Validating your impact measurement for stronger reporting Lessons - - PowerPoint PPT Presentation

A part of the FirstRand Group

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February 2018

Validating your impact measurement for stronger reporting

Lessons from an Impact Investor

Dean Hand

2 A part of the FirstRand Group

• Listed on the Johannesburg Stock Exchange (JSE) and the Namibian Stock Exchange (NSX), FirstRand

Limited is the largest listed financial institution in Africa by market capitalisation.

• Through its portfolio of financial services franchises, FirstRand provides banking, insurance and investment

products and services to retail, commercial, corporate and public sector customers. In addition to South Africa, the group operates in nine key markets in the rest of Africa.

• FirstRand Limited is a Level 2 BEE contributor
• Ashburton Investments is a signatory to the UN Principles for Responsible Investing (UNPRI)
• FirstRand executes its strategy through separately branded operating franchises:

Corporate overview

FirstRand group operating structure

3 A part of the FirstRand Group

Corporate overview

A new generation investment manager

Ashburton Investments’ vision

• To become the African-based new generation

investment manager of choice providing global investors with African/Asian corridor products by: ̶ Offering our clients investment solutions using our traditional and alternative product capabilities ̶ Actively managing the risks inherent in these investment solutions ̶ Providing them access to the group’s origination and structuring capability by developing new investment opportunities

Competitive advantage

• Unique access to attractive assets and origination

capabilities of FirstRand Bank

• Innovative culture combined with strong risk

management skills

• Investment strategies suited to client liabilities and
• ther constraints
• Offerings structured to match investors’ requirements

4 A part of the FirstRand Group Source 

Targeted returns

Fulton, K (2005) The future of Impact Investing, The Monitor Institute

High High None None

Target financial return Target social/environmental return

Financial return floor Impact return floor

Solely profit- maximising investment Philanthropy

Financial First Investors:

Optimise financial returns with an impact floor

Impact First Investors:

Optimise impact return with a financial floor

Targeted returns

5 A part of the FirstRand Group

Social Investment Continuum

SOCIAL PURPOSE ORGANISATIONS COMMERCIAL PURPOSE ORGANISATIONS Charities Revenue generating social enterprise Social Purpose Business Traditional Business Grants only: No trading Includes traditional philanthropy Trading revenues and grants Potentially sustainable social enterprise (>75% in trading revenues) Breakeven: all income from trading revenues Profitable social enterprise: surplus reinvested (no dividends to shareholders) Profitable social entreprise: surplus profit distribution Company allocation a percentage of profits to charity Mainstream Market Company Primary driver is to create social value Primary driver is to create financial value Organisations can create “blended” social & financial value Impact only Impact first Finance first Venture Philanthropy

Source: Balbo, L. et al., 2010. Establishing a venture philanthropy organisation in Europe: A practical guide 2nd ed., Brussels: European Venture Philanthropy Association. Available at: https://avpn.asia/wp- content/uploads/2014/12/Establishing-a-Venture-Philanthropy-Organisation.pdf.

6 A part of the FirstRand Group

Ashburton ACEF

Stakeholders

Pension fund and corporate investors Investee companies

7 A part of the FirstRand Group

Guarantee mechanisms

An underutilised tool

• GIIN: “guarantees offer exciting ways to stimulate increased private-sector investment in solutions to social and

environmental challenges”

• Perceived impediments to impact investing strategies with traditional capital

‒ Very few overt investment opportunities exist for fiduciary capital that offer a financial return with an intentional and measured social/environmental return, and if they do, they are very risky ‒ Impact investing strategies are nascent and as yet have unproven viability over time ‒ It is demanding to achieve impact and market related returns at the same time without a trade-off between one goal or the other ‒ Investor choice - more proven strategies and asset classes with better visibility and liquidity

• Unsurprisingly there has been less adoption of impact investing strategies
• Guarantees offer one way to facilitate adoption
• Potential to provide investor comfort to step over the line and thus a track record is developed

Source: Schiff, H. & Dithrich, H., 2017. Scaling the use of guarantees in U.S. community investing, New York p 2.

8 A part of the FirstRand Group

Principles of our measurement

Our ToC and Logic Model Our Theory of Change

• Useful for demonstrating why an approach will be

successful in achieving impact

• Graphic with multiple multi-directional arrows showing joint

causality

• Less useful for program development or management
• Shows the why not the how

Our Logical Models

• Appropriate for managing a programme
• Focus how indicators are associated with activities
• Graphic & reflect a time order with one-direction arrows
• Helpful for both for program M&E and management
• Can show both why & how
• Can include major indicators for different project stages
• Use focus groups, messy, stakeholder inclusion, consensus-

driven approaches

Source: Denise L. Baer, Ph.D.: Centre for International Private Enterprise (CIPE)

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Theory of change

Guarantee mechanism to ‘crowd in’ investors

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Results Chain

Guarantee mechanism to ‘crowd in’ investors

11 A part of the FirstRand Group

Impact: Alignment to global priorities

United Nations: Sustainable Development Goals

Impact indicator Sustainable development goals

New permanent jobs created New permanent jobs created: female New permanent jobs created: previously disadvantaged Growing businesses supported

12 A part of the FirstRand Group

Measurement continuum

Evidenced Anecdotal

Atlantic Credit Enhanced Fund I Ashburton Credit Enhanced Fund II

• IRIS Measurement

standards

• Quantitative measures

(job creation)

• Sample evidence
• Independent evaluation
• Audited
• Qualitative case studies

Ashburton Impact Fund

• IRIS Measurement

standards

• Quantitative measures

(job creation, loans granted, homes built, etc.)

