charitable partners. We find tools like the Omidyar Network’s spectrum of capital a helpful way of framing the finance a foundation like ours can provide, and like many other funders are looking to develop new and more user-centred approaches to our support.
But we think we can go further. And so, on the latter, this now includes committing part of the investments in our endowment to contribute directly to better health outcomes.
Our investment policy commits us to seeking to increase the positive health impacts of our endowment and reduce the negative ones, including through using our position as an asset owner to engage others in constructive dialogue for change. This is in line with our belief that foundations like us should look beyond philanthropy and use every possible avenue to drive positive change.
The hardest step, though, is to move from theory to practice. We are therefore delighted that one of our first impact investments is with Apposite Capital, a healthcare specialist private equity investor. Its core approach to investing in businesses that deliver innovative care solutions for the benefit of all – patients, service users and healthcare providers – makes it a perfect complement to our endowment investments.
To help us refine and grow our impact investing, we have appointed Anita Bhatia, formerly at Barclays Wealth Management, to lead our health impact investing activities. Plus we have developed our own impact assessment criteria which is helping us to direct our capital to ‘best in class’ specialist funds. We are looking to invest in funds which offer meaningful and measurable positive change in health and healthcare alongside competitive financial returns adjusted for risk.
However, our expectations of impact investing are not just limited to the funds we will invest in. By taking a bold step into this space, we also hope others will invest in attractive opportunities offered by less established businesses, which tend to face barriers to funding.
We are only at the start of our impact investing journey. We will continue growing our own understanding of what investments make ‘good impact’ and how we best measure it – and sharing what we learn with others. We also look forward to working with others to help create better practices and the conditions that help impact investing make its journey to the mainstream.