understanding the demand for and supply of social finance

8/6/2019 Understanding the demand for and supply of social finance

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Understandingthe demand for

and sUpply ofsocial financer B s Bk

Iona Joy, Lucy de Las Casas and Benedict Ricey,

Ne Philanthropy Capital

THE BIG SOCIETY FINANCE FUND


2/52

part 1: the crisis of reform in pUBlic serVices 2

About NEStA

nesta UK x w v v

u j . i wk b b w, u b n l,

v x.

nesta w u wk u b

x , v -

. www...uk

About NEw PhilANthroPy CAPitAl

nw p c (npc) v w

v v. ou qu qu u

vb b .

W u b ub v.

ou , , k b u, u UK, v x u. ou

v u w u . i

, w u - b v.

About thE SEriES

t ub u w w v bu

v k u B s u u

u w.

Also in the series:

Twenty catalytic investments to grow the social investment market, Ul, pu

nesta.

Investing or the Good o Society Why and How Wealthy Individuals Respond,

bk u w i mori nesta.


3/52

foreWord 3

One o the most pressing questions acing a developed country like the UK is how to put our considerable

resources to work in innovative ways to address major social challenges.

These challenges, rom social exclusion to long-term ill-health, and rom demographic change to climate

change, are growing. But the ability o our public services and civic society to respond is too oten

constrained by straitened public fnances or by institutional inertia.

There is widespread agreement that innovative approaches hold the key: shiting our eorts rom treatment

to prevention, and replacing central control with the energy o empowered citizens and communities.

Social investment can help us achieve this. By fnancing new approaches, increasing the diversity o

provision, and allowing money to be diverted rom the symptoms o social problems to their causes, it helps

innovation take root.

The Governments enthusiasm or social investment, exemplifed by their establishment o the Big Society

Bank, is to be welcomed. We are excited to see the realisation o a project envisaged 11 years ago when the

Social Investment Task Force began its ground-breaking work.

The Big Society Finance Fund is a practical contribution to this project. Working with Panahpur and UnLtd,

two o the UKs leading social investment charities, we have constructed a portolio o pilot investments to

demonstrate the kind o products and services that a thriving social fnance sector could enable. Alongside

the portolio, we are publishing two substantial pieces o research, looking at UK investors interest in social

investment, and the demand or fnance among social enterprises and the organisations that serve them.

We hope that the Big Society Finance Fund, through its portolio o projects and research base, oers a

helpul practical contribution to the development o the UKs social investment market.

As always, we welcome your thoughts.

Stian Westlake

Executive Director of Policy and Research, NESTA

April 2011

FOREwORD


4/52

contents 4

CONTENTS

Part 1: iu 5

Part 2: su 6

Part 3: s 10

Part 4: xu 19

Part 5: f u: B s Bk 30

Part 6: r 32

Appendix A: Bku 36

Appendix B: xu 47

Appendix C: ivw 48

Endnotes 49


5/52

5part 1: introdUction

PART 1:

INTRODUCTION

Overvie o research

t B s Bk (BsB) u kv qu 2011. t w b nesta

B s Bk.

t : set out the natureo current and uture demand or capital rom

social fnance intermediaries and to develop an

understanding o the mix o fnancing the Big

Society Bank will need to support.t v bnw p c (npc).

npc w k k: , u, u. i u, , , v u , bu w u. t , u, x - v b UK. t , u, k u .

t UK k . i w k.

Approach

t k v , bu wu , u k v, vu :

Wk u : u w vw ubb bu k. t w

w k-v u u , ,.

ivw v : w vw

xu , ubb x bu u uu k.

Qu : w uub u bu u -v

u z k. W w u vw u u.

W u w vw, wv u kw x. a vw b u ax c.

Structure o the report

ou u qu bu k: w v v, w b , w uu. i b w v u v qu, .. bu x , BsB k. t v w bku w w u v u u.

t uu w:

Summary o fndings: v -v vw k.

Social fnance fndings.

Financial exclusion fndings.

Financing social housing: BsB.

Recommendations: npc BsB b u .

Appendices: u u.


6/52

part 2: sUmmary of findings 6

I b xu k UK BsB u , k .

i b k w u b u

v. t :

ow v v xu vu.

c .

ov bu w u b xv v bu v .

dv w u.

Bu k.

t u k v , npc bv u BsB. hu v u x 3 b x u w v. ou vw, vw u vw, BsB

w b b , u wu v . hwv, v 20 ,u v u u bu u. t x v uu bu k u v - ,w u p 5. o u v w u, w , bu u

b v k u.

u xu k, x k ju u:

1. The absolute aounts needed ro a underlie the BSB total hundreds o illions ratherthan billions o pounds.

2. By ar the ajority o deand or capital is

or sot capital , - . t BsB u x v u v (u u , u bw). B , w w k u .

3. Sot capital does not ean beingundisciplined. t b w v . cu w v u ub uu, w u ub, w b k u .

4. Building the aret is essential, wqu v .B k uv ; b qu v b ub.

5. The BSB ay have to ae a trade-obeteen building the aret and aintainingits capital. mk-bu v

qu v k w v. t u w u BsB u , w v. hwv, k-bu v u v v wv , w b v v .

6. There sees little appetite or a neinterediary entrant u

v w x. hwv, wu k /qu v w u x v w k.

PART 2:

SUmmARY OF FINDINGS


7/52

7

t BsB, u b bu bu : , b v ? o v

u? i , qu v v- w b . i BsB w , u, w u u u v wu w v b v b v. a qu w BsB w k v, b u? a, w w k w.

npc u p6 u k u u .

2.1 The social nance aret

d w. Bu k v.t w , , b u bub . sub w u b uu: k v v, v v v k.

ou v uw b , wu w u vv u x (bw). t w w u w x w :

Hard or coercial capital to lend on to/invest in investees: w k

u u, bu qu, v u k, v w . t wu v u BsB u u bk v u qu k, w u vu k.BsB u bu uw 50 k v x w .

Sot, sei-coercial capital to lend on to/

invest in investees: x k b siv Bu (siB) u bu w v xu .s /

b u. BsB ubu uw 50 k.

Capital to und interediary capitalisation:

u v w v /qu k.i bu wu u w , v k w . npc bv ub 20 uub BsB.

Capital to und interediary overheads: ub ( qu

) u w v v/v b v . t bju , ub: u k - uk BsB bjv. t u 15 20 v x , w b .

Capital to build capacity o the sector investees: .. v ,u v , bu . m qu v bv : w v b b u k ub. t BsB u b u bu w v, cbux: b bjv, u v w. npc qu k.

Capital to build capacity o the sector investor aret: v k. , v k -v k. t u w vb v v b. i BsB -v v b ,v , u b v u u u; w w v bu uu bu k

w u j k . s w v u, w b ub-k. hwv, BsB u b v u, bu v

part 2: sUmmary of findings


8/52

8

. npc qu k.

Developent o ne products: , bu

v w b v k, v w u u . i qu k, bunpc u 20 u w w.

i , npc BsB infuencing the legal, regulatory and taxenvironent or the aret. iv kb uu uvb x bk vb vu

. h v u w x v wu b w. tbk u greater transparency inthe aret, u , , u .

u u b u p 3.

2.2 The nancial exclusion aret

t b w u u . W k x . -bu , w u u v bub -. ou u qu v x :

Sot, sei-coercial capital to lend on:u 36

k xu vu.

