Getting ready for social investment - Paul Davis, Charity Bank and Olof Williamson, NCVO

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This presentation is from a workshop at the NCVO Funding Conference 2014, sponsored by Charity Bank.

This workshop will give you an understanding of the steps you can take to get your organisation ready to receive social investment.

Presenters: Paul Davis, Charity Bank and Olof Williamson, NCVO.

Find out more about the NCVO Funding Conference 2014: http://www.ncvo.org.uk/training-and-events/funding-conference

Find out more about the funding resources provided by NCVO: http://www.ncvo.org.uk/practical-support/funding

Published in: Economy & Finance
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Getting ready for social investment - Paul Davis, Charity Bank and Olof Williamson, NCVO

  1. 1. Paul Davis: Charity Bank Olof Williamson: NCVO Sponsored by: Getting Ready for Social Investment
  2. 2. a different bank for people who want a different world Paul Davis • Regional Director of Charity Bank, covering London and the South • 20 years’ experience lending to businesses and now using that experience in the third sector. • 10 years as treasurer of a local charity with revenues of about £100k pa and over £1m raised in grants. 2
  3. 3. a different bank for people who want a different world Charity Bank Our vision - A world where social purpose organisations have the financial resources they need to create a better society for all. Our mission - To attract share capital from social investors, take savings from socially conscious individuals and lend solely to social purpose organisations, and, as a result, be the most admired bank in the UK. 3
  4. 4. a different bank for people who want a different world Charity Bank Established in 2002 Takes deposits from anyone Lends only to charities, social enterprises and community groups More than a 1,000 loans so far Lends from £50,000 to £2,000,000 for up to 25 years 4
  5. 5. a different bank for people who want a different world Are social enterprises new? A business model made of chocolate 5
  6. 6. a different bank for people who want a different world The Cadburys’ objectives Reduce poverty Treat people fairly Run a successful business (Sounds like a social enterprise to me!) 6
  7. 7. a different bank for people who want a different world What is a social enterprise? There’s no legal definition…but the Government seems to go with… An organisation that applies commercial strategies to maximize improvements in human and environmental well-being, rather than maximizing profits for external shareholders. 7
  8. 8. a different bank for people who want a different world What is social investment? 8 Capital that gives social sector organisations the capacity to deliver returns Capital: money invested Capacity to deliver: enables fruitful activity Returns: to the investor
  9. 9. a different bank for people who want a different world Is there anybody out there? No data currently exists on the overall stock of social investment But…probably £150m invested in 2011 £200m invested in 2012 Not a huge figure, but it is going the right way 9
  10. 10. a different bank for people who want a different world Is there anybody out there? Finance gap according to NESTA £300m Finance gap according to CDFA £1,000m So if £200k was invested in 2012, there is something like £1 of investment available for every £4 demanded So you had better look like you are in the top 25% of social enterprises!!! 10
  11. 11. a different bank for people who want a different world Who is getting the investment? The five biggest recipient groups in the BSC report… 11
  12. 12. a different bank for people who want a different world Who are these investors? 12
  13. 13. a different bank for people who want a different world Banks 13
  14. 14. a different bank for people who want a different world Government But the £350m quoted in the previous slide is from a few years ago and it has now all but dried up 14
  15. 15. a different bank for people who want a different world Trusts and foundations Charitable foundations report that, even those with large endowments, often have small staff teams, which makes it difficult for them to get involved with social investment The Esmée Fairbairn Foundation alone may be responsible for nearly half of all the social investment from this source 15
  16. 16. a different bank for people who want a different world Big Society Capital 16 Big Society Capital gives only through Social Investment Financial Intermediaries (SIFIs) These are listed at http://www.bigsocietycapital.com/finding-the-right-investment/ And these are probably the best ready source for social investment
  17. 17. a different bank for people who want a different world Otherwise Universities are leading the way for proactive social investment in the US. The UK Unis are following, but you probably need to be in a field that lights their lamps Institutional investors are the key to scale with $90tn of capital, but apparently not much appetite Individual “Angels” again, if you are in a sector that appeals to them and if you can find them! 17
  18. 18. a different bank for people who want a different world Financial investment Why do you need to get ready for it? To present a compelling argument for why the social investor should put his money with you To work out what you are prepared to pay To make sure you have a suitable organisation This means having a good business plan, which means you need to do some good planning 18
  19. 19. a different bank for people who want a different world Planning and proving you’ve planned 19 “Ike” Eisenhower 1957 Plans are worthless, but planning is everything
  20. 20. a different bank for people who want a different world Business plans 20
  21. 21. a different bank for people who want a different world Business plans If you don’t have, maintain and use a business plan You are not running a business You are having an adventure 21
  22. 22. a different bank for people who want a different world Business plan light - the teaser Saves everyone time Divides investors into two camps: • This looks right up my street – tell me more and • Sounds great, but it’s not for me 22
  23. 23. a different bank for people who want a different world Business plan – the full panoply It proves you have thought about: • The marketplace you are operating in • Your products and their place in that market • The competition • Pricing and reward/return • Whether you have the right people • Your regulatory environment • What might go wrong • What might go right • Everything the investor might think of 23
  24. 24. a different bank for people who want a different world Business plan – the full panoply At brass tacks level: • What the investor will get while their money is in • How sure they can be of getting it back again You need to show you are a sound business 24
  25. 25. a different bank for people who want a different world Business plan – the full panoply It must include – Section 1 • A clear front page • A good index • An introduction – perhaps re-use the short form • The proposal – what you want – key terms 25
  26. 26. a different bank for people who want a different world Business plan – the full panoply It must include – Section 2 • What the organisation does now • What amazing things the organisation is going to do once it gets the investor’s money • What the investor is going to get in return • The people – who you are – what you know – why you are just the people for the job 26
  27. 27. a different bank for people who want a different world Business plan – the full panoply It must include – Section 3 • All the dull stuff at the back: • Historic accounts, budgets, projections (base case and stressed), • Detailed terms for the investment • Lists of your professional advisers, bank, etc • Copy of the NDL if appropriate 27
  28. 28. a different bank for people who want a different world Business plan – essentials • Tell a story – use plenty of pictures • Keep the narrative part clean and concise • Stick all the dull facts and figures in the back • Index it well • Be prepared to have several versions if you are approaching different types of investor – the changes probably only need to be minor • Be scrupulously honest and realistic but not over cautious 28
  29. 29. a different bank for people who want a different world Be the right type of organisation (Or at least know what you need to set up when the time comes) A bog standard company (perhaps as a subsidiary) Can issue shares, loan stock, borrow Community Interest Company (CIC) limited by shares Can do anything a purely commercial company can do (but with some limitations on dividend size) Anything else But can probably only borrow 29
  30. 30. a different bank for people who want a different world Prepare to put the hours in Research Keep checking developments Networking Events Shoe leather Chasing up Have a Plan B Keep smiling – you are doing good 30
  31. 31. a different bank for people who want a different world Paul Davis Regional Director – London and the South pdavis@charitybank.org 07585 808309 The Charity Bank Ltd 194 High Street Tonbridge TN9 1BE 01732 774040 www.charitybank.org 31

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