1We help social entrepreneursraise capitalAuthors: Simon Evill (Editor)Megan Bellamy (2ndEdition)Shiura Rasheed (2ndEditio...
2We help social entrepreneursraise capitalDear Entrepreneur,I welcome this second edition of the ClearlySo Guide for the A...
3We help social entrepreneursraise capitalDear Entrepreneur,ClearlySo are proud and excited to publish the second edition ...
4We help social entrepreneursraise capital1. About ClearlySo.................................................................
5We help social entrepreneursraise capital4.4. Business Networks.............................................................
6We help social entrepreneursraise capitalClearlySo is a financial intermediary in thesocial investment sector, advising s...
7We help social entrepreneursraise capitalLooking to connect with us?There are a number of entry points for socialentrepre...
8We help social entrepreneursraise capitalIf you are reading this the chances are that youare considering joining, or have...
9We help social entrepreneursraise capitalinvestments in sector infrastructure6. BSC ischarged with supporting the specifi...
10We help social entrepreneursraise capitalnations), $400bn to nearly $1tn13is forecast tobe invested14.Investment readine...
11We help social entrepreneursraise capitalRaising capital is one of the most important, butdifficult, tasks any entrepren...
12We help social entrepreneursraise capitalPerformance based: where funds aresecured only if agreed outcomes ormilestones ...
13We help social entrepreneursraise capitalTo carry a distressed business while asearch for an investor or buyer isconduct...
14We help social entrepreneursraise capitalvi. Community ShareCommunity shares are a form of equityfinancing where shares ...
15We help social entrepreneursraise capitaldisadvantaged, or at risk of disadvantage,to tackle youth unemployment.Other no...
16We help social entrepreneursraise capitaland help create self-sufficiency.Key Requirements: Organisations that are worki...
17We help social entrepreneursraise capitalPymwymic Put Your Money Where Your Mouth Is Community (Pymwymic) convenes thelo...
18We help social entrepreneursraise capitalAllia Allia is a charitable social investment intermediary that creates investm...
19We help social entrepreneursraise capitalKey Requirements: Must be a UK-registered social investment financeintermediary...
20We help social entrepreneursraise capitalPortfolio in 2011 held investments in 35 companies totalling £75.2m.Deal Size: ...
21We help social entrepreneursraise capitalFocus: Community energy in England, Wales, Scotland and Northern Ireland.Key Re...
22We help social entrepreneursraise capitalmany local people from being able to afford accommodation. The fund is beingdev...
23We help social entrepreneursraise capitalSocialEnterpriseLoan FundThe Social Enterprise Loan Fund provides loans exclusi...
24We help social entrepreneursraise capitalconsidered in some circumstances (maximum loans of £250,000). Loans arerepayabl...
25We help social entrepreneursraise capitaliii. Venture Philanthropy CapitalThis type of capital focuses on the socialretu...
26We help social entrepreneursraise capitalCANBreakthroughCAN Breakthrough “provides grant funding and management support ...
27We help social entrepreneursraise capitalFinance Available: Not specified.Type of Finance: Grant and equity.Investees: C...
28We help social entrepreneursraise capitalKey Requirements: Please refer to the Go2Play criteria document.Finance Availab...
29We help social entrepreneursraise capitalKey Requirements: Not specified.Finance Available: £20,000 to £250,000.Type of ...
30We help social entrepreneursraise capitaliv. CrowdfundingCrowdfunding (or crowdfinancing, crowdsourcing) is where indivi...
31We help social entrepreneursraise capitalFocus: Generating micro-loans to support small scale businesses.Bank to theFutu...
32We help social entrepreneursraise capitalEthex “Non-profit ethical investment club.”Region: UK.Industry: Ethical busines...
33We help social entrepreneursraise capitalRegion: UK.Industry: Any.Focus: Companies generating revenues between £250,000 ...
34We help social entrepreneursraise capitalIndustry: Creative, innovative or community-minded projects.Focus: Raising fund...
35We help social entrepreneursraise capitalEcologyBuilding SocietyThe Ecology Building Society provides specialist mortgag...
