Investors put their money to work with the hope of making healthy returns and long-term benefits, but a new trend is testing the convention of whether every dollar they make needs to go back into their pocket.
What if, instead, a portion of the returns could be funnelled into a different cause?
Known as social investing, it’s a strategy that is gaining momentum as corporates and investors aim to book profits for their clients and also be a force for good in the community.
Bernie Shakeshaft’s BackTrack is an example of an organisation that has benefitted from the new wave of social investing, after it partnered with Future Generation Australia, the country’s first listed investment company that provides returns to shareholders while also donating 1 per cent to social partners.
The brainchild of veteran investor Geoff Wilson, Future Generation has raised $65.2 million for charities since its conception in 2014. It’s aiming to hit $100 million by 2030.
Founded in Armidale in 2006, BackTrack started as a way to stop vulnerable young people from falling through the cracks and prevent them from entering a cycle of homelessness, substance abuse, juvenile crime and unemployment.
“I’ve been working in the space of kids at risk for the best part of 30 years. All my frustrations, where it came from, I got to a stage in my life where it was kind of stop whinging about it, and do something about it,” Shakeshaft told a room of investors this week.
“So, a couple of volunteers started in the shed, and we work with the most vulnerable kids that there are in our community.”
About 90 per cent of kids that go through Shakeshaft’s BackTrack program return to full-time education or find their way into employment, and with more than a thousand having completed the program, it’s become a successful model that they have replicated in seven other regional locations, including Dubbo, Broken Hill and Toowoomba.
Future Generation has provided BackTrack a consistent stream of funding, something it wasn’t always able to get through government grants, and it also generates about 60 per cent of its own income by giving the most un-employable kids a job and providing them with training.
Its success raises the question, should more companies adopt an investment model similar to Future Generation? And how would that model work alongside government responsibility?
Former NSW Premier Mike Baird AO, chairman of Future Generation, said that social investing shouldn’t replace the role of the government in providing funding to charities, but rather corporates and investors should take it upon themselves to give money back to social enterprises.
“I certainly think corporate Australia needs to step up and have a look at this model [Future Generation] because there are many ways you can make a difference, and I think there is an onus on corporate Australia to contribute,” Baird said.
Veteran businessman and former chairman of ANZ Bank, David Gonski AC, said companies should invest in community groups, but it shouldn’t carry the word ‘philanthropy’.
“To me, philanthropy is more from the heart and the brain, and it basically comes [from] that you want to do good things, and basically the result of those really has nothing much to do with what reward you get. You may get a reward…but it’s not the aim,” Gonski said.
“I think a corporation should do good things in the community…but I think there has to be a purpose to that, and I think the purpose often comes from your stakeholders… So, I think there are plenty of reasons to do it, but I don’t actually think it’s philanthropy. Call it sponsorship, call it being involved in your community, but it is to build and improve one’s stakeholder relations.”
Investment insights 
News