Capital to und interediary overheads:7 16 v k w .

Capital to build capacity o the sector:22 25 ( ), v uub u ub (..

). 7 10 ( x ) wu u 15 ( ) wu u c sv o

u.

s w xub x , ub ,

u k . t bu b v u ( 4.1.1).

sub bb v x w. ou u -v 22 25 , uw w p o wku k u , vb, v, b b w . t

wu u u b -u x ub uv x v . c u u v w b. i , wqu x u.

t, v v, w u v . The rst to opportunities could beseen as a short-ter ay o ensuring lenderscontinue to ae loans. t bu u xu x . t , ,u b investent in the long-tersustainability o the sector. i bu uv w u k xu vu uu, wu x u.

2.3 Suary o deand or the to sectors

tb 1

w .

part 2: sUmmary of findings


9/52

9part 2: sUmmary of findings

Table 1: n b xuk

Benets

Hard, or coercial, capital to lend on to/invest ininvestees

c u u , bu v v. i b , -b , qu.

t u u

w k ( ).

Sot, sei-coercial capital to lend on to/invest ininvestees

a, u u . i b , -b , qu.

Bu u.

Capital to und interediary capitalisation

t w w w . i

u.

Capital to und interediary overheads

t qu wk, bu npcbv bjv u b v

ub. npc wu k u u , u u x uv.

Capital to build capacity o the sector

i u, b c sv o.

Capital to develop ne products

Social nance

g: 50 illion to 100illion qu

k.

g : . 300 400 v x .

g: 50 illion to 100illion.

g : . 200 300 v x

.

g: 20 illion, BsB

bu; 50 illion .

g : . 50 v x .

g: 15 illion to 20illion v x

, w .

Uqu.

g: 20 illion BsB

bu.

g : . 50 uw v x .

Financial exclusion

n qu.

g: U 36 illion v x .

o qu u

u.

g: 7 illion to 16illion v x

.

g: 22 illion to 25

illion v x v .

n qu.


10/52

part 3: social finance findings 10

t u v , w bu k b , , B s Bk

(BsB). t u qu x k v k.

t v , BsBu . ou vw

uu bu uu wk k, wu v BsB. t u ax a - uu .

3.1 Bacground: explaining the aret

3.1.1 maret structure and an overvie oinvestent optionsa vvw uu k u ,

PART 3:

SOCIAL FINANCE FINDINGS

Figure 1: su u k

Companies

Charities

Social, enterprises,

e.g. CICs*, mutuals

Individuals

(retail)

Liquidity

(e.g. deposits of loans)

for onward supply

InvesteesInvestors Intermediaries

Capital to fund

new products

Capital to

fund revenue

Capital to capitalise

intermediary

Capital for

onward supplyIndividuals

(wealthy donors)

Trusts,

foundations,

corporates

Government

Investors also invest directly

*a cic u , k u .


11/52


u, v .

u 1 u w k wk.iv u qu k, uu v , bu

. t vqu w u k v. d ququ v v.

v vw, u, u k v k, w b v w:

Financial returns coensurate ith rishile achieving social returns. iv uu , v ,.. B Vu, t Bk. i kw .

Financial returns approaching coercialrates, but tending to ignore ris wuu u. iv , .iv wu u w k b u w. npcwu u rb ,B Vu s eu u,c Bk ca Vu bk.

Social returns ore iportant than nancialreturns. t vv 0 v w , k -. iv . iv u ca Vu . t

i v.

Social returns but nancial loss e.g. grants.o b !

t k bx. c Bk ( , bk) w x w . t s iv tk w 2000. Bu u x u 2002 .1t k -, bu w

u v v v w ub . t v u .

ax a x :

u.

iv v v.

avb .

ob w uu.

s k z.

s w bku u.

a

b u u vw,ax c.

3.1.2 Overvie o the arett k 1990/2000, b w : w k v.

t u v bw / t s iv Bu (siB) w vu Vu B iu iv.c k w zb u B Vu (145 ) t UK (450 ). a w - u b , c Bk 60 , v . s b b cudv iu (cdi) b cu dv a (cda). W npc kbu cdi , wv, w uu ( bw).

t - b siB,w u Vu cdi . i b siB, k k .B iu iv x wu b , w : k v , . t x s e u bu w ub u fw

b v. s .

W v u bu w . e


12/52


w u k w, bu wu u v w zb k.a x u wu b a ( cl) B, x wb v bu u

b, bu wv u b, w b .t s i B w , w v v v b b. t si B qu x. cv uk v w k u v w u

u . n kv w. Bu w . cdi b w w u( w ) u

.

3.2 Investent opportunities or the BSB

3.2.1 Options or all investorsB k uu bv, tb 2 v.

Table 2: o v

Option or investors

iv qu wbu v. h

: tb 3.

iv b uv v (..

).

iv v. t vwu b ( u

uu); xu (.. it).

iv v v

w u.

pv v k, .. -bu

v -bu v.

Investent type needed and liely return

Can result in good nancial returns, k/w v. s k u v.ex wu b B Vu, t v c Bk v

b . Bu k vw bu w u k:Vu, u u b s iv Bu (siB), wu bx .

Liely to require patient capital, u w-b, u u w k wv. t uu u bu bk b. c Bk b,

u.

Liely to require grants, v , w v u uu u. s-uw x v b ubv. c Bk v w b w . l

cu dv iu (cdi) v vu ub u.

Liely to require grants, or very patient capital w v k. ex wu u B Vu u, w w u

b v ( ), u u w u. t v s i B wu b x, u v, u.

Grants ill generate no direct nancial returns but can generate good socialones. s iv Bu 1 v

v b v 27 uu .


13/52

3.2.2 Capital gaps: potential or the BSBtb 3 w u vb u bv. t b npc v

, x ax a.

13part 3: social finance findings

Table 3: d u

Type o capital

h, , /v v v

s, -,

/v v v

c u

c u

v

c bu

au qu*

p BsB

t

ru

au qu*

p

BsB

t

ru

au qu*

p

BsB

t

ru

au qu*

p

BsB

t

ru

au qu*

. 300 400 v x

m

50 100 w k qu, .. B Vu

l; -b ; qu ( u)

r: - (15 ) qu 5-7

u u u w k

. 200 300 v x

i v (v siB cdi)

ivv v , u w

50 100 v u u

rb b ; -b ; qu-qu.

s -

i v bw 0 6 , u

w k b

. 50 v x , .. c Bk 20

20 u BsB k 40 k

p

V -

m bk; u; k

g v

. 15 20 v x

10

g/ w k -

V -/u

, bu v

Uqu w qu b cbu x?a ncVo u c


14/52


3.2.3 Explanation o opportunities in Table 3npc vw u b v, z k, k uu . t u tb 9 ax a, 41.

t u b u w:

Hard or coercial capital to lend on to/investin investees

c : u v , u b b t c Bk.

hwv u bk j k v wu x.

l qu: u BsB, v u .

U qu: wu w u . , qu b vu k, vB Vu v 50 u. u bv.

Sot, sei-coercial capital to lend on to/invest in investees

s- : c Bk wu k x,bu b w v wu b v (bw).

gv-ub : u w w w uu b siB. t v k , w u uu.t BsB u b v . t u ub 50 , siB .

cx - , qu-qu: u , w b v v. a bu v v. Bu b u w w u u wk. t BsB wu b w u, buwu b w u k w u. t

u v v . m v bu cdi ( b ).

