Transcript Slide 1

Wednesday 28 January 2015
Liverpool
Managed by
In partnership with
Supported by
Event objectives
• Provide an introduction to the Social Investment
Business (SIB)
• Provide an introduction to social finance and
investment readiness
• Provide an overview of the Liverpool City Region
Impact Fund (LCRIF)
• Hear from other charities and social enterprise about
their experiences of social finance, investment
readiness and the LCRIF
Social Investment Business
Amy Zawislak
Local Impact Fund Project Manager
How SIB started….the SIB Foundation
• In 2002 the SIB Foundation was formed by a sector partnership to
show how to create sustainable community enterprises:
• Scarman Trust (Charitable Trust)
• New Economics Foundation (Think Tank)
• The Social Enterprise Loan Fund (TSELF – a SIFI)
• Locality (representative body for community enterprises)
• The UK Government (Home Office) provided £2m to SIB to set up a
demonstration fund, the Adventure Capital Fund (ACF).
• By 2006 ACF had grown into a £17m fund that provided:
• Business development grants.
• Loans and capital grants (up to 10 years, 0 – 6%).
• 2011 £70m Communitybuilders endowment:
• SIB Foundation is now a catalytic investor.
How SIB grew….SIB Ltd
• SIB Foundation created SIB Ltd as a social enterprise trading arm
specifically to manage UK Government funds.
• SIB Ltd (with partners) goes on to win a range of Government funds:
• 2008, Futurebuilders (£125m) – grant + loan
• 2009, Social Enterprise Investment Fund (£99m) – grant + loan
• 2010, Social Action Fund (£20m) – grant
• 2012, Investment and Contract Readiness Fund (£10m) – grant
• 2012, Community Assets and Services (£27m) – grant
• UK Government funding since 2010 election (post economic crisis) is
now smaller and for targeted grants. No more loan finance.
• SIB Ltd has adapted to Government change:
• Specialist manager of investment readiness support.
And now the specialist fund manager…SASC
• Social and Sustainable Capital (SASC) is SIB’s partner, and is an FCA
authorised and regulated fund manager.
• SASC provides simple finance to charities and social enterprises.
• SIB Foundation has invested in SASC, receives a share of SASC’s
profits, and has invested into SASC’s first two funds:
• Community Investment Fund (£20m) – equity and loans of >£250k
• Third Sector Loan Fund (£30m) – unsecured loans of >£250k
• BSC is the other main investor in SASC funds. SASC invests private
finance into charities and social enterprises.
• SASC absorbs investor complexity and…
…translates that into simple finance.
SIB in 2014
Philanthropy
Absorbing
investor
complexity
Translated
into simple
finance
SIB Foundation
(catalytic
investor)
Government
funding
Private
investment
SIB Ltd
SASC
(investment
readiness)
(loans and
equity)
Supporting all stages of the investment journey
Early stage grants
Grants for growth
Small loans
Large loans and equity
<£100,000
£50,000 –
£150,000
£50,000 £250,000
£250,000 £1,000,000
Case study: The Vine Trust
•
The Vine Trust (VT) originally came to SIB for investment in 2007 to
develop a new community hub, ‘the Goldmine’, in central Walsall.
•
Over the last six years VT has received:
• £1.9 million (£1.26 million loan and £0.63 million grant) from
Communitybuilders in 2008 for the purpose of funding the purchase of
land and buildings to create the Goldmine.
• £215,500 (£141,000 loan and £74,500 grant) from Futurebuilders in
2009 to cover the cost of the stamp duty and legal / professional fees
for the Goldmine.
• £97,280 grant from the Investment and Contract Readiness Fund in
2013 to raise over £1 million for a new building.
Social Investment Explained
Nandini Das
Social Investment Business
Outcomes
• Learn about social investment, and how it can help
• Find out more about the UK social investment market
• Hear from organisations that have taken on investment
Social investment explained
Midlands Together CIC raised £3m (with help from an investment
readiness grant of £149,300) to provide supported paid work, skills
training and tailored mentoring for nearly 150 ex-offenders.
They will acquire new skills, build their confidence and become work-ready by
helping renovate over 70 vacant properties in Birmingham, Staffordshire,
Worcestershire and the West Midlands to bring them back into use.
Social investment: what is it?
“social investment is the provision and use of
finance to generate social and financial returns”
Social investment: what is it?
“somewhere between philanthropy and
commercial investment”
Social investment: what is it?
“getting more of your money back than a grant…”
Social investment: what is it?
“money that gives the investor an ownership
stake in a social enterprise”
Social investment: what is it?
