A new type of business-philanthropic model is being implemented in the US, Australia and the UK – with fantastic results, Louise Walsh writes.
OPINION | A new wave of philanthropy is here.
In January 2018, a collaboration between Johns Hopkins University and a US investment management firm dedicated to improving healthcare through investment and philanthropy was announced.
The collaboration, known as Bluefield Innovations, is set to provide up to US$65 million ($83 million) to support the commercialisation of early-stage therapeutic research at Johns Hopkins over five years. It is hoped the work will lead to transformations in cancer treatment.
To raise the money, participating fund managers will donate their investment fees and shareholders will donate 1 per cent of the company’s total assets each year.
Many Australians think our nation is behind its peers when it comes to innovation. The truth is, from the Cochlear implant to black-box flight recorders to Wifi technology, we are a country of innovators.
While it may be true that we are behind the US in terms of our history and culture of philanthropic giving, people within the Australian financial services industry have been bringing their unique perspective and strong ability to innovate to the field of philanthropy for a number of years.
In fact, the model underpinning Bluefield Innovations is very similar to how we operate the Future Generation companies.
Wilson Asset Management chair Geoff Wilson set up two listed investment companies − Future Generation Investment Company (FGX) in 2014, and Future Generation Global Investment Company (FGG) in 2015 – after reading about the Battle Against Cancer Investment Trust and meeting with its founder in the UK.
Wilson was inspired by an exciting question – Could Australians invest with the intention of generating a measurable social and environmental impact and reaping a financial return?
He believed they could.
Social returns
What is unique about the Future Generation model is that it prioritises and delivers investment and social returns. We have mandates with top fund managers who, in effect, donate their investment fees to allow the Future Generation to donate 1 per cent of total assets each year. Our shareholders benefit because the forgone fees exceed the donation.
Investors have access to the best Australian and global fund managers without paying management or performance fees and receive capital growth and income. Charities gain a donation stream they desperately need, and Future Generation fund managers use their expertise to make a real difference.
In October 2017, Future Generation companies provided $6.8 million to Australian charities.
FGX invested $3.8 million in charities focused on children and youth at risk, such as Act for Kids, Australian Children’s Music Foundation, Australian Indigenous Education Foundation, DEBRA Australia, Diabetes Kids Fund, Giant Steps, Kids Helpline, Lighthouse Foundation, Mirabel Foundation, Raise Foundation, Variety, United Way, Youth Focus and Youth off the Streets.
FGG provided $3 million to charities supporting children and youth mental health, including: beyondblue; Black Dog Institute; Brain and Mind Centre; Butterfly Foundation for Eating Disorders; headspace; Orygen, the National Centre of Excellence in Youth Mental Health; ReachOut Australia; and SANE Australia.
These are just some of the projects the social investment funds are supporting.
Many people in the financial services industry already support good causes the traditional way, by donating. That’s great, but as a professional community we also have a unique opportunity to contribute by doing what we do best – creating wealth and helping people. Future Generation has enabled thousands of Australians to benefit from the pro-bono support from fund managers, service providers, board and committee members, simultaneously providing a social return and benefiting shareholders with low-volatility, risk-adjusted returns through capital growth and fully franked dividends.
I am confident that innovative Australians will continue to punch above their weight and the financial services sector is well placed to make a real difference for shareholders and the community.
Louise Walsh is the chief executive of Future Generation Investment Company and Future Generation Global Investment Company.