Type o capital

c bu

c vw u

p

BsB

t

ru

au qu*

p BsB

t

ru

Uqu: u w qu, w

i u bw bu , k uu vb

g

pu

, bu v

. 50 uw v x

20 BsB k 40

p

l-

dv uw u

*g k z


15/52


Capital to und interediary capitalisation

a , bw w u u,v u b

v. U 10 ( cdi) b qu x - u, w u bk u c Bk - 20 .

Capital to und interediary overheads

npc u (u w ) u ub u

, wu u b qu u v ub.

Capital to build capacity in the sector

t v k, v, v, unpc qu wb . siB Ul v b v v , wcbu. a vw uwu b . r wu b .

iv k u. npc w, vw v wb . hwvnesta v w .

Capital to und ne and esoteric products

pu k s i B v. dv u b uu , bu v, k w, b v. x, u k k v; B Vu u (w ); k

v b ( wuu). t u b v BsB b v v w w. d qu: npc k 10 , bu b .

npc v x u k.t u v, bu u u u .

npc bv u qu w w :

Notes on the odel

a b x, qu

w . t w k v, k v vu . s u v u:

Fuzzy boundaries to the sector. a k v bu:w u v b? iu u, bu Ul . W qu b, v b v? rb u v xu. a U Bk u uu .

Poor historic and current data. au w x; u u/

- u u , .. siB B Vu. a w npc w siB u w u x.


16/52

16

u x k ax a, a.1.

W v u x z ax a, a.5.

3.3 Opportunities or building the aret

s uv k.s v bu k bu v .2 hwv, , v, w k bu -u ku (cic), , v w b v w .

The social nance aret is still at an earlystage, and so building a social nance aretis uch ore than just providing a certain type

o capital. t bw v. t k , bu u. a u ax a .

Bw qu:

su u v b b siB u.

c-bu v b

v /v b -u .

p u

b uu u uu b v . i k u u, b x .su x u v bk.

dv u w v w v,.. v k/w . t b w u k u.

iv v v: uu; x v; uu. t b bb bu u b u v u u, w u b wu

u v.

iv u, u:

v v k v ;

u u v;

v k k;

u u u w;

u bk bkb .

part 3: social finance findings

Setchy public data contradicts conversations. i u w bu v w w ub vb.

Projected data reliant on hearsay. n- vw bu !

CDFI data not analysed in detail. W k cdi wu u v.

Loans revolve, so odelling availability o credit to organisations is dicult. t b v: vb v w. t qu u vv , ju w z.


17/52


i u b . lk v b u u v, v? i u ?

3.4 Overall ndings

d w. ex BsB , u cu dv a (cda) . Bu k , w , ,b u b ub . i

npc ub b v uu: k -bu.

ou BsB v u w b , wu wu v v u x ( bu bw). t w w u w x w :

Hard or coercial capital to lend onto/invest in investees. t u b u BsB u u b k v u qu k, vu k .W , v u vu , BsB wu v w v u. B v (u ) wu v k w v k v .Bu BsB u v w u

v. t u bu v 50 v, v v .

Sei-coercial, high-ris capital oronard investent. t u siBu u w v ub k, u u. t BsB k, bu v siB: u u(u) u

v. t BsB u vuv b siB u. t u b uu uu, u bb uw 50 u. Bu BsB u

k u , -w .

Capital investent in interediaries. cw b u

qu (.. ) . ru wu b u x w . t ub 20 50 b u. npcbv , u, bu wu u w, v kw .

Capital investent in interediaries to reachsustainability. i

w v u u v u v u w u v / ub w v. i w b, bu, ub vu w vw w v . npc b b b , bu wu b u , v u. BsB u bubu 10 . n u bx u bu u v . v, BsBu u u u b u ub bu .

Capacity-building o investees. m qu v bv , wv b b u k ub.gv siB x k

u v, u b uw 50 , unpc v .Wu v, w k v k b k v. t BsB w ubw bu v, k v wk. o , u b v b u. tBsB x u -bu x u bu

v . Wu v bw , w v u? W v bw , u u? npc


18/52


v v .

Capacity-building (2): broadening oinvestor aret. iv k -v k u

vb v vb. s BsB w b vb -v v b, u b wbu uu v u u u. s w v u, w b ub-k.t u qu b qu, bu u b 50 . t u u v k, wu b qu . m

, npc bv wk b uk u vk, bu wu qu u x, , u v x npc qu u wk.

Developent o ne products. t v v w u, u s iB. t BsB wub v w. BVu u vu u b v u b vu k, bv u b uu .t v b u ; b k b k v, w u k k v. hwv, w , u v u. BsB u u 20 . t u v b

x: vv, bu k w k w .

t BsB u v:

iv v w vb (.. bk ).

cw u k v, , b ub w qu u w

w x .

u siB (v u

u ).

sk w u wk, bk - u.

t BsB u v v . npc bv u u w , u b x b fw.

Other ey points

Structural issuesc u u b qu-qu

u cic wuu. t b w: b x, v v u. a , v v v v u , w quz w. Bu k. s v b uu, b w uuu w u wk w .

m vw uu x, u, uu wu b vb.

Transparencynpc wu u BsB b bu u, w v, w v, w u. npc u xu b v u b siB. siB w vb, w qu, bu w ubu u w u, ,

u, . npc bvu u b u vb ub , v. n u b u i qu b u.

Product and aret developentt wk b v k, v w u uw . Bu w u b, k

u .

ax a, a.5 u w qu b k u v .


19/52

part 4: financial eXclUsion findings 19

4.1 Bacground: explaining the aret, andan overvie o investent options

4.1.1 maret structure

A state in which all people have access to

appropriate, desired fnancial products and

services in order to manage their money

eectively. It is achieved by fnancial literacy

and fnancial capability on the part o the

consumer and access on the part o fnancial

product, services and advice suppliers.

Denition o nancial inclusion, TRANSACT.

The ain playersa w v wk xu .t w u: w u . t u bu u vb xu ,.. b bk u; u. t k kw xu , b k b . ou u vb xu, w u u .

t w b u

xu bk u b- . r bk v bk u u bku v u v b. W w vb xu v . c u cu dv iu (cdi) v v

( u 2).

t UK u v bk 1970. i w ub 1980 , w u , u

x uu u. B 1987 w 108, ub b bu600 b 1997. m w w-bu. s , b u ub

u 444. m v v vu , bu - v b.

u 2 u w u wk.

p cdi v b u 15 UK. t cdi v b -u v v 42 px u vu vu v ,u r dv a. tv w 2005, u b 10 v d Wk pgw u. t w b v u, u w w k k.

p cdi, uk u, w bk. t k v b uv . t w

cdi , v cdi ( ) bk . h, cdiv xuv ( ub- ) w b v bv b u. i , u ub u v.

v v, u dierences beteen credit unions

and personal nance Counity DevelopentFinance Institutions (CDFIs) are scale, services,custoers and sustainability.

Scale: u u

PART 4:

FINANCIAL ExCLUSION FINDINGS


20/52


cdi . cu b b v b UK; 444 u w,3 bw k 460 2009. s cdi xu ,wv 13 , k

bu 7.6 2010.4 cu v , bu v u w- v e , W,s n i. p cdi u v e n W, n e, W m,su e l W, bu ub.

Services: c u v v w , w cdi

v . i k ,cdi v v v u xu b b u.

