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Social investment – Scope take the plunge
Friday, April 20th, 2012
Scope has become one of the first charities to take a serious step into social finance with the launch of a £20m bond. They are pitching it as a straightforward commercial bond (with a reduced coupon and some impact reporting), secured on their retail and fundraising income. It’s important for social finance that products like this are successful. They prove that there is demand among investors for ethical debt and help build trust in charities as reliable organisations. READ MORE
Namibian debt
Wednesday, November 16th, 2011
This week’s notable fact about the Euro crisis was that as the rates on 10-year Italian bonds hit 7%, the Namibian government raised $500m of 10 year money at 5.5%. Namibian debt is now considered a safer bet than Italian or Spanish debt. READ MORE
Prosocial bonuses
Friday, September 2nd, 2011
Why pay bonuses? A recent Australian study has been looking at the impact of “social bonuses” – half of them were given a traditional bonus to spend on themselves and half were given the same amount to spend on a fellow worker. On measures like employee satisfaction, performance and return on investment to the company, the former group showed no measurable improvement. The latter performed better and felt happier. Read more.
Investor perspectives on Social Enterprise
Friday, August 5th, 2011
This in-depth report, commissioned by the City of London and the lottery, looks at what it will take to unlock funds for social enterprise investment. In short, investors want the things they want from all markets: manageable risk, good returns and deeper markets to allow secondary trading. Read more.
Understanding “irrational” generosity
Friday, August 5th, 2011
New psychology research suggests generosity is a sensible evolutionary response. We cooperate in the face of uncertainty, because we’re not sure if we’ll have to deal with the same people in the future. Economics deals in one-off transactions. People deal in relationships. Being nice can be a winning strategy. Read more.
The Lords take on Nudge
Friday, July 22nd, 2011
If you work in an area where policymakers are talking about “Nudge” and “behavioural economics”, then you’ll want this report to hand. The House of Lords Science and Technology Committee have critiqued the area and concluded that ‘nudges’ used in isolation are unlikely to be effective. Also, there was ‘relatively little evidence’ about how these theories could be used in practice. Whilst energy-efficiency and smoking cessation work had been based on evidence, food labelling and alcohol pricing work hadn’t. Read more.
A green nudge
Friday, July 8th, 2011
Behavioural economics remains a popular theme among policymakers. The government’s new “Behaviour Change and Energy Use” report examines ways of nudging people to be greener and is one the first attempts to turn this subject into some real policy ideas. Planned trials on energy efficiency measures will offer two incentives: some customers will be offered a “one month council tax holiday” for installing loft insulation, while others will receive Homebase and Argos vouchers. Other suggestions include a modern version of keeping up with the Joneses – energy bills that compare people to their neighbours. Read more.
Is a pound a pound?
Friday, June 10th, 2011
If you were given £200, how would you spend it? If I gave you another no-strings £200 and called it a “Winter Fuel Allowance”, how would you spend it then? New research from the IFS suggests that 41% of the winter fuel allowance was spent on fuel, even though recipients of the payment were only spending 3% of their other income on fuel. The authors suggest a ‘labelling effect’ that trumps some of the basic assumptions of economics (that a pound is a pound). Though the research raises more questions than it answers, the underlying idea is really important for all sorts of campaigners and policymakers. A rose by any other name might not smell as sweet. Read more.
Diaspora Bonds
Friday, March 18th, 2011
Africa needs infrastructure investment. This costs money. According to the World Bank, one way of getting the money in could be through the issue of “diaspora bonds”, issued to foreign nationals living in more developed economies. India and Israel have used them successfully and they can provide a stable, cheap source of external finance. Although the purchaser pays a premium for the bond, it might be attractive to give low interest-bearing returns. Buyers also seem prepared to accept a ‘patriotic yield discount’. There is more and more innovation like this in finance structures for development and philanthropy. Read more.
Crowding out in fundraising
Friday, February 18th, 2011
This is fascinating. “Crowding out” is the economic idea that public money can push out private money. A paper from the National Bureau of Economic Research suggests that for every $1,000 of government grant received, private donations fall $757. There are two possible reasons for this: private donors give less or that charities invest less in fundraising. The research suggests that the decline is mostly self-inflicted, because charities scale back their fundraising capacity, becoming reliant on their government money. Read more.