Impact Investing Network
The Community Trusts' secret sauce to solve climate change and housing
The Combined Community Trusts 2022 conference was held in Rotorua for the first time in four years. It's a big deal with over 200 attendees. Even a former Prime Minister delivered the closing session. And a Trans-Atlantic rowing race winner lifted the inspiration in the room. Sort of like the Olympics for community grant-making and investment for impact. But the stakes are much higher for Aotearoa.
New Zealand’s community trusts, who collectively manage $5 billion in assets and grant over $150m annually, came together to work collaboratively on two of the most pressing issues facing New Zealanders, housing and climate change initiatives on a national scale.
Given the scale and urgency of the challenge ahead, for us all, this is a race the Community Trusts need to run together. Collaborating at both a granting and investment level to play their part in addressing these systemic issues.
“We need to be revolutionary and in these challenging times, funders must use all their tools. We have traditionally focused on using granting to help achieve our mission and we will continue to do this. In the past 30 years we have collectively granted nearly $2 billion into our communities yet at the same time our key wellbeing metrics (environment, housing, inequality, child poverty) have all worsened. If we are to truly make a meaningful change in our communities then we must now explore advocacy, leadership and using our collective investment bases to make a difference and fulfil our purpose.” says Alastair Rhodes CEO of BayTrust, who hosted the conference and is also Chair of the Impact Investing Network (IIN).
Tan Huynh, the Impact Investing Network Manager, attended the conference and went in search of the special ingredients that go into the Community Trusts' secret sauce.
The gifting economy
The future is here, it's just unevenly distributed.
Futurist, Melissa-Clark Reynolds, expanded minds and asked the audience to look over the horizon at the future trends. The rise of the gifting economy, enabled by technology, offers opportunities to utilise the rising trends of gifting, subscription and pre-ordering. As an example, crowdfunding can more evenly distribute and democratise the process for many people to pay and invest, as little or as much as they can, into projects and ventures that matter to them.
Cool, calm and collective - ways to solve climate change
Ki te kotahi te kākaho, ka whati; ki te kāpuia, e kore e whati.
When reeds stand alone they are vulnerable; but together they are unbreakable.
- Kingi Pōtatau Te Wherowhero Tāwhiao
The imminent threat and scale of climate change is irrefutable. As such, it'll take a matching immediacy and collective effort to calm and cool the planet's climate.
The problem is only 4% of philanthropic funding in Aotearoa goes to the environment, even less for climate. There needs to be a big commitment by funders and investors to fill the funding gap.
Linn Araboglos, convenor of the Climate Action Aotearoa NZ, gave an honest and insightful take on an initiative contributing to the climate solution. Climate Action Aotearoa NZ, is a platform initiated by the Community Trusts and other funders to better understand climate action and its opportunities. To take collective action and accelerate a just transition to a low carbon society in Aotearoa, in partnership with iwi/hapu/Māori. A tika transition. A just transition that doesn't leave anyone behind.
There's reason for optimism despite the seemingly insurmountable giant iceberg that is melting in front of our eyes. Linn gave actionable inspiration. Imploring us to "lift our chins, and look at the horizon, [as our] our decisions will be different". Our decisions must be different.
We don't have all the answers. But we don't need all the answers. We just need to get behind the car and start pushing towards our destination.
Jo Hendy, CEO of Climate Change Commission, provided other climate opportunities. Supporting native planting to project forests that sequester carbon. Decarbonising by covering up-front costs, like insulating houses, and helping people on low income to get low emission cars.
Community Trusts, the philanthropic sector, and impact investors have a special ingredient. They can take much more risk than politicians. To invest in community projects that go beyond the political cycle, to sustain action and long term change.
Many parcels make a home
He aha e kore ai? Why not? Why not collectively fund papakāinga?
- Te Aorangi Murphy-Fell
Te Aorangi Murphy-Fell (Trustee at BayTrust, Kokohinau Marae Papakāinga) showed us how even a disaster that affected many, can be turned into a opportunity that benefits many.
The Kokohinau Marae Papakāinga development houses whānau who lost their homes in the 2017 Edgecumbe floods. A housing model based on Māori principles of shared land, collective ownership and long-term benefit for the community.
Asking a powerful call to action. He aha e kore ai? Why not? Why not collectively fund papakāinga?
Investing for a positive impact
We like numbers. We're into investing after all. A popular session was the 'Sustainable investments for positive impact' facilitated by Ross Pennington.
Alastair Rhodes, illustrated through BayTrust's impact investing journey, that you can have your cake (positive social & environmental impact) and eat it too (robust financial returns).
BayTrust, currently allocates 10% of its $250m portfolio to impact investments, mostly in housing. It has made the second highest financial return of the Community Trusts over last 3 years and the most impact. Including a 91% carbon footprint reduction in global equities and emerging markets. BayTrust intends to increase its impact investment allocation to 15-20% in the future.
To replicate BayTrust's successes, there needs to be a commitment by Community Trusts to develop and invest in internal impact investment capability.
Community Trusts' Secret Sauce
So what's really in the bottle that makes Community Trusts uniquely placed to contribute to Aotearoa's big gnarly challenges like climate change and housing unaffordability?
Freedom: Community Trusts have freedom to define their 'why', the purpose and positive impact they intend for their communities.
Longevity: An ability to think long-term, to have strategic plans and foresight that provides stability for communities they serve, beyond political cycles.
Community: Deep relationships with their communities provides unique insights that inform their investments.
Partnerships: Breadth and depth of relationships with funders, investors, community organisations and iwi enables the scalable investments required for the largest of challenges.
Unconstrained capital: Have more flexibility, compared to government, to deploy capital to achieve impact and financial returns.
Bill English, former Prime Minister and Finance Minister, adding that Community Trusts have are trusted for the important role they play in communities.
However, understanding impact is critical to know the difference an investment is making to people, through stories and insights. Funders need to ask:
Which people and where?
What change are you trying to achieve?
How would you know it happened? Did you go back and look?
Taking action - inspiration from a Trans-Atlantic rowing race winner
After all that is said, workshopped and told. There needs to be action.
And what better person than Kevin Biggar to inspire ideas into action. Kevin has survived the world’s toughest endurance event - the Trans-Atlantic Rowing Race. Rowing 5,000 km in a 7m plywood dinghy, between the Canary Islands and Barbados. Funny thing is. Kevin had never rowed before and was prone to sea sickness.
This is what Kevin learnt about achieving seemingly insurmountable challenges with almost impossible odds. How to fearlessly face the future:
Get enthusiatic, before you get rational too soon, to overcome your doubts and deal with risks.
Frame goals by steps, not all or nothing. Challenges are steps.
Work together as a team. Don't do or say anything to lower the energy of the team.
Dealing with setbacks. Break the challenge into smaller chunks you can bite.
So though even the future is already here, and it's unevenly distributed. Even though we face the biggest existential and exponential challenges we've had to solve. There is hope, but only with collective action.
Community Trusts can share their secret sauce around to use investment for positive impact.
Get enthusiatic - we had plenty of fun too. BayTrust put on a great gig!
The judges were particularly kind (blind) and awarded Tan Huynh an award for his unroad-worthy prototype cardboard EV car in the 'Recycle, Reuse, Reduce' dinner competition.
There were undoubtedly more worthy winners!
Find out more
- Impact Investing Network