Custoers: Uk cdi, u u v w- (86 u) k w v. i ,-b u (14 u) v v.e u , , xu. cdi,

, v w-, xu .5

Sustainability: u v b entirely sel-unding . t k v bw, b u ub. i , u v u- ub, w u w p o wk.6cdi, , v w

v . K v w bu , k cdi w u u k .

Figure 2: hw u wk

c u ,

, k u bk.t k vu u k vu. t u u ,u qu b v k. a , u b

v , w bk . c uv k v u b, w . t u w u wk.

Assets

Loans

Cash/liquidinvestments

Deposit(members

shares)

Capital/reserves

Income

Interest Grants

Interest

-

=

Costs

Surplus

Liabilities Profits and

losses


21/52


when calculating deand or capital in the shortter, e have included both credit unions andpersonal nance CDFIs, u u b v . hwv,hen calculating ho uch capacity-building

investent is required, e ocus on creditunions bu v vub, k b b w u b .

Progress over the past ten yearsh w v -v u; u v b w w.7 i w, w v, u xu b v,bu b .

Substantial progress has been ade toardsaddressing nancial exclusion v . i 2004, iu tk w u b xu. W bu 250 u v, bku u , b bu u u ub xu bk. i u w u ub wu bku b . t w v juv u ub 3.75 2002 1.75 b 2007.8

t w k w , ithregard to exclusion ro baning, ost o theain supply side issues had been addressed,u u b bku (u wk b , u v u u). t w w u, u k kw w bk u u,

w. t tk bu v b xu b u 500 v w u. hwv, u m, b .

The aount o loans to nancially excludedpeople has gron k 100 gw u v b iutk . t u w u cdi k 317,798 b v b - vu u v

k . t j (vu-) w b u.9 t u gw u m 2011, uu b u.

The progress ade in increasing loans tonancially excluded people is short-ter.gw u u bu bu v ub xu . t u

u b b u cdi ( u bw u ) x w .hwv, gw u v -, bu u w bk b u (m 2011), k ub.

The sustainability conundruThe best ay to sustain lending is to aethird sector lenders sel-nancing. t

v u bw k u . hwv, b u k v vv u u k 30 400.10 h u u wu 50 apr bk v, bu uu u 10 . t w k v b u b k. W u bk v?s k,bu . i u k u v v.

Soe progress has been ade toards aingthe credit union sector sel-nancing, but a lotreains to be done. s b u b z v (-). Bc U dv a (BcUda) u , ,

400,000, , 240,000 u b b ub ( ax B ).11 mk l, xuv a B c U (aBcUl), u ub. hwv, u 2.4 bk ( 240,000) vub, u u k .

t u w -

u u bw 1997 2008. a, v ub u 596 1997 444 .12 iv b v b w


22/52


. t , , u, w 40-50 -vb u v . t b v w b ( 262,000 2002 524,000

2008), ub vu .13t w u b ww uu b ,v u x u.

The challenges or the aordable credit sector inthe next ten yearsW b x ? pv v - x 100 apr, w u 25 apr

. t three illionhouseholds using high-cost doorstep lenders.t iu tk u bw 3 b 14 u b .

W b ? tbk v ub wu bk u b . c w k w u educating nanciallyexcluded people to ae good choices increasing (or at least aintaining) the supplyo aordable credit b gwu. W u .

4.1.2 Overvie o investent optionsou u qu beteen 29 illion and 77 illion v x k vw ub. t :

Sot, sei-coercial capital to lend on:u 36 k xu vu. c u bb v.

Capital to und interediary overheads:7 16 v k w .

Capital to build capacity o the sector:22 25 , xu , v uub u ub(.. ). 7 10

wu u, u 15 wu u c sv o u.

t u u, u u wu bqu u w u.

tb 4 w u qu, w u b vb Bs Bk (BsB). a w, u ( ) ww v w u. ou ju v v, v b (

u uu). n u u w v u , u w b u.

a v w x u v vu , bu v ub w b v . hwv, w bb b u w k , bu v , b u -.W k u u u b v b 2013, w z b 2016/2017.

4.2 modelling deand or capital

Third sector lenders in generalW u u , w u gw u. W u w : -

v v .

Credit unions u, w sa b . W u k j u u 2013, bu w ku. W u w:

Deposits gro at trend: t vu u w 8.5 u 2005 2009. W u

j w u 2013. t b u w . a v w k b k


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w u x .15t w .

Loans gro at trend: t vu u w 7.8 u 2005 2009. W u

j w u 2013. m fu w , k v u . W w b u .

u , w u j x ( u 3).

W j w w wu u b .W w u

b :

Liabilities: W u v u b uu vu v.

Table 4: d u

Type o capital

s, - /v

v

c u

v

c bu

au qu*

p BsB

t

ru

au qu*

p

BsB

t

ru

au qu*

p

BsB

t

ru

U 36 v x u k xu vu

U 36

g/ /x

n-b/b v 10-15

lw/ , u wu b k uu

s u (u xu), v

. 7 16 v x v v

b

. 7 16

g

n-b

n , u wu v ( u)

s u (u xu), v

. 22 25 v x v- u (7 10 ) csv o (15 )

. 22 25

mx /

mx -b/b v 5-10

mx w/ () k ub-k (cso).

s u - b ( u xu)

*g k z


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Assets: i w bk, b v b b 3.5 , qu 36 x 3.7 bk. t x ,w w u b , ww u bw b. i u , ; ubu u ( tb 6).

Incoe: W u wu b u 2011. s x

gw u uk b u.gv u w vu u w u. t w- , bu bb w w k . W u w bw2005 2009 (9.7 bk). W j qu 3.7 2008 1.5 2009 2013 (v Bk e b ).

Costs: a w bw 2005 2009, u v (6 bk), v (2.4 ), b b v w- (1.7 bk).

4.3 Investent opportunities

4.3.1 Sot capital to lend onwe estiate that third sector lenders could useup to 36 illion o sot capital to ae loans tonancially excluded individuals in the next threeyears. t b u v b iu tk gw u 59 v v . Wv ub w vu u x ( tb 5).

t 59 v b gwu b u, uu . t, k v 12 u . t j(10.4 u) w b u, w b cdi (1.1) u (0.3 ).

lk w, w u u 12 u, w 36 v

x . t gw u vvu u ; k ( 4.3.2).

u 3. t j u

2005 2006 2007 2008 2009 2010 2011 2012 2013

Deposits actual

900

800

700

600

500

400

300

200

100

0

Deposits projected Loans actual

Year

Amountin m

Loans projected


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It ay be that credit unions can eet asubstantial aount o this need or capitaltheselves. ou u u qu

- v 2013( tb 6). t bu w j w w v u v , w k u uu buu v v (10-12 ).

Hoever, there are liely to be at least soecredit unions that require sot capital. Wk , uu k u u vu u. ex gw u u u v xu vu u u . t b B s Bk v k u .

For that capital should taeThe capital could either tae the or o a grantor patient capital (e.g. a loan over 10-15 yearsith very lo interest and high appetite orris). pv u u b v ub. t bk

, w uu. t uu, w

v . t wu u v, wu b ub. pv b u v. s

v w v u; BsB u b bu v u w v:

p u v k xu u wu b v ( gw u).

u u b k xu.

n u b -b- b v u u.

u u b k ub, - ub b u.

