China's wealthy look to make 'social impact' on education

By Paul Welitzkin in New York | China Daily USA | Updated: 2014-11-07 14:16

It's called social impact investing, and in China a group of entrepreneurs intends to use the unique type of financing and problem solving approach to help improve education.

Social impact investments are investments in companies, organizations, and funds with the goal of generating social and environmental impact alongside a financial return, according to the nonprofit Global Impact Investing Network.

"A group of wealthy Chinese entrepreneurs have decided to make a contribution to education in the country. Rather than just donate money or establish a grant, they want to issue financing in the form of a bond that will provide a return so it can become self sustaining and eventually be used on other social problems," Raymond Horton, faculty director of programs in social enterprise at Columbia University's Business School, told China Daily.

The 13th Social Enterprise Conference at the business school on Oct 31 hosted a special "China Moment" to release the results of a study on China's social impact investing. It was co-sponsored by the main organization in the country engaged in social impact investing, the Shenzhen Innovation Corporate Social Responsibility Development Center (CSRDC).

Beginning in the fall of 2015, a training program for Chinese entrepreneurs who want to engage in social impact investing will be hosted jointly by the CSRDC and the business school.

Horton said next year's training program is the result of a memorandum of understanding between the business school and CSRDC.

"We will host the group and introduce them to faculty members who are engaged in educational reform. We will also introduce them to philanthropists in the US who are investing in educational reform," he said.

One of the main features of social impact investing is "that it's a way of turning investments into socially useful initiatives in way that requires solid information (metrics) to measure the success of the initiatives," said Horton.

An example of social impact investing in the US involved Goldman Sachs Group Inc, which launched a social-impact bond in 2012 that funded a program aimed at reducing recidivism among teenagers at New York's Rikers Island jail. It included a provision that said Goldman would profit if the four-year program succeeded in significantly reducing recidivism.

The release of the report -- 2014 Social Impact Investment in China --detailed the results of the study of social impact investing involving 100 large firms in China. Funds for the study were provided by CSRDC and the Shenzhen Charity Federation and Social Enterprise Center of Shanghai University of Finance along with major Chinese corporations.

According to CSRDC president Liang Yudong, the conference provided an important venue for the first "China Moment".

Since 2012, the CSRDC has been operating a program called Social Enterprise Growth Plan for Chinese Entrepreneurs. The program has been training executives of 100 firms already involved in social impact investing.

One of the participants, Sina, one of China's largest network companies, has teamed up with China Merchants Bank, the nation's fourth-largest bank, to found China's biggest network-finance-interactive public crowd-funding platform. That platform is expected to attract charitable donations of around 1 billion yuan ($163.5 million) annually and plans to engage in impact investment practice cases such as targeted charity fundraising drives.

paulwelitzkin@chinadailyusa.com

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