“investment that achieves a blended return”
Social investment: what is it?
“money invested to create social impact,
expecting some or all or more of that money to
return”
Social investment: why?
• to buy buildings + other assets
• for working capital (managing the time between
spending money + receiving it)
• to grow and expand (through new services, products,
geographies)
• to raise money for a new start-up project
• to recycle money for re-use
• to attract new money to the social sector
When social investment + when grants?
Grants don’t have to be paid back and can be useful if:
• You need £ to test whether your idea works
• You need £ to find out whether anyone wants to pay for
products and services
• You need £ to sustain an activity that delivers great
social value but doesn’t bring in enough income
• You need £ to help you reach the point where you can
take on investment
• BUT - there’s fewer grants available…
When social investment + when grants?
Investment can:
• Be more flexible
• Bring more expert support / involvement
• Bring business discipline (effectiveness)
• Help plan for the long term
Remember > investment will not replace grant funding
• Social investment is one part of your funding mix
• Not all organisations or projects can be financed using
social investment – it’s about ‘appropriateness’
Investment: What types?
(match them up)
1.
Working Capital
A. Investment through purchase of share capital
2.
Equity
3.
Debt
B. Financing public sector outcomes
(with non-public sector money)
4.
Quasi-equity
5.
Bridging Loan
6.
Grant
7.
Social Impact Bond
8.
Secured loan
9.
Unsecured loan
10. Patient capital
11. (Charitable) Bond
C. Long-term debt issued to finance growth
D. Finance which combines debt + equity benefits
E. Debt finance borrowed against an asset
F. Finance for everyday to help with cashflow ‘dips’
G. Gift with no expectation of financial return
H. Debt finance not borrowed against an asset
I.
Finance for big short-term cashflow shortfalls
J. Investment – borrowed + paid back over time
K. Long-term loans at low / no interest
Social investment market: structure
Supply |
INVESTORS
Demand |
SOCIAL VENTURES
Government
Philanthropists / HNWI
Trusts / Foundations
Charities
High street banks
CSR
Social Enterprises
Charities
Voluntary groups
Community enterprise
Social Businesses
Intermediary |
PRODUCTS
Advisors |
SERVICES
Loans
Investment readiness
grants
Social Bonds
Social Impact Bonds
Community shares
Investment readiness
Social impact plan
Deal structuring
Marketing strategy
Investor relationships
Social investment market: players
INVESTMENT
READINESS
SOCIAL FUNDS
SOCIAL LENDERS
SOCIAL IMPACT
BONDS
ADVISORS
Social investment market: market size
£1bn
2016
£200m
2012
Big Society Capital, Social Investment Compendium, Oct 2013
Social investment market: type of investments
Secured
v
Unsecured
GHK research, 2013
Navigating the market
Start up
Early growth
Scaling up
Expansion
Incubators
Big Potential
Investment &
Contract
Readiness Fund
Loans
Social Bonds
Equity
• Advice services and financial products for each stage of
investment journey
Becoming investment ready:
what does it mean?
• Some organisations might need additional support
before taking on social investment for the first time –
this is called investment readiness support
• This tends to focus on key areas:
-- people (skills + experience)
-- what you do + who your customers are (market)
-- how you do things + how well (impact / track record)
-- finances (state / management)
Becoming investment ready:
what does it mean?
• Big Potential’s free online
diagnostic tool helps you
better understand your
organisation’s state of
investment readiness.
• Apply for grants and
specialist support.
bigpotential.org.uk
Targeted
support
available
Social investment story
Birdcage
Trustees of domestic violence charity,
Behind Closed Doors, took a big step
to start generating income to support
their valuable service. They took a
loan and opened Birdcage, a
charming vintage shop in the heart of
Skipton.