4.3.2 Capital to und interediary overheads

Deand or revenue unding to eep third sectorlenders lending

Third sector lenders ill probably ace a revenueunding gap o beteen 7 illion and 16illion over the next three years. t wu

Table 5: s v b gw u v

Table 6: uu u

Average annual capital on-lent Aount required over three years

c u 10.4 31.2

cdi 1.1 3.4

hu 0.3 0.9

Total 11.8 35.5

2011 2012 2013

c v 107 105 105

c 12% 11% 10%

c 46 44 45

Please note: c w b u ; w w u v u bk u vb u bw.

tk mt 60


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v b v u.t w w b k v -. t c

sv o, , u u u.

The axiu revenue unding needs o lendersis 16 illion; b gw uu. i v , u v 26 v , w ju v 5 u: 23 vu u u (.. ), 3 xu (.. it). a w b ub x ( 4.1.1), u k, v ub v x .

Credit unions alone (reoving other thirdsector lenders) ill ace a revenue undinggap o beteen 5 illion and 14 illion. ou u u w v 5 v x ,w wu qu u v . hwv, vu u u gw u , vu u

u u b u 14 .

Big Society Ban unding ould have to taethe or o a grant. t u u bv k u

uu b .t u v v uk

uu .t wu b u xu x . t xu u v, BsB u u w w:

p u v k xu u wu b v ( gw u).

o , u b u v k .

u u b k xu.

u u b k ub, - ub b u.

4.3.3 Capital to build capacity o the sector

t w u u w b qu u ub u w . , vu u b - (v w

Table 7: gw u v

Table 8: uu u vu ( u u 0.1 )

Average annual cost o loans Aount required over three years

c u 4.6 13.7

cdi 0.5 1.5

hu 0.1 0.4

Total 5.2 15.6

2011 2012 2013 Total

i 66.3 73.2 81.1

c 69.4 75.0 80.9

suu/ -3.1 () -1.8 () 0.1 (uu) -4.8 (decit)


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wu x u). s, bk u , k w u .

maing local credit unions sel-nancingwe estiate that the total cost o aing ostlocal credit unions sel-nancing is beteen 7illion and 10 illion. t wu 90, v (7 ) w(10 ). W wb w u vub u. i , b v bw u w v u. hwv, w w

u bw v uu x () u v qu u v w ub.

W w bw 73,000 ( ) 108,000 (w). i 271 uub u, b u , wu b 90 . t u vu u b w w uk. Bu vu u u u, w uu u wu qu.

W u 271 u -, 444 u UK . t b 2008 uv u 61 u w -.16 W v w u wu k - . i ku u w v u:

m bk v w v u b -.

o v, u wu ub .

a wu k bw w, b v k W m.17

t wu u vu

u , bu k w .

t u u u ax B.

A Central Service Organisation or credit unionsnationidea B c U (aBcUl) c svo u wu k

- v u 15 . W aBcUl w k ,bu u u b u b x,u bk .

t wu v u w u b k po wk 11,500 b, v u w . t, w v vb c sv o, u u w

bk b . t wu b u v w v v b bw, aBcUl x:

i a number o credit unions in Britain shared

one banking platorm it would enable them to

oer shared branching through the Post Ofce

network and each others branches. It would

also allow or a telephone helpline giving

credit unions much longer opening hours and

easy internet access to accounts or those who

were able to use this.

18

W c sv o ?c u UK v w ub . hwv, k w . t vub, u . t wu u xu, v fu . t vu b u, b u -ub ,

xu u. t u k bk u .

ev u w w b w b w bk b , u b v v. B w ( it ) (.. u) u v k k . i 1999, cU uu tk u

w v wub c sv o. a b v u u.19


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For that capital should taeFunding or ergers could be provided asa ixture o grant and patient capital (sotloans). t v uk uu . t

j -. i gw u xb m 2011 (w k), u x u w b v . i , vw ub, v xu uk v b b uu w v , w . , bu k w-. s, bu v uu w, u wu

v (b ).

Funding or the Central Service Organisation(CSO), on the other hand, could be provided aspatient capital. t c sv ou uu v x v . t ub v k ub-k b v v ( u b u w a B cU). pv u wu b BsB v u u uu b ub.

4.3.4 who else could help eet the capitalneeds o the sector? u vw k , w v u u b u (bw 29 77 v x ). c v, u bk v

. hwv, v u u u ub k b u u. ou vw bk k u u u, b -( 4.4). hwv, bk uk k v . W BsB u k u u w v .

4.4 Building the ider nancial inclusionaret

t u xuv w u

xu v . h w k bk v ( xuv) w wu bu b :

Ensure that Post Oce plans coe toruition: , wk u c sv o p o wk. s, v b . a, v p o k p o k k u.

Explore potential o interediate loanproducts: gv u k cdi (.. m h )v w.t , 50 60 apr, , bu w .h v v . s u w. o v 50 apr b. s b b u b b, k v . m w u b xu. u vu mh wu b .

mae bans long-ter partners: gvu w u bk u b v . i u w iu tk , ub

bk v u b v u . Bk uu vx (.. v w v ). m bk u b u b xu .

Building nancial capability: a k k kw k b xu. t u 500 v w- u u


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m 2011. gv u u v uu w u v (u cz av Buu).

4.5 what ight the Big Society Banachieve?

4.5.1 IpactProviding sot capital (36 illion) and revenueunding (7 illion to 16 illion) ouldhelp third sector lenders to eep lending. tb wu b v xu wu

w . xu wu, u, v v u v u b. t ub wu wu u u v. t iu tk gw u v . i w u k 317,798 ; w , wv v 300,000 xuvu.20 t u 10 ub u ( ). t b gw u w w u . B 2010, v v 59 u k v v ,bu w 137 .21s 1 v v , 2.32 w xu. i w u b ku uu.

The capacity-building investents o 22illion to 25 illion could realistically taethe credit union sector to sustainability in the

next ten years, w ub w x v . pv b v u c svo p o wk wu u u w v bw. a u uv x xuu, u v u u w - (w u v ).

4.5.2 Return on investentFinancial inclusion interventions have a rangeo potential benets. B v bv , vuv b , w

. t k . a vu u u v l(u b v v) 3.3 b

b 26 .22For every 1invested in nancial inclusion interventions, 8as spent in the city econoy.

tu vu v , b u , Vat. i, u u v . Bv , u u w bku , . W wu

w u w b v .


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part 5: financing social hoUsing: lessons for the Big society BanK 30

5.1 The context

s 1988 w u b, bu u b .

s j u u k b u (ha) UK. t u ub ub bu uk w. m u ub v vu. hwv, bu k. t B s Bk (BsB) b v- v u , w v vu v v ub v. B vw k , w u w b k u u b k u w Bk.

5.2 A success story

t w v ha v 30 , w, u . t u u

k ha UK 1988 vu v w eu. t 1988 hua u b w , kha v v w u u k.t ha UK w 2.5 u u v .

t b v x (bu w), b ( ) v

u w ha v v u. U u, bw u 60 b u v 30 .t 40 b

ub u . ha uu 15 b v b v w buv. t uu , bu

w , w u ub u. t x uu w ha u u v qu u u u 80 u 1989 u 40 u . i , ha v b b v u v u.

ub bw u, ha v b b v bw k ubv u k. g, w u.

5.3 Dependence on the state

t u w w . t ha w v ( w) v.dv mu l Qu (l&Q)

b ha - u b v: u, , u b.23 t v ub v wu. hu b w- u , v w , b u vu. g b w v u v u vub . hv vvv bk b k

v ha w v b u w w k, bu ( uw) u v w u ub u b.

