Social Investment – The British Experience and it is relevance in Switzerland
21 April 2015
Zurich Panel, 24 March 2015
In the UK, Social Investment and Venture Philanthropy have become widely accepted and indeed established ways of investing responsibly while all the same allowing to aim for some financial return. Next to a fair amount of activity in the private sector, there have been a number of government-backed initiatives dedicated to promoting the cause, including the creation of a special type of legal entity (Community Interest Company) and, as recently as 2014, the introduction of the Social Investment Tax Relief (SITR).
It is probably fair to say that Switzerland is still somewhat lagging behind as a jurisdiction to conduct Social Investment from. Whereas the existing legal entities would no doubt be not only sufficient but also well suited for Social Investment purposes one might argue that there is some room for development in particular on the side of tax incentives.
A panel discussion was held in Zurich on 24 March 2015, kindly hosted by Withers, designed to give an overview of the "British Experience" until now and how that could be relevant for Switzerland.
The panel was chaired by Heiko Specking (specking + partners gmbh) who was joined by Oliver Karius (Partner at LGT Venture Philanthropy), Mike Mompi (Director at ClearlySo) and Michael Fischer (Partner at Froriep) to examine various aspects of the topic. Oliver Karius and Mike Mompi both provided first-hand practitioner accounts, Oliver in particular of his experience of setting up a venture philanthropy fund and Mike from the perspective of an intermediary in the industry. Both also reported on challenges they encountered, ranging from hurdles when introducing the concept where it may be yet too little known to the very practical intricacies of fund raising. Michael gave an overview of the legal developments in the UK since 2000 and contrasted them with the Swiss legal and in particular tax environment that does not (yet) provide for much of an opportunity to combine the promotion of the greater good with financial objectives.
The panellists' presentations were followed by a Q & A with active audience participation in the discussion. One conclusion was that the Swiss could be perceived as still suffering from a bit of a conceptual divide between traditional "giving only" charity and doing business commercially, a place the UK were said to be at, too, fifteen years ago when the government started its initiatives. That said, it was noted that Switzerland had a century old well established history of charitable activity and always been a jurisdiction traditionally open to progress. As such, it was thought to be at a good point to continue developing the environment for the "third way" of Social Investment and Venture Philanthropy as bridge between purely non-profit charity and commercially minded business.
Michael Fischer, Partner, Froriep Zurich