36We help social entrepreneursraise capitalUnity TrustBankUnity Trust Bank is a specialist provider of financial services ...
37We help social entrepreneursraise capitalCommunityBankingbusiness support and community finance services. Community Dire...
38We help social entrepreneursraise capitalKey Requirements: UK organisations with innovative ideas to inspire womeninto e...
39We help social entrepreneursraise capitalDeal Size: Not specified.Grantees: 2011 Food Issues Census.ArthurGuinness FundF...
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur
Upcoming SlideShare
Loading in...5
×

Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur

968

Published on

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
968
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
7
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Transcript of "Ldb Ri-scosse_Letizia Custodero - Guide for the ambitious social entrepreneur"

  1. 1. 1We help social entrepreneursraise capitalAuthors: Simon Evill (Editor)Megan Bellamy (2ndEdition)Shiura Rasheed (2ndEdition)Grace Howells (1stEdition)Felipe Zalamea (1stEdition)Version: 2.0Published: March 2013Disclaimer and CopyrightThe information within this Guide has been taken from public sources for which ClearlySo isnot responsible. Whilst every effort has been made to ensure that all facts in this Guide areaccurate at the time of presentation on our website, if any errors have occurred, pleasecontact ClearlySo at contact@clearlyso.com so these can be rectified as soon as possible.The copyright in this document, unless referenced as the work of others, is covered by orlicensed to ClearlySo, with whom all rights are reserved.
  2. 2. 2We help social entrepreneursraise capitalDear Entrepreneur,I welcome this second edition of the ClearlySo Guide for the Ambitious Social Entrepreneur and amdelighted to support this valuable resource – a mine of industry information that is free to access forall emerging social entrepreneurs and individuals with an interest in the sector.Our sponsorship of this guide is one of the many ways the City of London Corporation supports thesocial enterprise sector: from encouraging City businesses to procure from social enterprises, tosourcing free consultancy support from City employees for local social enterprises.As part of our commitment to helping progress the social investment marketplace and to provide thenecessary financial support for social organisations, the City of London Corporation has established a£20 million Social Investment Fund. This fund aims to provide investment into organisations that meeta social need (in the UK and internationally) and deliver positive financial returns. To find out moreplease visit www.cityoflondon.gov.uk/socialenterprise.I wish you happy reading and hope you find this introduction to the social enterprise sector bothconstructive and inspiring.Sincerely,Mark BoleatChairman of the Policy and Resources CommitteeThe City of London Corporation
  3. 3. 3We help social entrepreneursraise capitalDear Entrepreneur,ClearlySo are proud and excited to publish the second edition of the ClearlySo Guide for theAmbitious Social Entrepreneur.When we launched the first edition in April 2012, we felt the sector was missing a comprehensivesource of the information, resources and organisations that exist to support social entrepreneurs. So,we distilled our industry knowledge and experience into this one document which became the Guide.For those who have read the Guide before, this revision reflects the growth, over the last nine months,of initiatives and organisations dedicated to supporting social entrepreneurship.As the sector evolves, we will continue to update the Guide biannually but the essential themes willremain the same: stay informed, get connected and find the organisations who are helping ventureslike yours.I would like to thank all our authors, past and present, for their incredibly thorough research in helpingto put this Guide together. Without their hard work it would simply not be possible to provide thisresource to our social entrepreneur network.I hope you find the Guide useful and do give us your feedback.Sincerely,Simon EvillCo-author and editor, the ClearlySo Guide for the Ambitious Social EntrepreneurClearlySoMarch 2013
  4. 4. 4We help social entrepreneursraise capital1. About ClearlySo........................................................................................................... 62. The Social Enterprise Sector ...................................................................................... 8Size and resilience of social enterprises ....................................................................................8The key players ..........................................................................................................................8The demand for social investment ............................................................................................9Investment readiness...............................................................................................................10Public procurement and social value.......................................................................................103. Raising Capital........................................................................................................... 113.1. Functions of Capital ...........................................................................................................113.2. Types of Capital..................................................................................................................113.3. Sources of Capital..............................................................................................................15i. Angel Investors ................................................................................................................15ii. Social Venture Capital......................................................................................................17iii. Venture Philanthropy Capital .........................................................................................25iv. Crowdfunding ..................................................................................................................30v. Social Banks and Ethical Lenders.....................................................................................34vi. Community Banking.........................................................................................................36vii. Foundations and Trusts ...................................................................................................38viii. Social Venture Intermediaries .........................................................................................53ix. Award Organisations .......................................................................................................55Competitions and Challenges ..................................................................................................59x. Public Bodies and UK Government Funds .......................................................................63xi. European Union Funds ....................................................................................................694. Business Support and Investment Readiness Services ......................................... 694.1. Training and Mentoring .....................................................................................................694.2. Advisory Services and Consultancies.............................................................................714.3. Accelerator and Incubator Programmes.........................................................................75