PART 5:

FINANCING SOCIAL HOUSING:

LESSONS FOR THE BIG SOCIETYBANk


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part 5: financing social hoUsing: lessons for the Big society BanK 31

5.4 Vulnerability o the odel

t w u kha vub b v v .

ha vulnerable to changes in governentpolicy. ha bw vu w v v x 30 . t vu b v u b, w vw- . c ub ha bw. hu b k w b Uv c b v. i u w u

c w u vu .24 i , w u k u ha bw . su wu bb k u u vx , w b vuu b v. i k k u w , uvu wu bb . s bw, u v v v.

t w k v ha vulnerable to fuctuations in the housingaret. ov w , ha v v ub , uu v v. W u u k 2007, u v x. a uu u : Over the next ew years a lot ohousing associations will be working through

the consequences o having had too much

development risk at the wrong point in the cycle.

t k ha vulnerable to theters o borroing oered by bans. tu w ub ha u b u , k u j . ha v b bw b w . i w w , wu u b u uu. a u u

v w bk v b v ha, b x w . t u bk u v v j

. i ju w (.. ), u u ha .

i u, ha v u u u

v v w u v x k. t wk u b v bk, k- . t, k vub v , , wu u k.

5.5 Lessons or the Big Society Ban

t , v v v w BsB w w :

hu v b b u v , u vu k .

hu bw v ub b ,b w uuu vu. o vu w u v u wu w.

a, u ha v ,u vu u ( u b).

t b k ha b v u/ . p , k.


32/52

part 6: recommendations 32

t B s Bk (BsB) u v , w b u, uu w u. t Bk w v b bu

w v. a k w v b k?o uu w wu - uu? t w .

6.1 Investent options

6.1.1 Social Financea x v b u. i BsB k v k u u , u k. i u v :

maing investents ith coercial or closeto coercial returns. t wu u w u v k, w qub .

Investing patient capital or inial or zeroreturns. t k u

, v w uv.

Provide grants/other support. t wu b v k, .. -bu v, v uv.

t BsB u v w u u , b ,v u b k w v u.

s-u k w , w, u k, vu.

t - bw ub

BsB, w wu v u, bu k, w u w u. s -bw u - . o

BsB w uu.

what ight the BSB achieve?t BsB u vw u u . B v k, u .

hwv, b x u b u, npc w BsB k wu u w. t BsB ju w fxb . Bu w u k, u v.

6.2 Financial exclusion

ou u qu beteen 29 illion and 77 illion v x k vw ub. t

:

Sot, sei-coercial capital to lend on:up to 36 illion o patient capital k xu vu.

Capital to und interediary overheads: 7illion to 16 illion o grant v k w .

Capital to build capacity o the sector: 22illion to 25 illion, as a ixture o grantand patient capital, v uub u ub (.. ). 7 10 wu

PART 6:

RECOmmENDATIONS


33/52


u 15 u u csv o u.

t u u,

u u wu bqu u w u.

what ight the BSB achieve?The rst to opportunities (36 illion and 7illion to 16 illion) ould help third sectorlenders to eep lending. t b wu b v xu wu w. t v gw u wu k v 300,000 xu vu, bu 10

ub u ( ). t gw uw v ub , v b u u , bu u .

The capacity-building investents o 22 illionto 25 illion could realistically tae the creditunion sector to sustainability in the next tenyears, w ub v . i v w b w k p o wk, wuv x xu u.

6.3 Iportant considerations or strategyand operations

key ndings ro the research to actor intodecisions

1. The absolute aounts needed ro a underlie BSB total hundreds o illions rather

than billions o pounds.

2. Patient and sot capital is in greater deandthan purely coercial capital.

3. But sot capital does not necessarily eanundisciplined. a u u b w w u bjv.

4. Building the aret is essential, butnancially unrearding.

5. So BSB ill have to thin about the trade-obeteen its on sustainability and aretstrength.

6. There sees to be little appetite or a neinterediary entrant. i x qu .

Other considerations

mk bu:

B b k - ub. t u ub v ub. tu k u. l b k,

.

dv w u w xv , bu u w.

mk v:

t BsB u v u vu w u u b u. au siB uv bu vu, BsB wu u u u .

t BsB u v, v v ub. sub u .

t BsB u b bu v, u, , u wb. npc u u ub siB u u k.

t v:

npc v x k w BsB . t w w x, k b u u b. g w, BsB u v u w u, v u /

w .

t BsB u u k u w v u w u


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u.

t u v:

t BsB/v u vw x,

, u u wv k k v v.

t BsB u b v w v v v. i uk v k v, , , u vw .

6.4 Suggestions or urther research orinvestigation

npc u v v w vu w x u.

6.4.1 Social nance

iv cdi v k . npc k cdi qu v, bu u b vub x, u 2010, w vb. i u u u ub cdi u b . a,u cdi wk x ? t cudv a (cda)wu b .

iv w v ,

u x v vu v.

ex vu v , siB. (Vw siB bu x vu w w). npc bv x v vu uu b w.

npc qu w -bu . tu b u b -bu .

t k -. lu b , u , v u.

6.4.2 Financial exclusion

m wk u csv o p owk.

ex bk vu , uu b v x (..probono u v ).

m w (.. m h) b xu . u vu m h wu b .

6.4.3 Further reading

Social nance

Inside Out 2010

cu dv a,nvb 2010.

Evaluation o Community Development Finance

InstitutionsghK, m 2010.

Financing the big societyca Vu, sb 2010.

Response to the Ofce o the Third Sectors

consultation on Social Investment Wholesale

Bank:A consultation on the unctions and designca, ob 2009.

Access to Capital, a briefng paperca Vu, sb 2009.

Financial exclusion

Mainstreaming Financial Inclusion: Planning or

the uture and coping with fnancial pressure:

access to aordable credit iu tk, m 2010.

Breaking through to the uture: The strategic

development o credit unions in Britain, 1998

2008pu J aBcUl, db 2008.


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Short Changed: Financial Exclusion a guide or

donors

npc, Ju 2008.

Credit Unions o the Future

tk r hm tu, nvb 1999.

Towards Sustainable Credit Union Development

pu J aBcUl, Ju 1999.


36/52

appendiX a: BacKgroUnd on social finance 36

A.1 Financial products

A.1.1 Products or investorst v u w

v u qu k:

Deposits in bans. a k bk. Bk ub, w , u u, . d b.

Bonds. B b b,bu u ub v ub ubj u. Bu v(, u u) v . iv b b- v w bk w b u. tk b v qu, u u ub (u b u ) k.

Loans. t b - ubw . t v

u, , k vu u, u.

Equity subscription in unlisted copanies.sub u v uu v vu u b B Vu. Bu wu b u w u u qu w. m u u x u v (.. ).av bu k

v. t v qu.

Equity subscription in listed copanies.t w u b

(u), v w w u. i u u w b w b w b k

u u.

Quasi-equity in organisations hichare not copanies, e.g. CICs, charities.g u uu u, b x w uu bu f. i uu b k, u u ub u w b k u u v. i u w w f.

Direct arrangeents ith charities,social enterprises etc. r k. ibu u b u, u .Bu v .

Investents in interediaries theselves.

t bv b v u,bu u u k x w.

