How does Guy’s & St Thomas’ Foundation approach impact investing?
We endeavour to maximise the impact of our work across all parts of our foundation, including our grant-making activities, our support for Guy’s and St Thomas’ NHS Foundation Trust and the management of our endowment assets, valued at £1 billion ($1.4 billion; €1.2 billion).
Each year, we use a generous amount of the proceeds from our endowment investments to fund the health programmes that underpin our grant-making activities. In 2018, we went a step further by launching the foundation’s impact investment strategy, targeting a 5 percent allocation of capital from the endowment.
This is a growing allocation and now includes nine funds dedicated to addressing the social determinants of health, such as affordable housing for homeless and vulnerable groups, as well as backing healthcare innovation.
How does this align with the organisation’s charitable mission?
We are one of the leading health foundations in the UK and our mission is to build a healthier society. Our work seeks to identify and address poor health outcomes and health inequalities experienced by the most underserved and vulnerable people in society.
How can impact investments outside of the healthcare sector improve health outcomes?
In seeking health impact through our endowment’s impact investments, we specifically focus on opportunities that identify significant challenges that affect disadvantaged groups, and we invest in innovation and solutions that aim to eliminate or mitigate those challenges.
In the early days of this strategy, we scoped the financial markets landscape to identify which sectors were best aligned with improving health outcomes. Our research and evidence show that social determinants of health actually have the greatest impact on people’s health. These centre on the circumstances in which people are born, grow up, live and work. So, as well as traditional healthcare sector investments such as medical innovation, we place considerable emphasis on key social sectors including housing, community infrastructure, education, training and employment, financial inclusion, environment, food and nutrition.
Some of our investments include funds that seek to create resilience against homelessness, support vulnerable women and children and provide more accessible training and employment opportunities. We believe this support is foundational in helping individuals and families to keep healthy and well.
How do you hope to develop your impact strategy moving forward?
When we launched our impact investment strategy in 2018, we did so with a small allocation from our endowment. We wanted to test whether a mission-aligned strategy with the objectives of financial return alongside impact would be viable. The impact investments that we made over the past few years have shown promising results, with our current portfolio on track to meet our financial and impact return expectations.
Encouraged by the initial success of this allocation and the ambition to make more (perhaps all) of the foundation’s capital work directly towards its mission, the trustees have formally set the endowment the dual objectives of financial returns and health impact. We are now taking the next step by growing the impact allocation to 10 percent of the portfolio en route to our final vision of measuring and incorporating health impact into every aspect of the portfolio.
We believe we are testing an innovative approach that focuses on real-world health impact, combining strong place-based research and working towards investing for health impact in every asset class.
This is unusual in charitable endowment practice, and we are excited to encourage other institutions to join in this approach.