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SOCIAL INVESTMENT More Than The Sum Conference 14 March 2012 A different bank for people who want a different world Definition Social investment is any investment activity which has an expectation of both a specified social outcome and an explicit financial return (usually below “market-rate”). Main difference with traditional types of funding is that there is generally an expectation of repayment! A different bank for people who want a different world How Does In Work Investors Individuals Grant Makers Government Corporations Intermediaries £ A different bank for people who want a different world Investees Charities Social Ent How Does It Work (2) Service Growth Income £££ Surplus Investor A different bank for people who want a different world Matching appropriate funding mechanisms to financial needs Venturesome A different bank for people who want a different world Types of Social Investment (1) • Secured loan – using tangible asset at ‘collateral’ – Low risk – Only an option if you have an asset or looking to purchase an asset – Providers include Charity Bank, Big Issue Invest, CAF Bank • Standby/Underwriting facility /Bridging Loan – Similar to overdraft but only available for certain period and does not ‘revolve’ – Useful as a ‘safety net’ in managing cashflow situation – Providers include Charity Bank, CAF Venturesome A different bank for people who want a different world Types of Social Investment (2) • Philanthropic Capital – – – – Investment by trusts foundations & philanthropists Can be “donation” but increasingly expecting return Often used as a ‘leverage’ and prefers ‘innovative’ ideas Providers include Esmee Fairbairn & Tudor Trust • Equity investment /Revenue Participation – Uses sale of shares to finance activity – Depends on legal structure – Currently not common as most orgs are structured as ‘company limited by guarantee’ i.e. No share capital – Providers include Key Fund & Big Issue Invest A different bank for people who want a different world Types of Social Investment (3) • Social Impact Bond • a form of outcomes-based contracts between the public and private sector. • Peterborough Consortium • Investors (17) were mostly charitable trusts/foundations with social & financial investment ethos. • Interventions delivered by consortium of organisations including St Giles Trust, Ormiston Trust & YMCA • Returns linked to reduction in reoffending amongst prison leavers. Paid by Ministry of Justice & Big Lottery. A different bank for people who want a different world Types of Social Investment (4) • Charitable Bond – Charities and social enterprises can issue bonds as a form of long-term debt to expand business operations – Very much an emerging market; recent example is Scope A different bank for people who want a different world Bring It On? • New source of capital in market where grants are increasingly difficult to obtain. • But…it needs to be repaid. • Mission driven? • Consider the risks! A different bank for people who want a different world Further Information • • • • www.charitybank.org www.socialfinance.org www.philanthropycapital.org www.knowhownonprofit.org/funding/socia l-investment-1 • Useful Contacts A different bank for people who want a different world Further Information Jeremy Ince Telephone: 07787 575023 email: [email protected] Jeremy Ince [email protected] 07787 575023 A different bank for people who want a different world