SIP60004 - Social Investment and Philanthropy

This research study focuses on the Open Society Foundations Organisation which is a fictional charitable philanthropic trust. The legal structure of impact investments, social impact investments, opportunities and cases, recommendations, and conclusion are discussed.

Running head: SIP60004 - SOCIAL INVESTMENT AND PHILANTHROPY
SIP60004 - Social Investment and Philanthropy
Student’s Name
University Name
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2SIP60004 - SOCIAL INVESTMENT AND PHILANTHROPY
Table of Contents
1. Introduction............................................................................................................................3
2. Description of the organisation..............................................................................................3
2.1 Origin and History............................................................................................................3
2.2 Foci and Activities............................................................................................................4
3. Legal structure of Impact Investments...................................................................................6
4. Social Impact Investments (Pros and cons)...........................................................................9
5. Opportunities and Cases.......................................................................................................11
6. Recommendations................................................................................................................12
6.1 Teaming up with government agencies..........................................................................12
6.2 Teaming up with public ancillary funds.........................................................................12
6.3 Investing in Development Impact Bonds.......................................................................12
7. Conclusion............................................................................................................................13
Reference List..........................................................................................................................14

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1. Introduction
The need to implement stable improvement in the society by fostering incredible
improvement and progress is of utmost urgency and should never be neglected. In today’s
realm of apparent economic freedom, millions of people are living impoverished and living
within marginalised communities where various social problems like health issues, economic
disparity, high rate of orphans and other issues. People like these who are not able to make
ends meet and lack sufficient resources for supporting their livelihood, rely mostly upon
charitable organisations who work in close counters for the upliftment of these people, by
helping them with basic supplies like food and shelter along with other resources. It should
be understood that governments of developing countries have lot of responsibilities. On that
mote, there are several organisations who do not operate on the lines of profitability and raise
funds in order to support people who are impoverished or needy, particularly orphans, or the
people who have been marginalised due to their health factors of chronic illnesses.
Works of charity also make significant contributions toward social, political as well as
economic factors in Australia (Chuen 2015). Like private and public organisations, ancillary
funds also renders services that make significant contributions. Services like building
hospitals, schools, and housing complexes create value towards the society. This research
study focuses on the Open Society Foundations Organisation which is a fictional charitable
philanthropic trust.
This organisation is a reputable trust that operates in various parts of Australia
rendering charitable works in various Australian cities. The organisation has handsome funds
and educated employees who understand the societal needs and haver the potential to create a
long lasting influence on the lives of the Australian people. The organisation allocate their
funds and the philanthropic projects particularly towards the welfare of the deserving,

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including the orphans. This is a philanthropic organisation basically, which focuses on
charitable activities only, operating within and even outside their periphery by offering
either service or financial grants. The innovative evaluation dissemination is followed by the
organisation by means of which the people in the organisation update themselves with
relevant information of social status of the people in Australia so that they can strive towards
helping more and more people.
I have undertaken the active role of acting as a consultant to this non-profit
organisation and by means of global knowledge, I suppose the organisation would be able to
spread their helping hands towards other areas of the world just as foreign organisations
also renders help to their needs. As an outcome of this, their productivity level as well as
fund generation would also increase. The kind of operations that this organisation
undertakes makes them popular in Australia and hence they are able to attract attention as
well as funds from many philanthropist from Australia and also all over the world.
Following a report based structure, the organisation have been described here along
with a proper layout of the legal status and the legal layout of the philanthropic trust. The
impact investing outcomes for this trust have also ben highlighted with proper evidence of
case examples. Besides recommendations for the future improvements of this trust have also
provided in the course of this report.
2. Description of the organisation
2.1 Origin and History
In the year 1985, the joint venture from Melbourne Academy of Social Sciences and
the Open Society Foundations was founded. The objective of the foundation was to eradicate
living bi-standards and communalism. The backdrop of the undertaken activities of the
organisation have been cultural freedom and social integrity. In 1993, the company started its

