Harnessing Finance for Lasting Impact: The Journey of the Social Impact Fund
Harnessing Finance for Lasting Impact: The Journey of the Social Impact Fund
In a world of mounting social and environmental challenges, social impact investing represents a finance paradigm shift, intertwining financial goals with tangible social and environmental impact.
A lesser-known element of what we do at London Community Foundation is harnessing the power of finance for positive change through impact investing, creating meaningful change within the community through our Social Impact Fund.
The Genesis of the Social Impact Fund
The recently opened Pond Mills development was supported by a Social Impact Loan of $1.6M from London Community Foundation (Derek Ruttan/The London Free Press)
In 2012, we embraced a challenge by the Governor General to Community Foundations across Canada to invest their endowment funds in capital projects that do good. That spurred the inception of the Social Impact Fund.
Our initial goal was to direct 10% of our assets to impact investments by 2020. The Fund began with a $650,000 allocation from our traditional investment pool, which represented 1% of our total assets at the time. Since then, the Social Impact Fund has grown exponentially and has now invested over $20 million into affordable housing and social enterprises – far exceeding our 10% goal.
Recognizing how well impact investing unlocks donor capital and magnifies the impact of our assets, the Foundation has grown the fund to $25M this year, with plans to grow it to $30M in 2024. The growth of the fund this year means that over 20% of our assets are now being allocated to investments that align with our mission.
Driven by a vision to create lasting impact and encourage innovation, the Social Impact Fund prioritizes affordable and transitional housing as an opportunity to kickstart community development. Housing, along with other areas our social finance loans support, are all informed by our Vital Signs Report.
Long-Term Sustainability
The Fund follows a well-disciplined due diligence process that includes staff working alongside the applicants to review the social impact as well as financial viability of the proposed project. This thorough process ensures that the Social Impact Fund makes informed and responsible choices. A dedicated committee provides review, oversight, and recommendation to the board on all social finance investments.
Reliable partnerships form the cornerstone of our approach, as we collaborate with organizations and individuals who share our vision for positive change. Out of the 30 loans originating from the fund,10 are in consortiums or partnerships, allowing us to magnify impact in the community.
The Fund is used to its fullest potential by enabling flexibility in the ways it provides funding, with lines of credit, equity, and mortgages being just some of the financial tools available. We also look to partners outside of London and Middlesex County, with recent investments in affordable and transitional housing projects in Tillsonburg and Guelph being examples of how the Social Impact Fund is widening our impact.
Without our donors’ unwavering support and trust in our organization, none of this would be possible. Our donors have generously gifted unrestricted funds to the Foundation that now make up over one-third of our assets – a unique position for a community foundation that gives us the opportunity to run initiatives like the Social Impact Fund.
Learn more about the projects the Social Impact Fund has invested in.