Ne products and esoteric instruents. aub u bv. cl b, v 1999, x x uu v v u u b bu w b

u b. tb wu b v u u. t s iB u w v, u v u

APPENDIx A:

BACkGROUND ON SOCIAL FINANCE


37/52


v v u. s u b , .. s z / k, u. NPC believes that ore

products ill be developed over tie.

c v w b v k, v wu u , k v w. Bu w.

A.1.2 Products or investeesiv :

s u- u wk, v v.

s-b uw v v uu j x, v v uv w u.

l- u , .. .

mu - u v, x, -u .

t :

Coercial loans: B b bw bk, . t v b w bw.

Coercial and sei-coercial loans rospecialist lenders: o u c

Bk t. t bk u qu () . s-b u. Bu c Bk wu w qu qu bk. t b w .

Governent nance subsidised: t u v bs iv Bu (siB) v bu v k npc

v 350 b vb u b siB 2008. tu b u30 u ( v bw u), u

70 w v. Bu u w , w u u ( b b ).

Sot loans outside SIB: t vu k w bsiB v, v v. Vu B iu k w, bu vu qu . t cdi k , bu n W e, W m, yk hub, l, . p v bu-v xv, u v ub v

. l b u.i u bv v .

Quasi-equity in charity/CIC sector: tk . t u x uu v uu -k, u v b . i vu v-, uu vb v u u w k.a b v-, w .

Real equity in coercial sector: equv uu u. i b u w u, uuw b w. B Vu w u u /ub; rb bu

.

Esoteric instruents: .. s i B.nw u u bv w k.t qu u s wk s i B 18 b u. o u b v, .. - u . r b v. s u/

vub.

Grants: a . s vb


38/52


v /v wk, .. Ul,w v bu b u.

A.2 Investee aret

npc v k ,bu w w vwbu k u:

Sall organisations need grants to getto rst base v v w .

Bu v - . Ul k , bu u 20,000 . siB k u v b x 1 v v- -bu 27 uu v.

Sall to ediu-sized charity/socialenterprise trying to get beyond rst base vb b , k v . W k 20,000-250,000 -k v x v. iu v bu wk w bu u .m siB u kk 50,000 uw, bu , , uu u. Vu v k. l vb 50,000 uw , bu b -k. l cdi v .

Traditional charities and social enterprises oediu-large size needing oring capitalor governent contracts. t k ww uu v b u. rk w . s (t, cBk, Vu) v . t k u w , bu npc uw k vu u .

Charities and social enterprises needingoring capital to bridge private incoe. a v b u uu u, bu

v u .s w u uuu .

Traditional charity/social enterpriseneeding nancing to develop assets. av b bu bk b u, v b .npc bv bk u . tk b u u w, u v b w .

Social enterprises trying to scale-up itha quasi-coercial proposition. t

b fw u.i k b b u . siB, Vu B iu , b . i k vb v-. hwv, w b u wbu bku k,u w bu x v . i vu uu w v.

Established social enterprises groing.lw-k b u b. h-k uu w v, u . c u v .

Ne ideas, ne vehicles, consortia etc. s u b-kw x

x b u u. hwv,s k uu wk u k u s i B .

A.3 Availability o capital

npc k v , w w w v

, w u w kw .

what happens ith the SIB unds and othergovernent unding ill have consequences or


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the aret. t ub u w siBu:

t - (.. s eiv u (sei) u

; cubu u). s u u.

t uu u. W kw w w 2011, 2012, wu uv.

i u , w b ? Wuubu ,

u u u w v b kv u. Bu , b .

t u ub-k. s w v b u b siBu uu . hwv siB wuu ub-k u w uv b .

siB annuality qu b v. d uk bu uu , u v uu qu w . s b b w v. The heinousness oannuality is one o NPCs ey ndings or theBig Society Ban. It ust avoid being tied toTreasury annuality requireents at all costs.

siB v u u, bu u v k, vv f u w u.o kw npc k uubu w u j, bu uubuu qu v w k . a u vu u vu wu bu u k

siB u.

Bu vu siB- u ( ) v b siBw u .

, v v- u b v, b uu.

Governent has heavily unded the developento the CDFI aret. t 35 u cdi k v k pxu x wx v k, w u v b v. W cdi vb ub? e w u v 74 v cdi.25 t b w ub cdi 80 2006 66 2010.

t cdi u w u77 m 2010, uu b u w j cda. Bu b cdi w u u u . n u w -. s buk u bu 20 .

Trusts and oundations are dipping their toes inthe aret. Bu u v .e b b u 20 u 2007. B 2010 14 w , v u Vu. t tu tu v( qub), w h s c b v uu k -b- b. s sbutu u b v u, .. - u v . t b u k, bu nesta v w w qu u.

tu u 30 b . i ju 5 v w v , 1.5b wu b vb k. Bu u uu bu u w w k k v v . a w w v v qu. s w b

ubj w v u u v u. s u u k , bu buk b u. tu u


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w bu w x u u. i u uu u v wb , w v. s k w b qu.

i, npc wu k bw v b .

Deepening o the ris capital aret ight helpto coax ore players onto the eld. i u k bu wu k 15 u, w b vw w ? i w 10-20 u v , k-

wu b u .

Coercial investors are just that coercial.t w v b uu w k. s w v v k. Bu v w qu v w u.m u w k , u u v bk BVu w v uv .

c k v w wbb.t vu k x qu . i u, u v u u u v w w, v u v. t u B Vu.

U w bk u

bk v, vw v.

Private investors prepared to oer ris capitalare still quite thin on the ground. s b w u, bu uuu v v. npc w u u v , w u b .

tx, u u b b, bu v w v k k x u. i u qu vu k b.

The direct aret (.. v v w v) qu w, buwu u u u b k u

b s; b u b mub g l hu; xb u b cl (w a) . s u b npc Newacilities, new unding ub m 2010.npc wu u vj w w , vqu u v. Bu .

Private individuals are shoing appetite to invest

in ainstrea products ith a social purpose.Bk ; u qu vk b u.

Charities v v w k w-k b u, u b bk. d corporates.

A.4 Investent options

tb 9 v v u k w vw u v u. i uu u -v , u k . t w bw u . W v bu w k w . x, u u, w qu v ?d and.

NB s u , bu w v u w b bw.

A.5 Obstacles to uture groth

Deand or nancenpc qu b uv w k. ou b

, w b.npc v u , v u u vb. t x uubu


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Table 9: sz k v

maret

c

s-

gv-ub

cx -

,qu-qu .

W /k/

v v ub/ub-k

s-

, qu-qu . cdi

l

qu/u

Players

t

bk

c Bk

u b siv

Bu (siB)

NB siB u vb -

Vu,

B iu iv,rb ;

B Vu u. NB

bu

r cdi

rb,

..du Bk

Size 2010

460

bt

50 u bc Bk

t u . 300 350

. 60 k w

(73 /27 )

. 25

u

e . 70

80, bu u w

cdi w u

v bu

n qu:

b -. Bu

w

where doesunding coe ro

u

d, buu qu

gv

p

v:vu,, u

u

gv:

px u;rvu;

gw u;citr, erd bk

tu

u

u

Potential2011-2014

p w 25

bw uu:u 600 700

Wu k w 200 b

. 150 bk

Ukw: u

vuu. siB u vb

/55 60 ,

u >100

gw w

: x

. h v

r

: b u

g w

(20-30 ) bu

.

cdi ux

du u

:

what is needed

n. c

w k

Needs 20 illion

v

suv

u u?Funding gapcould be 50

illion+

i uqu

uuu

cu

u :

v k

5 6

x u

B v bwu

v k

c b

w

npc

u bcda

eu,bu v

u


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cubu w qub u u. s b u b u.

s w kw u b k w u u w . twv 18 .

n vb. cv v Vu v

10 qu. s bb , w u, w vb.

a u b j u b nesta B s Bk.i v 47 qu, v. m 500,000 1 bk w w w w

x u. ou 65 , 18 w u 500,000, bu b w w v wu. npc w u b qu v 30 u qu.

