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  1. 1. Social Investment Geetha Rabindrakumar Big Society Capital grabindrakumar@bigsocietycapital.com CFG Annual Conference
  2. 2. What is social investment? • Financial returnInvestment • Financial return & • Social return Social investment • Social returnPhilanthropy
  3. 3. 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
  4. 4. 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
  5. 5. BSC role as a wholesaler and market champion
  6. 6. Social Funds Social Lenders Investment Readiness Advisers Social Impact Bonds General funds Specialised funds Social Investment Finance Intermediaries
  7. 7. OCS Social Incubator Fund(£10m) Big Venture Challenge (>£5m) CO ICRF (£10m) Stage of business growth Commissio ning/reven ue support Secured Loans Unsecured Loans Equity Grant Restricted Grant Social Investment Funds (~£20m) Start up Early Growth Established Typeofcapital 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 OtherGrant programmes from Charitable Trusts and Foundations (>£2bn) Social Banks (~£180m) Tech for Good (£500K) Stage of development
  8. 8. 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? Organisation Activities Outputs Outcomes Impact
  9. 9. Other things to consider • Risk appetite? • Predictability of payments? • Could social investment work alongside bank finance & donations?
  10. 10. 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
  11. 11. 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 Commissioner (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
  12. 12. 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
  13. 13. 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
  14. 14. 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)