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UBS’s Tom Hall on maximising impact through collective philanthropy 

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Published: 26 March 2024

Tom Hall, global head of social impact and philanthropy at UBS, tells Impact Investor that collective philanthropy is about more than just pooling financial resources to fund the world’s most urgent challenges.

Jacaranda Maternity, a social enterprise backed by the UBS collective philanthropy initiative, has helped deliver over 7,000 babies with maternal and neonatal death rates well below national averages | UBS

Collective philanthropy allows wealthy donors to pool resources and create more impact bang for their buck than may be possible by investing separately.

But it’s not just about the size of the investment, it’s also about working together with NGOs and other actors to shape strategies that create sustainable and scalable impact, according to Tom Hall, managing director and global head of social impact and philanthropy at UBS.

Swiss wealth manager UBS actively encourages its clients to engage in philanthropic activities and is one of the pioneers of collective philanthropy, via its Optimus Foundation. 

The foundation has developed a series of themed ‘UBS Collectives’, which donor organisations can join through various tiers of membership – the top tier is a minimum yearly financial commitment of $250,000 (€231,000) with UBS adding a 20% match. By donating , these donors have access to a learning curriculum and expert advice on philanthropic strategy, gain on-the-ground experience of the projects they are supporting and are able to share solutions with other members.

These ‘Collectives’ provide a framework for donors seeking to make a greater impact in areas that interest them, but in which they may have limited expertise or where the opportunities to make an impact as a solo investor are limited. 

“One thing that we saw, for example, in the climate space was that many philanthropists didn’t really know where to start. There were a lot of charities looking for funding that were over promising and under delivering, partly because they were competing with each other,” Hall says.

That was the case with the UBS Optimus Foundation’s first focus area for a collective, which was improving coastal resilience in south-east Asia, in particular by supporting efforts to incentivise shrimp farmers not to cut down mangroves.

“There were many organisations operating in that area, but they weren’t collaborating, so we brought them together to say, look, we can raise more money than you can individually, but we want you to work together to come up with a really coherent, collective impact approach to this issue,” Hall says.

Holistic approach

By pooling over $7m of financial resources together from various philanthropic donors, the first cohort of the UBS Collectives, the Climate Collective, was able to help fund and organise the complex task of bringing together the relevant actors, such as non-profits, companies, government and academic institutions, to develop a joined-up strategy to tackle the issue. 

Tom Hall, UBS: “One thing that we saw, for example, in the climate space was that many philanthropists didn’t really know where to start.” | UBS

For part of this initiative, the foundation has been working with consultancy Earth Security to invest in a three-year programme to fund restoration projects in 40 important mangrove locations. A $3.5m investment is supporting the development of  a potential pipeline of up to 500 investable projects, which, UBS estimates, could mobilise $100m in public and private capital.

“Without the resources that come from philanthropic capital at the beginning, it would be difficult to get any of these benefits. With them, you have a chance of really catalysing solutions that are scalable and sustainable,” Hall says. 

Besides the Climate Collective, UBS Optimus Foundation currently provides two other ready-made collectives – the Transform Collective, which funds organisations and strategies protecting vulnerable children, and the Accelerate Collective, which focuses on using social finance instruments and support for social businesses for development, while generating returns that can then be recycled.

To date, over 60 UBS Collective members, who took part in the learning journey from around the world, have committed over $27m to the three collectives. 

UBS is now launching its second Accelerate Collective cohort, as part of which donors are to provide catalytic capital intended to crowd in commercial capital with a leverage ratio of 2.5 times. The foundation say it will identify, seed and support 15-20 innovative impact enterprises using a range of patient capital techniques, such as equity, debt and convertibles.

Support for social enterprises

One social enterprise in which the Accelerate Collective has invested is Jacaranda Maternity, which provides maternal care via clinics in Kenya. UBS says the enterprise has so far helped to deliver over 7,000 babies with maternal and neonatal death rates well below the national averages, while profitably managing their hospitals.

“Some philanthropists might set up a maternity clinic, but for that clinic to still be there in 20 years, they’ll have to fundraise for it, or endow it, if it’s a charitable project. But Jacaranda was incorporated as a social enterprise, which has a corporate rather than charitable structure. That means they can obtain revenue from the government and from the health insurance system – and that provides a self-sustaining model,” says Hall.

Again, the pooled upfront funding that collective philanthropy can provide is seen as vital to cover the high cost of identifying promising early-stage companies. But there are also other benefits. 

“Typically, the reason why an enterprise like Jacaranda can’t scale is because their cost of capital on the open market would be perhaps 20-25%, because it is seen as a risky business. But with philanthropic capital, you can do that loan at 7-8%, making it viable for them to start scaling,” Hall says.

UBS Optimus Foundation first provided an impact loan to Jacaranda and is now investing $700,000 through a convertible note as a bridge prior to the enterprise’s planned series B fundraising later this year. That funding will underpin an expansion from three to 15 maternity hospitals.

The Collective aims to make a small return on its lending, which can then be recycled to preserve philanthropic capital. 

Outcomes initiatives 

Outcomes initiatives are another avenue opening up for collective philanthropy. Investors in these provide the upfront costs of a project, typically one implemented by private or charitable organisations to deliver a public service. Returns are dependent on whether pre-agreed targets are met. 

The Accelerate Collective was one of the driving forces behind the $100m SDG Outcomes Fund, a multi-investor blended vehicle to support and deliver impactful projects in low- and middle-income countries, whose backers include the development finance institutions of the US and UK governments as well as private investors. UBS says philanthropic donations from more than 30 UBS clients provided catalytic capital to unlock additional impact-driven investment. 

Among the projects backed by the SDG Outcomes Initiative are government-backed outcomes partnerships in Ghana and Sierra Leone, under which repayment is dependent on whether targets for improvements in education standards are met.

“Getting governments to transition more of their existing budgets into outcomes contracts for education or healthcare, which are externally audited, we’re actually seeing public money genuinely paying for impact,” says Hall. 

He believes it is time for outcomes initiatives, which have been on the agenda for the last decade, to become more prominent in impact investing. “It’s literally better value for money for the government and taxpayers to spend money that way. We should be asking why more money is not spent in a way that’s auditable and is being proved to work,” he adds.

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