  5. 5. 5We help social entrepreneursraise capital4.4. Business Networks.............................................................................................................76i. UK & Ireland.....................................................................................................................76ii. Europe..............................................................................................................................78iii. International....................................................................................................................784.5. Co-Working Spaces...........................................................................................................795. Measuring Social Impact ........................................................................................... 805.1. Business Methodologies ...................................................................................................80i. Social Key Performance Indicators (KPIs) ........................................................................80ii. Social Accounting.............................................................................................................80iii. Impact Scorecard.............................................................................................................80iv. Social Return on Investment (SROI).................................................................................81v. Social e-valuator ..............................................................................................................81vi. GIIRS.................................................................................................................................81vii. IRIS ...................................................................................................................................815.2. Social Impact Reports from Social Enterprises .............................................................825.3. Developments in Social Impact Reporting .....................................................................826. Legal and Taxation .................................................................................................... 836.1. Legal Structures .................................................................................................................836.2. Tax Incentives for Investment in Social Enterprises.....................................................856.3. Access to Capital and Relevant Tax Structures............................................................877. Tools for Social Entrepreneurs................................................................................. 897.1. Directories for Social Enterprises ....................................................................................897.2. Online Tools and Resources ............................................................................................897.3. Sector News and Commentary ........................................................................................907.4. Social Media........................................................................................................................90i. Top Practical Tips.............................................................................................................90ii. Social Enterprise on Twitter.............................................................................................927.5. Key Events in the Sector...................................................................................................937.6. Franchising..........................................................................................................................948. Index ........................................................................................................................... 96
  6. 6. 6We help social entrepreneursraise capitalClearlySo is a financial intermediary in thesocial investment sector, advising socialbusinesses and enterprises on raising capital.We provide corporate finance and financialadvisory services to social entrepreneurs withcapital raising ambitions of £500,000+ andwere approved as one of the first Investmentand Contract Readiness Fund (ICRF) Providersin July 2012.In addition, we run the first UK dedicated socialbusiness angel investment group called ‘ClearlySocial Angels’ and manage investorrelationships with leading institutional investors,including foundations, impact investment funds,banks and corporations.In 2013, we were announced as the investmentpartner for the ‘Big Venture Challenge’, anexciting three year programme designed toaddress the funding gap in the socialinvestment marketplace for early stage/highrisk capital, led by UnLtd and underwritten bythe BIG Lottery Fund.Our servicesClearlySo’s financial advisory service focuseson social businesses, social enterprises andimpact investment funds raising over £1 millionin capital. We do, however, also work for socialbusiness and enterprise clients raising£500,000+ but only if we consider theinvestment opportunity significantly compellingfor our angel group and High Net WorthInvestor (HNWI) network.We have two basic services for socialentrepreneurs raising capital:where wefacilitate introductions to a targeted groupof potential investorswhere wehelp our clients build a compellinginvestment case, devise a fundraisingstrategy and target investors.Services include:Full review of business plan and financialprojectionsAssistance on writing a business plan andbuilding financial projections in ExcelAdvice on corporate and legal structureAdvice on management team andgovernanceGuidance on the measurement andreporting of social or environmental impactAdvice on capital structure and likely termsForming a fundraising strategy,identification and introduction to potentialinvestorsCapital raising, negotiation of term sheetand deal closingOur researchOur research arm is a UK leader in socialinvestment and undertakes commissions forboth public and private sector clients such asthe BIG Lottery Fund, Skoll Foundation, OxfordUniversity, Marks & Spencer and the EU. Seeour publications page here.ClearlySo’s research heritage goes back over adecade with the launch of a websiteshowcasing social businesses and enterprisescalled ‘socialinvestments.com’. In September2008, (the same day Lehmans Brotherscollapsed) socialinvestments.com becameClearlySo. The online showcase of 60 originalbusinesses now numbers over 3,500enterprises from over 80 countries and can befiltered by industry, impact theme andgeography, see our directory here.
