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SOCIAL INVESTMENT More Than The Sum Conference 14 March 2012

SOCIAL INVESTMENT More Than The Sum Conference 14 March 2012 . 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”).

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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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