The article in the url below is confusing. It outlines the Danone Communities Fund, but describes it in parts of the article as a means of “financing social businesses” and, in others, as a “financing model” designed as an investment fund (Issues: Finance, p180; Investing, p184):
“[Danone] has devised a financing model in which 90 per cent of investors' money will be ploughed into low-risk investments, weighted towards socially responsible investments. The other 10 per cent will go directly to the yoghurt project [a nutrient-rich yoghurt for poor consumers in Bangladesh]. The model is a Sicav (société d'investissement à capital variable), an open-ended collective investment fund common in France.”
Several questions come to mind: What were the motivations behind the fund—a social project or investment vehicle? Are investors asked to accept a lower level of return to meet the fund’s social goals? What is Danone, a “French food company,” doing designing investment funds?
“Anyone, from Danone staff to shareholders and institutional investors, can invest in the Danone Communities fund, which launched in December 2007 and is managed and marketed by Crédit Agricole. So far the fund has raised about €60m (£47): €20m from Danone, €24m from Credit Agricole, and the rest from other institutions and Groupe Danone's employees.”
The article is not clear on these questions, but I think it is also missing the broader point by confusing the firm’s and fund’s social and business goals. If this fund is not considered part of Danone’s philanthropic arm, then it is designed to generate a profit. Alternatively, if it is a philanthropic project, then perhaps it should make clear there will be a trade-off between reaching its social goals and ROI:
“In recent years, many groups have warmed to the idea of serving the world's poorest people while turning a profit. But the heavy investment in time and money and the unstable operating conditions concerned mean most of these activities remain far from profitable.”
Danone’s project looks interesting—unfortunately, the article describing it does not do it justice.
Take care
Dave
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther
Yoghurt maker's recipe for funding social businesses
Murray, Sarah
664 words
7 July 2008
Financial Times
London Ed1
16
http://www.ft.com/cms/s/0/ff1bd10a-4bc0-11dd-a490-000077b07658.html
