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'Social impact fund needs govt support'
N V Vijayakumar Bengaluru, Mar 23, 2016, DHNS 0:28 IST
Ronald Cohen, father of European private equity fund and co-founder of Apax Partners, on Tuesday called for the government to come up with support and tweaking of laws for enhancing social impact investment in the country.
The chairman of the Global Social Impact Investment Steering Group, with 13 countries including the G8 Cohen, said the government of India has come up with innovative mode of social impact funding via CSR norms. “We want the government to come up with some expression of support and tweaking of regulation so that more money can be pooled in for social impact investment,” said Cohen to Deccan Herald. He came to Bengaluru to promote a unified view of impact investment organised by Impact Investors Council (IIC) to encourage policy change to help $2 billion nascent industry in India.
“The government should come up with policy initiatives to start social impact bonds so that large funds can be mobilised. Here, the government should remove legal constraints and systemic problems,” he said.
He applauded the government initiatives to come up with legislation on corporate social responsibility (CSR), where companies will have to spend 2% of their profit.
“The government can free unclaimed money in banks. Here they can set up a body to provide capital to impact investment organisations,” said Cohen. He said that the social impact fund will reach more than $4-5 trillion in 20-30 years from a few billions of dollars now. “It will overtake private equity and venture capital funds. The revolution by social impact funds will be disruptive and it will change the business model of philanthropic funding,” he said.
Social enterprise evangelist said the funding model starting from 19th century was really financial return model. “But in the 20th century, we added risk to return model. In the 21st century, we actually started measuring risk, return and impact. Here the social entrepreneurs with their technologies can make disruptions and make measurable impact through their business model. Here the fund will get 7-10% return very easily,” he said.