At a glance
Save the Children Australia has ambitious goals that cannot be achieved through a conventional philanthropic approach. The 100-year-old charity has instead developed an innovative funding model to accelerate the pace of social change.
The Impact Investment Fund, launched in 2020, harnesses the investment power of philanthropic, corporate and high-net-worth partners to fund impact-led start-ups.
Administered by Save the Children Global Ventures, the fund is the first of its kind in Australia’s not-for-profit sector, because it presents socially minded investors with opportunities for competitive returns.
The fund’s A$7.4 million anchor investment came from insurance giant QBE and a range of existing supporters.
To date, the fund has invested in seven innovative companies across data science, education and health technology, which all focus on fundraising and child protection.
The fund’s success helped Save the Children appear on the Australian Financial Review’s 2022 Most Innovative Companies list.
Michael Dugina FCPA, group CFO and non-executive director of the fund, says this is just the beginning of Save the Children’s plan to radically transform its approach to solving complex global problems.
“We’re about to launch a second impact investment fund,” says Dugina, who joined Save the Children in July 2022.
“We also plan to have a European fund and a global endowment fund set up in 2024, leveraging our expertise and footprint as a globally federated organisation. Demand for our services is growing, and our operating environment is changing. We needed to adapt our business model.”
Competing for global shares of the same wallet
When Save the Children was founded in 1919, by English sociologist and teacher Eglantyne Jebb, it was among the first to champion the concept of children’s rights.
Its first Australian branch opened in Melbourne in 1920. The organisation has become a global movement, creating lasting change for children and their families through long-term education, health, child protection and climate change projects.
Over the years, the need for this vital work has only grown. Meanwhile, the global charity sector is under increasing financial pressure.
The Australian Charities and Not-for-profits Commission’s Australian Charities Report reveals that the sector’s expenses soared to A$167.8 billion in 2020, which is an increase of A$10.2 billion.
The Australian Productivity Commission has kicked off a review of Australian philanthropy, aimed at boosting donations and meeting the government’s goal to double philanthropic giving by 2030.
“To meet compliance requirements, we have to do a lot with very little, because the community wants to see their dollar go towards impact, not towards administrative costs,” says Dugina.
He says a key challenge is that big players in the global charitable market are competing for a share of the same wallet.
“Fortunately, we have great community members and corporates who contribute a great deal, but in Australia, there’s no tradition of significant, regular giving,” he says.
“We tend to have an environment where people volunteer more, as opposed to donating money for communities in countries far from home.
“That’s why an impact investment fund, where we can trade sustainable sources of capital for impact, is critical in terms of growing and changing the system to provide better equity globally.”
Strategy for success
Dugina’s strategic thinking skills were honed at a young age. He started his career as a private in the Australian Army and says the experience taught him the value of resilience and forward planning.
“Plans, as soon as the battle starts, are useless, but the act of planning is really important to understanding the options that are presented in front of you and in making an assessment about the best course of action to take,” he says.
“That stuck with me, and I think it’s the strategic element of planning that helped me develop into a CFO.”
Prior to joining Save the Children, Dugina worked in finance roles across the corporate, not‑for-profit, education, health and government sectors. Most recently, he led major change at the City of Greater Geelong, delivering improved customer and employee experience in digital technologies.
“I was drawn to Save the Children because I could see what they were aiming to achieve through their Impact Investment Fund.
“I thought I had skills I could leverage to help it to succeed.”
Why companies need a long-term plan for philanthropy
Transformative social ventures
Research from the Global Impact Investing Network shows that the impact investing market has reached more than US$1 trillion (A$1.5 trillion) worldwide. This represents a valuable source of patient capital for funding long-term innovation.
Save the Children’s Impact Investment Fund has four key priority areas for investment – health care, education, child protection and related areas, such as climate change and financial inclusion.
The fund’s ventures include Zeraki Analytics, which helps schools in places like rural and regional areas in Kenya to analyse academic data faster.
Health technology company THINKMD is another of its funded ventures. It increases the capacity of health workers in areas with limited resources.
Another venture, South Australian independent school Ngutu College, integrates First Nations knowledge and the arts into a curriculum that is fully compliant with Australian curriculum requirements.
Dugina says the fund’s decision to invest aligned with the school’s desire to support the most vulnerable and disadvantaged children to gain an equitable education.
While the impact of the fund’s investments is measured through a range of frameworks, it also draws on the expertise of the Centre for Evidence and Implementation (CEI), he adds.
A Save the Children subsidiary, CEI works with researchers, policymakers, organisational leaders and public practitioners to build a high-quality evidence base for programs, policy and practice.
The Impact Investment Fund has the same legal structures, environment and governance as any commercial fund, but it faces different challenges, Dugina says.
Early on, one such challenge was securing anchor investment to ensure the fund was both scalable and sustainable.
“You can’t start a fund like this on a whim,” says Dugina.
“You need inventors and volunteers from the corporate sector to support it.”
Another challenge has been building a pipeline of social ventures in which to invest. “Investors can be inhibited by concerns of ‘social washing’ in impact investments, just as they are around ‘greenwashing’ for climate-related investments.
“Fortunately, an organisation like Save the Children brings a lot of credibility to the table when it comes to our experience through operating in 110 countries. There is also our experience in impact frameworks and our reputation with governments and the philanthropic community.”
More to give
The success of the Impact Investment Fund has paved the way for the launch of Fund II. Fund II has a higher financial target of A$25 million, with at least A$10 million to be invested in Australia.
Key impact areas for Fund II include helping children to keep learning, grow up healthy and stay safe. It will also focus on solutions to address climate change.
Dugina says the funds aim to create system‑level change.
“You can give a dollar for a child in a particular place that will help them to get medical attention, food or other aid, but it doesn’t create system-level change or sustainable change in that environment.
“It becomes a kind of hand-to-mouth activity that’s required, but we need change at a system level to help prevent crises.”
“We do work at that level, because it’s extremely important, and we’ll always rely on traditional funding sources, such as government, public donations and philanthropy,” adds Dugina.
“But we’re now working up the value chain, stimulating investment activity in areas that can radically improve the entire system for children and families.”
One piece of career advice
“Continue to challenge yourself to try something new, so that you always feel engaged with your work. I also suggest developing a problem-solving capability, and always plan ahead, as these skills are universal."