The opportunities and risks of social investment Kieran Whiteside, Project Manager, Good Finance

The social challenge Social enterprises and charities are dealing with some of the most challenging issues in the UK We understand the magnitude of the challenge There is increasing demand for the sectors’ services and social need, whether due to an ageing population or the impact of the economic climate and public sector funding environment. Issue areas: Employment, training and education Housing and local facilities Income and financial inclusion Physical health Mental health and well-being Family, friends and relationships Citizenship and community Arts, heritage, sports and faith Conservation of the natural environment

K10, social enterprise Social investment sits alongside donations and grants as another tool that charities and social enterprises can use to help buy an asset, deliver a contract or grow their work.

To build innovation, growth and sustainability Another tool FINANCIAL TOOLKIT Social Investment Trading Donations Bank Finance Contracts/ Payment By Results To build innovation, growth and sustainability

Why social investment? Recycle money available Attract additional funding Social Investment can benefit the wider sector, as well as the individual social enterprise or charity taking on the investment. Be more flexible than grants Enable enterprise to direct grant income to where most needed Bring business discipline (effectiveness) Bring wider support and engagement with your mission Bring involvement/expertise from motivated investors Sharpening focus on social impact SECTOR YOUR SOCIAL ENTERPRISE OR CHARITY

Early considerations What do you need investment for? What social impact will you create? Is there an income stream with a surplus? Buy an asset Government contract Rental income Maintain cash flow Membership fees Kickstart your business Donations To grow and innovate Trading

Who are the social investors? Social Investment Fund Managers Social Banks Trusts and Foundations Individual Investors Traditional Investment Philanthropy Social Investment Social Return Financial Return

Common questions about social investment Is social investment more expensive than mainstream commercial lending? Is there a benefit of social investment over borrowing from banks? Why do social investors ask so many questions before being able to make a decision about lending? Is social investment suitable for social enterprises and charities at every stage of their development? E.g. start up?

CASE STUDY: Furnistore PROBLEM Families in difficult or emergency situations often lack the basic essentials to set up a home. SOLUTION Works with local agencies giving families furniture and household appliances at a significant discount or no cost. REVENUE MODEL Furnistore sells second-hand furniture to the general public and so are able to support low income families and to repay mortgage. IMPACT Took out mortgage to buy own premises as permanent base. Now selling second-hand furniture and provide emergency support. www.furnistore.co.uk Duration 20 years Cost of capital 6% Invested £160,000 Turnover £185,000

CASE STUDY: Burley Gate community shop & post office www.burleygateshop.co.uk PROBLEM Due to owners retiring the Post Office and Village Shop were under threat of closure, it is the only shop and post office in 15miles. SOLUTION Created a Community Benefit Society and money raised from local residents to buy a new portable building for the shop and buy the Post Office contract. REVENUE MODEL Individuals invested £57,000 using SITR through community shares or loan stock this will be repaid through income generated. IMPACT Serves a rural community with population of over 1000. Larger store has wider range of groceries and promotes local products. Duration 4 years from loan Cost of capital Between 2-3% Invested £57,000 Turnover £80,000

Good Finance - what is it? Collaborative project between organisations committed to improving access to information on investment & finance for charities & social enterprises Funded by Website for charities & social enterprises to help them navigate social investment In partnership with

Good Finance provides... Structured content Investors/advisers directory Diagnostic tool Case studies Impact measurement Latest events & news

www.bigsocietycapital.com/get-informed

Next steps Visit the website Board members: sign up to “Get Informed” Do you have a social investment story to tell? Contact: projectmanager@goodfinance.org.uk

Q&A kwhiteside@goodfinance.org.uk