Investee-readinesst b. i k buv w u w u bu , bw, k/w, b v (v.), qu. rb v bv . x, uk qu wu v u u .s v , , wk

qu vu.

i , u bu , b u, k . c u k u x v, u . t uu u. a u wk u u b w b qu u.

W w buu b u(bv b B iu) .

maret

U

qu

e u

/w u

g

( vv )

Players

B Vu

s ;

k ..a (cl);sbu u

u b siB; Ul

Size 2010

. 120

u, v

s :

5 si B;a 11

1999; sbuu vu

siB bv

Ul 3

5

where doesunding coe ro

u ,

bu w bjv

ivu; u

u

B l u

muw

Potential2011-2014

l

bu vu kv

qu, u

Bu u

m u

w : 10 z.s k

u b zb

aw

what needed

h

50illion und

B Vu b b

Seed unding or

products

B v b

n/a


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Processing o deand and supplyt u. b u uub v. m k u k

b. , B Vu wk. i , u wk 3 1980? Bu u u?Vu w u b, u u uubu w.

p wv. W v w bw , ku. t k k

k w vbu u b b . a u v w v , , k.

Tax, regulations, and legal structuresg npc legal, tax,and regulatory environent can inhibit theinvestent environent. s wbu v w x, u fxb w u u u . tx bk vu w , uu wk w.

u u, u. hwv, b qu-qu u, u rb v bw v u uu. a qu k b b w u.

npc v w

qu v x, u . Bu w u u b k , w u qu x.

Returnsru w f k v .npc w w v k k , b v v.

W u u u. cu bu u u k. i w u,

wu b u . t wu quz . a uu w v ?

A.6 what else needs to happen to build asocial nance aret?

Bu k u ju v . t v, bu u.

c-bu v b

v-:

/v .

ab -u .

dv u w v w v:

s.

rk/w .

iv v v:

l uu.

tx v.

ru u.

iv u:

dv v k v .

r v u u.

dv k k.

eu u u w.

pu bk bkb .

i u b :

i v b u.


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i u v u/-u v ? iu ?

a k , , v successulnancial product k v .u 4 w .

o x s i B. u w v (w u wk) w b bu u w k v u.

c v w b

v k, v wu u , k v w. Bu w.

t BsB w v k.

A.7 Deal sizes oered by interediaries

i z v , bu z . t w w u, u v. t u k b. tb 10 w v.

tb 11 u vb u b z. nB v, uw b b bv x b. s w v v vb u, v uv b .

s u-z bk v .

Figure 4: s u v

Developidea intoapproachto pilot

12-24 months 1-5 years

Time

1-5 years

Pilotapproach

Introduce tocommercialmarket

Developand growinvestment


45/52


46/52


Table 11: avb u b z

Deal size

sub 20k

20-50k

50-500k

500k +

Available todra 2010,

3.0

[40-45]

[150-160]

[90-100]

Serviced by

Ul

Vu, cdi, b sei

sei v

cdi k

c qu , bu b qu

t, c Bk, B iu, cdi, sei, Vu, BVu eu u

m : k / vb w

, sei

B Vu, rb, sei, s , t, c Bk.h x k


47/52

appendiX B: financial eXclUsion 47

B.4 Investent opportunities

merger calculations , b v w

aBcUl u, w v w wu b qu . t w k v (.. v j ). W u w u wu w , .

APPENDIx B:

FINANCIAL ExCLUSION

Table 12: ck: W qu u ?

Ite Total cost one year Total cost to years

c j 30,000 60,000

ex ub- 2,000 4,000

c u 10,000 10,000

tv 2,000 4,000

hr u 8,500 8,500

u

mb 1,000 2,000

nw k b 1,000 1,000

s 2,160 2,160

c 16,166 16,166

Total cost (one erger) 72,826 107,826

Total cost (90 ergers) 6,574,731 9,734,531


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appendiX c: interVieWees 48

APPENDIx C:

INTERVIEwEES

Organisation Intervieee

Social Finance

c Bk r o

s iv Bk su p

s e s

B Vu m g

Vu e g

t c m & Bv W

U J Jk

rb gbk mk m

s e c c J

B iu iv s & e s

cu dv a (cda) B m

Financial exclusion

sa B p

a B c U (aBcUl) mk l

B r s

tb h/transact c hb

Social housing

n hu gv s

t sv au g rw

Trusts & Foundations

e b d s

sbu cb tu (sct) V hb


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1. s iv tk (2010) s iv t y o. t s iv tk a 2010 x 4-5. i , wv, c Bk b bk 2002.

2. J.p. m gb r w rk u (nvb 2010) i iv: a . nw yk: J.p.m gb r t rk u.

3. aBcUl v u, w b sa u .

4. u bk u : sa (m 2010) a Qu s u b v cQ.

l: sa. cdi u : cda (2010) i ou 2010 t s cu dv . l: cda.

5. J, p. (2008) Bk u uu: t v u B, 1998 2008. i r su.r U iu, lv J m Uv, b w a B c U l.lv: lv J m Uv.

6. aBcUl (2010) c U p o. m: aBcUl.

7. J, p. (2008) Bk u uu: t v u B, 1998 2008. i r su.r U iu, lv J m Uv b w a B c U l.lv: lv J m Uv.

8. iu tk (m 2010) m u: m bk. l: iu tk .

9. s gw u dWp wb-, ://www.w.v.uk/-/-w-u//

10. J, p. (2008) Bk u uu: t v u B 1998 2008. r U iu, lv J m Uv b w a B c U l. lv: lv J mUv.

11. ib.12. s: ://www.bu.//.

13. J, p. (2008) Bk u uu: t v u B 1998 2008. r U iu, lv J m Uv b w a B c U l. lv: lv J mUv.

14. ax a iu tk (m 2010) m iu p uu w u: b . l: iu tk .

15. aBcUl (2010) lv c c U. p B. m: aBcUl.

16. J, p. (2008) Bk u uu: t v u B, 1998 2008. r U iu, lv J m Uv b w a B c U l. lv: lv J mUv.

17. J, p. (2005) c w W m u ub c U: a a r pj. aBcUl bw lv J m Uv. m: aBcUl.

18. aBcUl (2010) c U p o. p B. m: aBcUl.

19. hm tu (1999) c U uu: tk r. l: hm tu.20. t u u nvb 2010. t b u ub b d Wk p, :

://www.w.v.uk/-/-w-u//.

21. t u u sb 2010. t w v b d Wk p.

22. Uv s l c cu yk w (2009) iu iv e : t l. l: l c cu.

23. puk, a. (Ju 2010) hu a e uu Vu o. l: t B u.

24. n hu (ob 2010) B cv s rvw a B n hu mb.l: n hu .

25. cda u 2010 i ou db 13 2010.

ENDNOTES

endnotes 49


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understanding the demand for and supply of social finance

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