2c – social investment
TRANSCRIPT
What is social investment?
• Financial returnInvestment
• Financial return&
• Social return
Social investment
• Social returnPhilanthropy
External developments
• Voluntary sector borrowing increased from £2bn to £4bn over 10 years (NCVO Civil Society Almanac)
• Future demand c£760m per year (CAF Venturesome “In Demand”)
• Social investment tax relief• Commissioners and Social Impact Bonds
(SIBs)• New investor groups – corporates, housing
associations, local authority pension funds• New funds (e.g. focus on care and wellbeing)• Crowdfunding
BSC vision of market
Improving access to finance for small and
medium-sized charities
Building mass participation in
social investment
Capital to scale innovative
approaches to tackling social
problems
Greater financial scale in the
financing of social issues
BSC role as a wholesaler and market champion
Social Funds
Social Lenders
Investment Readiness
Advisers
Social Impact Bonds
General funds
Specialised funds
Social Investment Finance Intermediaries
OCS Social Incubator
Fund(£10m)
Big Venture Challenge (>£5m)
CO ICRF (£10m)
Stage of business growth
Commissioning/revenue support
Secured Loans
Unsecured Loans
Equity
Grant
Restricted Grant
Social Investment Funds (~£20m)
Start up Early GrowthEstablished
Typ
e of
cap
ital
BIG Potential(£10m)
CO Outcomes Fund (£10m)
BLF Outcomes Fund (£40m)
Fully or partly funded by government
Fully or partly funded by Big Lottery Fund
Partly capitalised by Big Society Capital
Other
Grant programmes from Charitable Trusts and Foundations (>£2bn)
Social Banks (~£180m)
Tech for
Good (£500K
)
Stage of development
Early considerations
• What do you need investment for?o Purchasing/refurbishing assets
o Working capital (e.g. to support payments by results contract)
o Bridging finance (e.g. confirmed grant)
o Expand existing work/ deliver new services
• Is there an income stream?• What social impact are you seeking to
create?Organisatio
n Activities Outputs Outcomes Impact
Other things to consider
• Risk appetite?• Predictability of payments?• Could social investment work
alongside bank finance & donations?
Opportunities and benefits of of engaging social investors
• Charity bonds – broader audience• Expertise from sector specific funds
(e.g. care, renewables)• Motivated individuals (e.g. angel
investors – ClearlySo)?• Contribution of skills and
experience (e.g. through Board seat?)
• Reporting impact
Social impact bonds – financial risk transfer to investors
Eg: Social Finance - Investment in services to reduce loneliness – benefits of reduced service use and improved health outcomes
Reduced loneliness
SIB SPV
Investment into SIB programme
Payments represent a % of cost savingsInvestors Commissione
r (eg LA)
Delivery programme (could include peer support, group activity, CBT for most isolated)
Lead delivery charity
Payment metric:Reduction in loneliness
- Pressing social need
- Engaged commissioner
- Complex social outcome to evidence
Co-developing investment ideas – Real Lettings
L&Q Housing Association• £10m social investment into Real Lettings Property Fund via L&Q Foundation
• Financial and social investment
• Mission alignment
Resonance• Manages Real Lettings Property Fund
• Raised £16m initially, aims to reach £100m
• Fund will buy c220 1-2 bed flats in London
Broadway• Homelessness charity• Charity supports previously homeless people in private rented sector
• Leases flats from Real Lettings Fund
• Supports clients to move on
Other ways to be involved with social investment
• Aligning investments with mission – e.g. Threadneedle Social Bond Fund
• Partnering with social enterprises to help deliver mission
• Federated charities – investing in your networks to scale impact
For reference
1) Submit online queries to BSC investment team
http://www.bigsocietycapital.com/ask-us-question
2) Grant support to prepare for investment:
Big Potential http://www.sibgroup.org.uk/bigpotential/
ICRF - http://www.beinvestmentready.org.uk/social-ventures/
3) Sources of funding currently open:
http://www.bigsocietycapital.com/sources-investment
4) Directory of social finance providers and advisers (can filter for specific requirements):
http://www.bigsocietycapital.com/finding-the-right-investment
3) NCVO guide and tool
http://www.fundingcentral.org.uk/Page.aspx?SP=6059
4) Big Lottery Guide to social investment (summer 2014)