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core operations in the areas of Queensland council, Calinan County and so on. Since August
10th of 2009, the company expanded their role in order to act as a benefactor to the civil
society organisations in all parts of the country and even in other parts of Oceania as well.
The organisation believes that political agendas are limited and their impacts shows
reflexivity of their diplomatic needs. Nevertheless, financial markets are cold stores of power
which needs optimisations and decentralisation for supporting the move to eradicate bi
standards of living and intentional and unethical communalism. This is essentially a non-
profit organisation. The organisation addresses the current as well as the future needs of the
local communities. They are also up to creating an alternative monetary fund permanently
that would support the local communities. As informed by Barraket, Barth and Mason
(2015), they receive help from other philanthropic organisations as well as famous
personalities in Australia and other countries who also carry out philanthropic activities by
themselves.
2.2 Foci and Activities
The key missions of their operations are:
 Seeking to improve the living standards and quality of lifestyle of all the people who
are being subordinated through communalisations
 Working independently from the influence of other parallel organisations or
regulatory framework of the governments.
 Having a governing body comprising of Australians who broadly represent various
communities of Australia and understand the value of communalisation and its
harmful impacts. Make monetary and other grants to the other non-business
organisations and community welfare organisations in order to address the
disadvantages they are facing in the context of their social life and belongingness.

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 Address the emerging needs of local communities and supply them the deliverables
they need for the impending changes in the community.
 Accept donations from the various personnel and execute philanthropic activities they
intend to perform.
The organisation accumulate their governance expertise, depth of knowledge, societal
working trends as well as their grass root connections in order to deliver a community of
engaged philanthropists to the society. Their main motto is the creation of potential, resilient
and healthy communities who have equal participation in the state territory where they exist.
They also operate various communication channels in order to create an Impact Fund, having
share in existing sub-funds and start small initiatives with Gumnut accounts.
However, most importantly, the organisation raises impact investments funds for small
objectives. In order to break the shackles of communal fragmentation, the company also
invests about AUD $65 million annually to establish high-impact, sub market returns. Till
now the company have provided AUD $200 million loans to 300 small and emerging
business entrepreneurs represented by sub sided communities. The repayment rate have been
98%. This shows that most of the ventures of the company have been successful. The
company, for evidence invested in certified apple trading in Perth. Smallholder farmers
mainly comprised of the cooperative society which have been sponsored with the funds. The
additional revenue that the company earns from such endeavours are used to launch small
projects like reforestation, establishing community based clinics for health care and donating
towards developing the business of small farmers.
The company also invests in housing projects with investment based financial returns and
providing various social benefits to the rural communities in Southern Australia and South
Eastern Australia. In this context, the company gathers investments from major financial

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institutions, privately owned family companies, development and real estate agencies and
other large scale organisations. For instance, the company made a potential investment of
AUD $$4 million to an organisation that worked towards building affordable homes for low
end incoming families in the unorganised rural sector. Another similar aid was provided to a
real estate agency in Tasmania that provided temporary shelters to the people affected by
natural calamities. Other important investments area are access to clean energy as well as
clean drinking water. A European organisation approached the organisation as a part of their
CSR activities. The two companies formed a joint venture to donate AUD $10 million
towards the development of in-house electricity producing facility in order to light up 500
houses of the rural sector. This include houses of aboriginal Australians who have been
submitting petitions to the government with the want of access to electricity.
3. Legal structure of Impact Investments
In the year 2013, the Australian social impact investment saw a rapid rise owing to
major investments from international investors and the United Nations. At present the market
value of the operations of the philanthropic impact investments in Australia is AUD $32
million (Carè & Wendt, 2018). In the G8 conference the Australian Social as well as
affordable housing fund was formed and invited tenders from various agencies around the
world to establishing housing in Australia. The federal government of Australia sanctioned
loans for the housing program at 15% lower corporate tax rate for the agencies involved in
that approach (Wheeler et al. 2014). However trusteeship is a very big concern for engaging
in philanthropic impact investing in Australia. In case if an organisation itself or in joint
venture undertakes an approach to launch an investment campaign they needs to assure the
government that the company(s) have the financial capability to make the investment. Hence,
Cumming and Johan (2016), opines that the government needs to confirm that the campaign is

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within the investments power of the campaigners. In this regard, the company had received
financial aids from European investors and 8 agencies had launched a joint venture under the
leadership of this organisation in order to fulfil the financial needs of the farmers in the Great
Barrier Reef area. Hence the company had to fill the 52 (c) (c) form of the federation’s
Superannuation Industrial Act 1933 (Chuen, 2015). The beneficiaries had an insurance of
getting return on their investments as an impact and there always is an assurance of the
completion sand/or implementation of the project.
Another regulation of the government of Australia requires that the workers employed
in accomplishment of the project required basic standard of the care and/or skill that is to be
provided to the beneficiaries. In this context, de Zwaan, Brimble and Stewart (2015), opines
that the government have the 52(b) of the SIS act that confirms that the labours involved
should provide a skill test for being eligible to work on the project. The company had to
comply with this regulation during undertaking the artificial electricity hub implantation in
the rural areas of Tasmania and the Northern Australia (Stubbs, 2017). In this context, the
company had to endure additional costs of AUD $1million for inviting a Japanese company
to act as technical supervisors for the project. Again, Dowling (2017), informs that the
Prudential Regulatory authority in Australia is another regulatory body that inspects the
norms of the micro-financial loans that the organisation gives to various small agencies or
communities. In this context, the social investment undertaking bodies like this company
have to deposit certain share of their value that would be credit with interest after completion
of a certain percentage of the project and the release is up to the discretion of the concerned
body that is the Prudential Regulatory body in Australia. The investments from foreign origin
is on the rise and that is why the Australian government have introduced a new regulation
since 2016. It is evident that the social investment making organisations have the license to
accept funds from any of the foreign origins including the middle East and Asia also. As per

