Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 171

Business and social lessons learnt from 'jumping ship'

Introduction from Cuffelinks founder, Chris Cuffe

I left a full-time business career not quite knowing ‘what was next’ and met Michael Traill at the front of that journey. He changed my life. He has just released a book about that journey called 'Jumping Ship – from the world of corporate Australia to the heart of social investment'. His inspiring personal and professional story connects his work at Social Ventures Australia and his energy, vision and tenacity to make Goodstart Early Learning the reality and powerhouse it is today. As well as the intriguing Goodstart story, the book is a practical primer for anyone who is serious about ‘jumping ship’ and those who care about how we can improve social outcomes in the Australia of today.

We asked Michael to share key themes from the book and his personal motives in writing it. In particular, as someone who is widely regarded as a driver of the impact investing market in Australia, what potential does he feel this early stage market has to become more mainstream?

I wrote Jumping Ship for two reasons. Firstly, it’s a shortcut. I am frequently asked, “Why did you jump ship after 15 years at Macquarie Bank to work in the social sector?”.

Secondly, I wanted to share what I learnt in the 15 years since I ‘jumped ship’ to highlight that practical partnership solutions which use business disciplines for social purposes are making a real difference.

Avoiding the cycle of poor education and opportunity

My motive for Jumping Ship was driven by growing up in a country town community which would now be regarded as a 'postcode of disadvantage'. Courtesy of the strong values placed on education by my parents and especially my school teacher father, my brother and I were both motivated to take advantage of the educational opportunities we had. But we know talented and capable school peers who didn’t, mostly because the school or the families and community around them didn’t expect them to do well.

The data highlights Australia still has a big divide between those who are trapped in a cycle of poor education and opportunity and those who are not. Despite many genuine attempts by government and non-profits, not enough has changed to shift that data. It outrages me morally that students in those bottom 20% of postcodes are on average two to two-and-a-half years behind their peers in the top 20% by the age of 15 on standard education performance measures. That’s obviously a major economic and productivity issue for Australia.

I reached a point where I felt a strong urge to see if I could use whatever business and professional skills I had acquired in a 20-year career to do something constructive about that issue. The greatly respected social commentator Hugh Mackay, who kindly wrote a foreword for my book, explains better than anyone the reason for wanting that itch to be scratched. He talks about a group of 'affluent purpose seekers' – people who have done well professionally and financially but are looking for ways to engage more meaningfully around family and community. My experience is that there are many who want to have a serious conversation about how they can use their business and professional skills to make a tangible community contribution.

Using business principles for social purpose

At the heart of the work of Social Ventures Australia (SVA), where I spent 12 years as founding Chief Executive, and the $900 million Goodstart Early Learning social enterprise which I chair, is the belief that we can make a significant practical difference by applying business disciplines for social purpose. What I found in that journey is that there are many outstanding people who want to be part of that. Chris Cuffe was an exemplar of this and he made a transformational difference in a three-year period as Executive Director at SVA.

In the work at SVA, Goodstart has received significant profile because of the scale of the enterprise. As Australia’s largest early learning chain, with 644 centres nationally and over 69,600 children attending, it is one of the largest social enterprises in the world. When the deal was put together six years ago, there were many cynics who thought the idea that it could be run in a financially disciplined way and achieve social purpose objectives was nonsense. The cynics have been proved wrong. The investors who committed subordinated debt, so the Goodstart syndicate of four non-profit partners could fund the purchase of the bankrupted ABC Childcare centres, were paid a 12% annual coupon and had their debt fully repaid two years ahead of schedule in 2015.

That six-year journey has also seen substantial investment in critical areas of quality and social purpose, furnished by the solid financial performance of the business. The number of degree-qualified early learning teachers has increased more than fourfold to over 850. There has also been significant investment in improved professional development and specialist support resources to assist the particular needs of over 130 centres located in the bottom 30% of postcodes.