Amy Zawislak
Local Impact Fund Project Manager
Managed by
In partnership with
Supported by
Introduction LCRIF
• £2m pilot Fund. Draws on £1m of EU investment
from the 2007-13 ERDF programme, matched with
£1m from SIB Foundations Communitybuilders fund
• Launched Jan 2014, opened to applications May 2014
• 10 year fund 2014-2024, with two waves of
investment of up to 5 years
• Returns on investment will create a legacy fund for
the Liverpool City Region
• Supported by Local Steering Group who provide local
insight and hold the fund to account
• Year 1 evaluation on the set up and implementation
to share learning with other areas
Aim of the fund
Support charities and social enterprise to develop, grow
and increase their:
Economic
Impact
Financial
return
Social
Impact
Create new jobs
Increase trading
income
Increase no. users
Safeguard existing jobs
Secure new contracts
Increase Gross Value
Added (GVA)
Increase value of
assets
Increase turnover
Increase unrestricted
reserves
Increase services/
activities to local
people
Improve services/
activities to local
people
What the fund offers
Unsecured loans
Between £50,000 and £250,000
Repayment period of up to 5 years
6 – 12% interest rate on investments
To eligible organisations
To viable proposals
Fund USPs
Unsecured loans
Flexible terms
Repayment holidays
No arrangement fees or penalties
Simple online form to register interest
Investment readiness support
Post investment support
Access to European funds
What the fund can support
Examples include:
• Purchase of a building
• Development/ refurbishment of a building
• Purchase of equipment
• Start something new
• Grow an existing product/ service
• Increase organisational capacity
• Help with cash flow
Must = economic and social impact, and financial return
Who can apply
Charities and social enterprise that are:
• Legally constituted, registered and primarily
constituted for social benefit
• Based in and delivering impact in Merseyside i.e.
Knowsley, Liverpool, Sefton, St Helens and Wirral
• Meet the eligibility requirements
• Meet the positive characteristics of an application
• Delivering economic impact, financial return and social
impact
Positive characteristics of an application
• Viable business plan and financial projections linked to
the utilisation and repayment of the loan
• Strong management with proven capability to deliver
and good corporate governance
• Clear social mission and social impact measures
• Independent and community led organisation
• Clear and attainable targets against the Fund outputs
e.g. jobs created, jobs safeguarded
• Investment adds value to new or existing activity
What the fund can’t support
Excluded sectors:
• For example: retail, banks and insurance
companies, provision of generalist (school age)
education, provision of social welfare facilities
e.g. hospitals, nursing homes, fire stations, sports
facilities, parks, public libraries
Excluded revenue expenditure:
• For example: provisions, contingencies
Excluded capital expenditure:
• For example: child minding facilities including day
nurseries, tourist infrastructure facilities which
primarily service local people
How to apply and timeline
Eligibility
Checker
• 9am Fri 6
Feb 2015
Application
Form
• 9am Thurs
26 Mar 2015
Assessment
& Site Visit
Investment
Committee
• Mar – May
2015
• May 2015
LCRIF Guidelines 2014:http://www.sibgroup.org.uk/liverpoollif/guidance/
Eligibility Checker: http://www.sibgroup.org.uk/liverpoollif/eligibility/
Draw down
• May – Jun
2015
Supporting documents
• Business plan
• Audited accounts (3 years)
• Management accounts (YTD)
• Governing document
• Cash Flow for 3-5 years
• Board minutes (last 12 months)
• Impact reports
• Evidence of unbankability (letter from bank)
• Environmental, Health & Safety Policies, Equal
Opportunity and Disability Policies
What we’ve achieved so far
• Aiming to make 12 investments by Jun / Oct 2015
• 2 investments agreed:
- £250,000, at 5%, over 3 years, 6mth payment holiday
- £70,000, at 6%, over 5 years
• 1 investment (£250,000) being considered at Feb
Investment Committee meeting
• Pipeline of 5 potential applications being developed
• Wider pipeline of over 45 expressions of interest
• Launched Round 3 – deadline to register an interest is
6th February 2015
Types of applications we’re working on
• £250,000: New build for a community facility
• £250,000: New build for social enterprise activity
• £70,000: Building development for visitor attraction
• £250,000: WC to bridge the gap in contract income
• £250,000: WC to bridge gap in payment by results contract
• £150,000: WC to set up new homeless provision
• £250,000: Set up costs for a new logistics service
• £50,000: Capacity building to secure public sector contracts
Who is the LCRIF right for? (1)
• Legally constituted and registered social benefit
organisations based in and delivering impact in
Merseyside, who……
• Have a fairly advanced idea that will:
-
Generate unrestricted income e.g. trading
-
Deliver social impact in Merseyside
-
Deliver economic impact in Merseyside
• Are open to accessing social finance to help them get
going more quickly
• Want to work with a flexible and engaged investor
Who is the LCRIF right for? (2)
If this is you……
• Read the Fund Guidelines
• Register your interest via the Eligibility Checker
• Engage with SIB early on to help develop an eligible
and viable proposal
• Understand it is a loan, not a grant
LCRIF Guidelines 2014:http://www.sibgroup.org.uk/liverpoollif/guidance/
Eligibility Checker: http://www.sibgroup.org.uk/liverpoollif/eligibility/
Amy Zawislak
Local Impact Fund Project Manager
Social Investment Business
[email protected]
www.sibgroup.org.uk
020 7842 7715
Follow us on twitter:
@TheSocialInvest