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Flatau et al. (2015), the prudential regulatory body of Australia requires the monitoring of the
investments also. The major bodies that accepts foreign investments have to give a record of
the funds that they have accepted from the foreign origins and also mention the source from
where they have accepted the funds. Furthermore the government also forms an inspection
council that collects data regarding the progress of the various projects that have been
launched with foreign aid and sends a satisfaction report to the government (Snider, 2015).
Another important regulation 35 © of the SIS act also allows the government from stalling or
terminating any of the investors or partners from any ongoing project in case if the
government finds any of following in the case of the project:
i) The concerned body have some m kind of benefit from the project and might be
benefitted by the project, particularly if the charge of conflict of interest arrives
against any of the partners.
ii) In case if the investment in any project is coming from any source that have not
confirmed with the taxation rules of the territory, then the government have the
right to stall the project. However in case if the social interface of the project
undertaken is sensitive, that is if the organisation(s) have undertaken any project
that is of some significant benefits to the society then the government either
imposes fine on the organisation, or allows the project to go after expulsion of the
concerned partner that is found to be guilty (Haski-Leventhal & Mehra, 2016).
iii) Thirdly, if an Australian organisation have been found to be regulating money in
the market (even in impact investment projects), more than the licensed scale of
their market strength and permitted shares, the company can also be jailed if
found acquiring money from un-ethical or illegal sources.
iv) Other regulations include that any philanthropic organisation cannot accept funds
from any organisation that have been blacklisted by any territorial legislation or is

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in any way found to be directly or passively linked with terrorist groups. In case
if this regulation is violated then the concerned organisation would be blacklisted
and the directors can also be taken prisoners along with monetary punishment of
over AUD $5 million (Höchstädter & Scheck, 2015).
The concerned company here, being a private ancillary fund needs to follow up all these
regulations along with one principal consideration. One of such persons have to be in the
directorial committee of the organisation who is a socially responsible person. In this
organisation, there are two personalities who associated with international level outdoor
sports in Australia and later turned to philanthropists. The concerned organisation being a
private fund is to pay a certain percentage of financial return to the government. Other than
that the activities of the company in or outside Australia are not taxable by the Australian
government or the United Nations (Impact, 2014). The requirements for accepting funds have
been stated already. Other than that if the organisation provides fund to any other corporation
of the same genre, it have to grant the sanctioning of the fund from the government of
Australia. The organisation also have to fill the clause 61 form of the 58(b) regulation of the
SDIS act whereby the government should be informed of the possible risk of participating in
a philanthropic program as a partner, either strategic or financial.
4. Social Impact Investments (Pros and cons)
Often impact investments are undertaken by corporations that have particular thematic
approach towards social investments. IN case if any organisation is selling products like as
alcohol or might be tobacco that is potentially harmful for the society, undertaking impact
investments can suggest to be really beneficial for the company. Other genres of organisation
like pornography, or guns often endorse projects based on environment concerns or usage of
clean energy. Although the organisation is not concerned with any of such aforementioned