Support needed from superannuation trustees

There has been a lot of conversation about how deals like Goodstart – so-called impact investing transactions with a combination of reasonable financial returns and social purpose outcomes – can become more mainstream. I believe there is enormous potential for this to happen but we have a long way to go. Superannuation fund investors and trustees in particular need convincing that such transactions satisfy the twin test of being of sufficient scale and offering returns that would pass reasonable risk/return hurdles expected by their investment committees.

The current market is quite fragmented. SVA has been a market leader, and was behind the country’s first social benefit bonds, as well as running a $10 million social impact fund and a $30 million commitment from industry fund HESTA. Most of these investments are relatively small scale, as yet. For the opportunity to accelerate, there is a real need for large-scale investments that can deploy capital in amounts which are meaningful for the multibillion-dollar industry and super funds. My belief is that these will happen and will offer the infrastructure type returns (8–12%) that are already being demonstrated in the examples above.

 

Jumping Ship by Michael Traill is published by Hardie Grant and available online and at bookstores. See www.jumpingship.com.au.

 


 

Leave a Comment:

banner

Most viewed in recent weeks

Vale Graham Hand

It’s with heavy hearts that we announce Firstlinks’ co-founder and former Managing Editor, Graham Hand, has died aged 66. Graham was a legendary figure in the finance industry and here are three tributes to him.

Australian stocks will crush housing over the next decade, one year on

Last year, I wrote an article suggesting returns from ASX stocks would trample those from housing over the next decade. One year later, this is an update on how that forecast is going and what's changed since.

Taxpayers betrayed by Future Fund debacle

The Future Fund's original purpose was to meet the unfunded liabilities of Commonwealth defined benefit schemes. These liabilities have ballooned to an estimated $290 billion and taxpayers continue to be treated like fools.

Australia’s shameful super gap

ASFA provides a key guide for how much you will need to live on in retirement. Unfortunately it has many deficiencies, and the averages don't tell the full story of the growing gender superannuation gap.

Looking beyond banks for dividend income

The Big Four banks have had an extraordinary run and it’s left income investors with a conundrum: to stick with them even though they now offer relatively low dividend yields and limited growth prospects or to look elsewhere.

AFIC on its record discount, passive investing and pricey stocks

A triple headwind has seen Australia's biggest LIC swing to a 10% discount and scuppered its relative performance. Management was bullish in an interview with Firstlinks, but is the discount ever likely to close?

Latest Updates

Investment strategies

9 lessons from 2024

Key lessons include expensive stocks can always get more expensive, Bitcoin is our tulip mania, follow the smart money, the young are coming with pitchforks on housing, and the importance of staying invested.

Investment strategies

Time to announce the X-factor for 2024

What is the X-factor - the largely unexpected influence that wasn’t thought about when the year began but came from left field to have powerful effects on investment returns - for 2024? It's time to select the winner.

Shares

Australian shares struggle as 2020s reach halfway point

It’s halfway through the 2020s decade and time to get a scorecheck on the Australian stock market. The picture isn't pretty as Aussie shares are having a below-average decade so far, though history shows that all is not lost.

Shares

Is FOMO overruling investment basics?

Four years ago, we introduced our 'bubbles' chart to show how the market had become concentrated in one type of stock and one view of the future. This looks at what, if anything, has changed, and what it means for investors.

Shares

Is Medibank Private a bargain?

Regulatory tensions have weighed on Medibank's share price though it's unlikely that the government will step in and prop up private hospitals. This creates an opportunity to invest in Australia’s largest health insurer.

Shares

Negative correlations, positive allocations

A nascent theme today is that the inverse correlation between bonds and stocks has returned as inflation and economic growth moderate. This broadens the potential for risk-adjusted returns in multi-asset portfolios.

Retirement

The secret to a good retirement

An Australian anthropologist studying Japanese seniors has come to a counter-intuitive conclusion to what makes for a great retirement: she suggests the seeds may be found in how we approach our working years.

Sponsors

Alliances

© 2024 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.