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Social investment and the voluntary sector 7th October, 2014 Lucy Inmonger What is social investment? It IS: the provision of finance to generate social and financial returns It is NOT: a grant – there is an expectation of repayment of the finance, plus a return Why build the social investment market? Society faces a range of entrenched problems Long term unemployment Homelessness NEETs Social organisations can bring innovative approaches to tackle these problems But they face severe constraints in accessing capital for growth & development 48% of social enterprises identify a lack of available and affordable finance as the single largest barrier to their sustainability Demand for social investment could approach £750m by 2015 Big Society Capital has been set-up to accelerate the social investment market in the UK We have two primary roles INVESTOR CHAMPION Grow the social investment intermediary market Increase awareness and confidence in social sector and in social investment Provide range of affordable and appropriate finance for frontline social organisations e.g. Work with sector to develop framework for evidencing social outcomes Create investible products for individual and institutional investors e.g. Work with UK and EU governments to encourage appropriate policy and tax support for social investment When might I consider it? Haig Colliery Mining museum Awarded a grant to refurbish and improve visitor centre BUT Grant paid in arrears CASHFLOW PROBLEM! Based in area of high deprivation & unemployment No single paid employee Received an unsecured loan to cover upfront works Other examples… • Working Capital • Bridging to grants/contracts • Growth • Refurbishment • Asset purchase • Rescue • New product/contract Incubators for early stage organisations - Offer grants and loans - Mentoring - Personal support - Expert advice - Workshops and classes - Peer to peer learning - Networking opportunities - Desk space Finance from regional & national providers - £25k-500k - unsecured lending - 3-7 years - £500k+ - Unsecured and secured lending - medium to long term - £150k - £1m - Equity - Ability to scale quickly Alternative finance • Crowdfunding – Lots of small amounts of money from lots of people who support what you’re doing, usually raised through an online platform – Usually £2,000 to £50,000 – Investors would expect success of the project; nonfinancial rewards relating to the project • Community shares – Small amounts of money from lots of people in your local community – Average raised £200,000 – Investors expect success of the project and some of their money back Am I investment ready? • • • • • • • • • • • I know why I want investment and the type of investment I need I know I need investment, not a grant My legal structure is/will be appropriate I understand the market I understand the demand I understand my impact I understand my financial need I have the people in place to make this work I have the processes in place to make this work I understand what could go wrong Reverse thesis And finally… • This is all articulated clearly in a business plan A good business plan is: • REALSITIC so it can be implemented • SPECIFIC so you can track results against the plan It should: • CLEARLY DEFINE REPSONSIBILITIES for implementation • CLEARLY IDENTIFY ASSUMPTIONS that have been stress tested • I have financial forecasts outlining the financial need and future revenue • I can talk about the different elements confidently I need some help… Big Potential (new - first half 2014) - £10m fund over 3 years - For social organisations seeking to raise up to £500k investment (or contracts) - Diagnostic tool assessment to check whether social investment is a realistic possibility - Advisory support (apply jointly with an approved provider): - Preliminary grants to build organisational capability (c£25k) - Investment plan grants (c£45k) ICRF – For social ventures seeking to raise over £500k investment – Grant (£50k-£150k) to cover cost of capacity building support (application joint with advisory firm – over 35 approved providers) – Currently inviting applications from mutuals and arts ventures, as well as others. http://www.beinvestmentready.org.uk/s ocial-ventures/ Any questions..? Lucy Inmonger [email protected]