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industries, the company had taken up the in initiative of cleaning the Great Barrier Reef. As
informed by Lehner (2016), this initiative won high acclaim from the United Nations and
fund as well as resources were allocated from the UN in order to facilitate the heritage site of
the Great Barrier Reef. Hence it is evident as per the regulations of the Australian regulations
that if any of the organisations are taking up any unethical business initiatives for generation
they would be at a good place if they have paralley, also taken up an impact investment
initiative that is significant from the social perspective.
Operating in Australia, the individuals or the organisations also have the benefit of
accepting the funds of mutual funds in delving in to philanthropic projects. However,
Ormiston et al. (2015), opines that the allocation of funds should be notified with the
Sustainable as well as Responsible investment Forum of Australia. The Australian
government at presents enlist 456 mutual funds from where the social investment agencies
can take loans without the prior concern of the government. In this context, it requires
mention that the company during 2017, accepted loans of AUD $5 million from a British
fund raiser, that had a Canadian stock investor in their governing body. The company named
Amana Income Fund had to provide a declaration to the Australian government citing that
they had suitable permissions for collecting funds from any of the beneficiaries connected
with them. In this context, they showed a NOC to the Australia government (Scholtens,
2014). Only after that the Australian government sanctioned the AUD $30 million joint
venture project to the company and its partners.
However impact Investing have various disadvantages also. There is no specific genre to
define an impact investing company. A tobacco brand if they comply by the norms of SRI
guidelines in Australia, can invest in philanthropic projects. However since this company is a
core investment company that is listed only for philanthropic operations the particulars of the
two parent agencies have only 50% impact on the operations (Sardy & Lewin, 2016). Other

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than that, there are also few socially responsible persons who have represented the nation in
various fields.
Portfolio management n undertaken by the mutual funds in order to determine the
funds are coming from ethical sources can often cause interruption in the activities of the
social projects that might have been undertaken currently by a company (Patton, 2015). The
fees payable to mutual funds have fallen in the recent year and this is why most of the
philanthropic organisations accepts funds from them.
Often a company like this one might have global partners and investors. Often many of the
foreign investors might be unwilling to provide funds under the stringent guidelines of the
Australian government. In that case the parent company would be in doldrums as they might
have done partial investments and also deposited security fees to the government (Playford et
al. 2014). The company under concern here most of the times do not take the risk and
involves stakeholder’s representatives in the executive committee of almost all project.
5. Opportunities and Cases
One of the most important initiatives that have been taken up by the company was the
distribution of the pay against success bonds, the bonds granted the farmers of West Australia
to purchase bonds and conduct business under the guidance of the experts who would be
working with them in their projects. The company had a policy that in case if the business of
the beneficiaries did not click or if they run into loss at -11% or more they would not have to
pay back the bond value. They can only pay back the purchase value. This helped the farmers
immensely. However the company ensured that the business projects of the stakeholders did
not fail. In order to achieve this this they had along with team a groups of agricultural experts
committee whom the farmers could not have afforded to active. However in concern to the
priorities of the grant makers who had invested about AUD $50 million for the project, the

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company y made this arrangement. However as an impact the farmers associated with this
venture had worked with the group of agricultural experts and gained a harvest rate of 144%.
Hence the company could also gain back 81% of their money. Their expected return rate was
65%. Hence, the grant makers’ interest were commendably defended by the company in this
initiative.
Another international initiative of the company might be highlighted in this context.
In 70 of the poorest countries the country had arranged for vaccination during the recent
outburst of the swine flu. Nevertheless, the company skilfully preserved the interests of the
grant makers, this time also. Many of the global corporations of medicine had supplied
vaccination to the company as a part of their CSR activities. The company made this a public
campaign and marketed this as an event with keeping the commercial medicine companies in
the frontline. This helped hugely in their brand endorsement and as an outcome, the
companies gained a brand equity of over 1.5 units (Qiu, Movassaghi & Bramhandkar, 2017).
This also increased their revenue returns.
6. Recommendations
6.1 Teaming up with government agencies
It would be beneficial for the Australian companies to team up with the government
or government franchised organisations. As an impact, the profit making companies would
not have endure the stringencies of the government. Moreover, government aid in case of
philanthropic activities do not require payback of funds and hence grant makers interest do
not raise concern for the companies. Other than that, having government as partners raise the
weightage of the companies investing in social impacts.

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6.2 Teaming up with public ancillary funds
Having public ancillary funds as partners and having greater share of them in the
project funds reduces the stringency of the government. Hence it makes easier for the
executive or the governing body of the project to manipulate funds according to the needs of
the project.
6.3 Investing in Development Impact Bonds
Investing in development impact bonds earns high amount of aid from the
government bodies. Besides the development impact projects are considered to be most
beneficial as the listing of the company becomes higher and the share value also increases as
an impact.
7. Conclusion
Analysing the impact investing trends in Australia, it can be concluded that there are
more chances of confirming investable deals. Larger development investments projects and
government favoured endeavours can lead an impact investment organisation towards
becoming a universal regulator of economy and as an outcome they can earn more and more
brand endorsements also. Besides that, the creation of a benchmark of a core investment
agency have helped the company to gain serious reputation among the private ancillary funds
of Australia.

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