England’s king-in-waiting, Charles, Prince Of Wales, on Tuesday launched a $100 million fund that will help women in South Asia achieve greater access to education, health and aid the global goals of women empowerment.
The fund for women empowerment will be a trick mix of venture capital and financial innovation, and offer more than financial returns to investors. The fund plans to use money from investors to give approximately 500,000 women and girls greater access to better education, jobs and entrepreneurial opportunities in the next five years.
The investors will get returns of two types: a percentage gain plus the return of principal funding, as well as the opportunity to achieve the funding organization or individual’s corporate-social-responsibility goals.
British Asian Trust Chief Executive Richard Hawkes told Bloomberg that investors wanted more than financial motivation. “Globally, a growing number of investors are no longer driven by financial return alone. There’s increasing recognition of a blended return — both financial and social,” he said.
The British Asian Trust was founded by Prince Charles in 2007 and has been working ever since to improve the lives of people around the world by investing in charities that impact impoverished populations in South Asia and the UK. The Trust has helped 350,000 disadvantaged people in Bangladesh, India, Pakistan, Sri Lanka and the UK since it was formed in 2007.
The Way It Works
A prominent feature of the fund for women empowerment will be the concept of a “development-impact bond”, which will pay a return if, and only if, the pre-agreed social goals of the investment are met. The British Asian Trust will perform investment banking role for the project. It will help raise the capital, manage the project and channel various stakeholders to execute the project effectively.
The fund or the investment in the fund is looking for two types of investors: “risk” and “donor”. The former type of investor will be buying the bonds as they become available and make capital available for the project. The risk involved will range from little to severe or complete; meaning the investor may get little, decent or almost no return on the investment and may even end up losing every cent of the investment.
The “donor” will be the one actually buying back the bonds from the “risk investor”, paying both the principal and interest provide the goals of social improvement and impact have been met.
At the launch, Prince Charles called the new fund the “most ambitious venture to date” that the trust had taken up. “The sustainable development goals endorsed by 193 member states at the United Nations cannot be achieved unless radical new approaches are developed,” he said. “I am very proud that the British Asian Trust is at the forefront of developing such innovations.”
Such bonds are dubbed development impact bonds (DIB). These are performance-based investment instruments intended to finance development programmes in low resource countries. The DIB model creates a contract between private investors and donors or governments who have agreed upon a shared development goal. Investors advance fund development programmes with financial returns linked to verified development goals.