Spring 2020 Issue
3. Relying on the capital and knowledge of foundations to boost impact investing Foundations provide capital and technical assistance to organisations and social enterprises. In many GSG member countries, key initiatives in market development were funded by private foundations. A key element is the alignment of the missions of foundations with their fiduciary responsibility through impact investing. This has been possible because domestic regulatory bodies have eliminated legal barriers that were preventing foundations from investing according to beyondprofit-maximisation criteria. Another way to contribute to the growth of the sector is through hybrid instruments in which impact investing is supported by venture philanthropy. 3.1 Clarify the regulatory framework (state and regional) to allow foundations to make mission-related investments, both through their endowment and reserves and their annual budget, based on revenues and income 3.2 Raise awareness and train foundations on the possibilities to use impact investing for mission fulfilment 3.3 Create a joint pilot financial vehicle between several foundations to allocate part of their endowment to impact investments 3.4 Use endowments and reserves of foundations to create new vehicles of patient and hybrid capital that invest through a combination of equity, debt and non-refundable contributions 3.5 Promote venture philanthropy from foundations to support social organizations towards internal transformation processes and financial sustainability 3.6 Promote venture philanthropy from foundations to support social enterprises in their initial stages of development 3.7 Use the budget of foundations to build part of the infrastructure required for the development of the impact investment market (studies, databases, spreading of initiatives). 4. Promote outcomes-based contracts to foster social innovation Payment-by-results contracts (PbRs) or Social Outcomes Contracts (SOCs) represent an innovation in public procurement and in the provision of social services in Spain. SOCs represent an obligation for the contracted party to deliver certain impact results instead of specific benefits or services in order to get paid. In these contracts, payments are subject to achieving pre-agreed social impact objectives 65