Introduction to social investment

Transcription

1 Introduction to social investment Friday 14 th December 2012 GMCVO CAF Venturesome Isabel Newman, Investment Executive Seva Phillips, Investment Analyst Charity Bank Simon Thorrington, Regional Director

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3 What is social investment? Social investment is the provision of capital for charities and social enterprises debt/loan equity Not a replacement for grant funding Not a soft option!

4 What is social investment? Why would a charity want a loan?

5 What is social investment? Why would a charity want a loan? because grants are usually solely for revenue needs, and often cannot be used for capital needs equity not possible no shareholders a resilient charity should have a range of revenue and capital income: for example grants, contracts, trading income and loans

6 Why would a charity look for social investment? Can you provide examples of capital need?

7 Why would a charity look for social investment? equipment bridging finance pre-funding fundraising development rainy days what do charities need capital for? when might charities look for finance?

8 Why would a charity look for social investment? equipment bridging finance pre-funding fundraising development rainy days relatively low financial risk relatively easy to find capital funding relatively high financial risk relatively difficult to find capital funding match the risk of your need with a financial instrument that balances this risk financial need financial instrument

9 Products, needs and risk Different types of capital carry different risks and therefore should be financed by different products HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan Patient Capital LOW RISK Physical equipment Bridging finance Pre-funding of fundraising Development Rainy days i.e. reserve capital HIGH RISK Quasi-equity Equity LOW CHANCE OF REPAYMENT Grant

10 Where can I access social investment? Instrument Example suppliers Secured loan (mortgage) Banks: CAF Bank, Charity Bank, Triodos, Unity Trust Bank and some mainstream lenders Overdraft / standby facility Unsecured loan Quasi-equity (royalties) Grant Own reserves Banks can sometimes provide overdrafts Venturesome provides standby facilities Venturesome Big Issue Invest Key Fund TSELF Specialist lenders such as Venturesome, Bridges Social Entrepreneurs Fund, Big Issue Invest Grant makers: e.g. Esmée Fairbairn, Big Lottery Fund, Barrow Cadbury Trust, Venture philanthropists: Impetus Trust, Social Business Trust n/a

11 What will I need to access social investment? Information you will need when approaching social investors: Business plan Management accounts Annual accounts Cash flow forecast Social investors look for social returns, so It s important be able to clearly articulate your social impact: Underlying theory; measurement methodology Achievements Beneficiary demographics & numbers What would have happened without this service?

12 CAF Venturesome What we offer Unsecured finance that is not available from mainstream banks High financial risk in return for high social impact A mix of low risk (bridging finance, working capital) and high risk (for growth, development, rescue) facilities Our products: Unsecured loans, underwriting, quasi-equity 25,000 to 250,000 Repayable over 3-5 years from 6.5% interest Our criteria: UK registered organisation Minimum one year trading history Turnover from 70k Clear charitable purpose

13 CAF Venturesome About us Ten year track record Over 26m to over 300 charities and social enterprises 12m of philanthropic capital: patient capital (at risk) or gift capital We recycle our funds Low default rate

14 CAF Venturesome How we work No application form Due diligence: Past: history and track record, annual accounts Present: current activities, management team and governance, management accounts Future: business plan and theory of change, fundraising pipeline, cashflow forecast Face-to-face meeting Ongoing engagement tracking financial and social performance

15 Summary Social investment is the provision of capital for financial and social returns Meets a range of financial needs For specific capital needs; not a replacement for grants Carries risk; not an easy option Resources ClearlySo Guide for the Ambitious Social Entrepreneur a good place to start to look for funding: Funding Central, a grants and contract database:

16 How Venturesome supported Plaza Community Cinema Art deco independent cinema in Liverpool Mainly run by volunteers Arts and Education programme for community Screens a mixture of mainstream and specialist films

17 The Investment Package Needed to raise 150,000 to purchase new digital equipment for the cinema to retain independence Approached Venturesome in May 2012 Finance package: Own reserves 80,000 Venturesome unsecured loan 70, ,000 Funds in the bank by September 2012 To be repaid over 4 years, affordable interest rate Digital equipment has been purchased and installed

18 A word from the Chair The Plaza faced imminent closure if the funding for digital conversion could not be found. Through CAF Venturesome we were able to secure the funds that we required. They were thorough, prompt and diligent, making sure that Plaza was not encumbered with a long-term debt. CAF Venturesome has helped to secure the survival and future of the Plaza Community Cinema. On behalf of our organisation I would like to thank them for being there for us. Jan Dunn, Chair of Trustees

19 For more information about CAF Venturesome: Web: Tel: Blog: caf-venturesome.tumblr.com