April 14, 2021

Why and how to set up a corporate impact fund


 

Key takeaways from the EVPA member meet-up on 1 April 2021.

More corporate foundations and companies are considering setting up a corporate impact fund. During this meet-up, we discussed the key opportunities and challenges of doing so, how to get internal buy-in from the company, and how to get organised internally to set up a fund. Below are the key takeaways from the meet-up.

WHY set up a corporate impact fund?

Technical reasons:

  • Setting up a corporate impact fund can be a way to overcome the legal restrictions of a foundation.
  • Corporate impact funds provide an opportunity to deploy extra financial instruments (e.g. debt and equity) to better support social entrepreneurs.

Strategic reasons:

  • Corporate impact funds are usually part of a strategic corporate ambition to embed the societal purpose into the business.
  • They are a hybrid instrument, generating social impact alongside business benefits and thus building a bridge between impact and business.
  • Social enterprises are considered an important catalyst for sustainable and scalable societal solutions and can be scaled by impact funds.
  • Corporate impact funds are also an effective way to ring-fence capital and resources for a societal challenge, apart from short-term business logic.

HOW to convince your top management?

  • Align the purpose of the corporate impact fund with the overall direction of the company by defining a common vision.
  • Impact funds can be a learning lab for the business e.g. by incubating interesting innovations and business models before they would have a business case.
  • Outline a win-win approach in the collaboration between the impact fund and the company through a cross-fertilisation of their respective expertise.
  • Highlight the value of a corporate impact fund to the purpose-led transformation journey of the company.
  • An impact fund can be a golden nudge, catalyst or compass to turn business into a force for good.

KEY TAKEAWAYS

  • It is important to change mindsets in order to get the support to set up a corporate impact fund.
  • The increasing acknowledgement of the relevance of ESG is in favour of corporate social investing.
  • A corporate impact fund provides patient capital complementary to the business strategy.
  • Corporate impact funds are able to deploy various financial instruments needed to support promising social enterprises.

Are you keen to engage in such discussions with practitioners from across Europe? Then reach out to Sophie Faujour (sfaujour@evpa.eu.com) and become an EVPA member.

Watch top tips to set up a social impact fund by Sophie Faujour, EVPA's corporate Initiative Lead:

    Kindly supported by

    European Commission

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