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SOCIAL INVESTMENT More Than The Sum Conference 14 March 2012

Discover the world of social investment, where funding mechanisms match financial needs and deliver both social outcomes and financial returns. Explore secured loans, standby facilities, philanthropic capital, equity investment, social impact bonds, and charitable bonds. Learn how social investment can be a valuable source of capital for charities and social enterprises, and find out where to go for further information.

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SOCIAL INVESTMENT More Than The Sum Conference 14 March 2012

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  1. SOCIAL INVESTMENT More Than The Sum Conference 14 March 2012

  2. 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! NAVCA – February 2012

  3. How Does In Work

  4. How Does It Work (2)

  5. Matching appropriate funding mechanisms to financial needs Venturesome

  6. 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

  7. 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

  8. 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.

  9. 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

  10. 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!

  11. Further Information • www.charitybank.org • www.socialfinance.org • www.philanthropycapital.org • www.knowhownonprofit.org/funding/social-investment-1 • Useful Contacts

  12. Further Information Jeremy Ince Telephone: 07787 575023 email: jince@charitybank.org Jeremy Ince jince@charitybank.org 07787 575023

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