• Qualitative case

studies

Ashburton Money Market Impact Fund

• IRIS Measurement

standards

• Quantitative measures

(job creation)

• Data generated from
• ther investments in

the same portfolio

13 A part of the FirstRand Group Source 

Independent evaluation

Greater Capital Independent Evaluation 2016

June 2016 ACEF #1 achievements

• 96% of job creation target (June 2017)
• Jobs Fund Recognition Award (2016)
• Chosen by Jobs Fund as one of 8 projects to contribute to Oxford Policy Management’s learning report to

National Treasury

• Eleven reporting quarters successfully completed to June 2017 (1 quarter remains)
• Project, Fund & Guarantee Mechanism Trust all independently audited

14 A part of the FirstRand Group

How we have met job creation targets

June 2017

How do we define job sustainability?

• The job is newly created
• As a consequence of our investment
• The job is permanent
• Evidenced by a letter of appointment or similar
• The job is considered ‘decent employment’
• Salary is well positioned relative to minimum wage
• Focus on most marginalized

‒ HDI, youth, geography, gender

ACEF #1 Impact target Target job creation 9 635 Verified job creation 9 223 Target achieved 96%

99% previously disadvantaged 89% female 100% full-time equivalent jobs 78% of jobs created in underserviced provinces

(Eastern Cape, Limpopo and North West)

ACEF #2 Impact target Target job creation 4 200

R8,274 cost per job

15 A part of the FirstRand Group

M&E plan

Impact Monitoring Impact Evaluation Programme Indicator Input Process Output Outcome Impact

1

Debt funding provided by Ashburton Investments to growing businesses Expansion activities of the business New permanent jobs created by the business as a result of the funding 4,200 new permanent jobs created across all investees as a result of the funding Contribute to job creation in the national economy

9 & 13

Debt funding provided by Ashburton Investments to growing businesses Expansion activities of the business Routine impact reports:

• No. of jobs created within

the reporting period Cumulative impact: Total no. of jobs created Contribute to job creation in the national economy

7 & 8

Development of a Guarantee Mechanism and related structure Leverage the guarantee to raise investor capital Raise 900 million to leverage the guarantee by 10 times Change the perception of risk related to investments that result in impact Demonstrate that investments (mainly unlisted) in job creating initiatives are viable

11 & 12

Leverage Ashburton Investment’s fund management expertise Building investor confidence in impact investing Assess individual investor attitudes toward impact investing in the Fund Assess collective attitudes

• f investors towards

impact investing in the Fund Contribute to positive change in the investment sector

Scaling a guarantee for growth & job creation

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Baseline plan

Purpose: to provide an information base against which to monitor and track the performance and effectiveness of the Fund at mid-term and at summation

Investee baseline Investor baseline Baseline assessment As each investee is approved:

• Measure challenges faced by

the investee before the investment by Ashburton

• Measure employment by the

investee before the investment by Ashburton As each investor commits:

• Measure investor goals and

attitudes towards investing in growing businesses Inputs Provision of a guarantee mechanism Provision of debt funding to growing businesses Activities Outputs Aggregate baseline responses from investees over time Aggregate baseline responses from investors over time

Industry research forms part of the base line as it provides important context

Scaling a guarantee for growth & job creation

17 A part of the FirstRand Group

Disclaimer

The information contained in this presentation is made by Ashburton Fund Managers (Proprietary) Limited ("Ashburton"). Ashburton is a licensed Financial Services Provider ("FSP") in terms of the Financial Advisory and Intermediary Services Act, 37 of 2002 ("FAIS Act"), with FSP number 40169, regulated by the Financial Services Board. This presentation is for information purposes only and it must not be regarded as a prospectus for any security, financial product or

• transaction. Ashburton does not in any way represent, recommend or propose that the securities and/or financial or investment products or

services ("the products") referred to in this presentation are appropriate and/or suitable for a particular investment objectives or financial situation or needs. This presentation is not advice in respect of any other financial, investment, trading, tax, legal, accounting, retirement, actuarial or other professional advice or service whatsoever ("advice as defined in terms of FAIS"). While all care has been taken by Ashburton in the preparation of the information contained in this presentation, Ashburton does not make any representations or give any warranties as to the correctness, accuracy or completeness, nor does Ashburton assume liability for loss arising from errors in the information irrespective of whether there has been any negligence by Ashburton, its affiliates or any other employees of Ashburton, and whether such losses be direct or consequential. Ashburton disclaims any liability for any direct, indirect or consequential damage or losses that may be sustained from using or relying on this presentation or information contained herein.