  7. 7. 7We help social entrepreneursraise capitalLooking to connect with us?There are a number of entry points for socialentrepreneurs to connect with ClearlySo:Fill out our online social investmentapplication, designed in-house to managethe many incoming queries we receivefrom social enterprises across the UK.Applicants are able to get onto ourinvestment radar and benefit from referralto more appropriate sources of funding orhelp should their business not be at theright stage of development for our support.Come along to a ‘ClearlySo Tea Time’event for emerging social entrepreneursand mid-career professionals with aninterest in the sector. Free to attend, these‘group therapy’ sessions are an informalway attendees can talk to ClearlySoexperts as well as network with and learnfrom their peers.Visit our website www.clearlyso.comwhere you can browse dedicated contentand resources for entrepreneurs, sign upfor our industry newsletter or visit ourpopular jobs board.ClearlySo Ltd is an appointed representative ofCatalyst Fund Management & Research Ltdwhich is authorised and regulated by theFinancial Services Authority (No.185678).
  8. 8. 8We help social entrepreneursraise capitalIf you are reading this the chances are that youare considering joining, or have already joinedthe growing ranks of socially-motivatedentrepreneurs around the world. Like themyou’re probably a problem-solver, combiningthe tools and disciplines of business with adeep passion for tackling a particular socialand/or environmental need. Never before hasthere been such opportunity for socialenterprise, as society struggles to cope withfinite resources, a damaged planet, an ageingand ailing population, widespread and deep-rooted social inequities, a growing gap betweenrich and poor and a weakened global economy.Size and resilience of socialenterprisesMost often quoted is the figure of 62,000 socialenterprises operating in the UK, generatingsustainable employment for close to 800,000people in the UK, including those mostdisadvantaged from accessing the labourmarket1. Social enterprises are said tocontribute approximately £32bn to the UKeconomy and appear to have demonstratedresilience during the recession, with 58% ofsocial enterprises reporting growth in 2010,compared to just 28% of mainstreamcompanies2. Within the EU, the social economyemploys over 11 million people, accounting for6% of total employment3. However, figuresshow these statistics are outdated and may bemisleading.Defining a social enterpriseThere are many definitions of a socialenterprise, but at the heart of the model is thecombination of doing business and doing goodwhich makes social enterprise one of the mostexciting and fast-growing sectors in the UK andinternationally.1Social Enterprise UK2SE UK (2011) ‘Fightback Britain’3CIRIEC, ‘The Social economy in the EuropeanUnion’, p48The common characteristics of a socialenterprise4are:It is an organisation that trades with theprimary aim of tackling social needs byimproving communities, people’s lifechances and/or our environment; it has aclear sense of its mission and how itsactivity addresses those needs.It differs from a straightforward charitybecause it is run as a business, generatingrevenue from trade and making surpluseswhich in part, or full, are used to financefurther activities to generate social benefit.It places an emphasis on profitoptimisation as opposed to profitmaximisation (unlike conventionalbusinesses), thus allowing for the trade-offs involved in securing potentially lessfinancial growth in the short-term to ensuresustainable, and socially impactful growthin the long-term.The key playersFor this nascent sector to mature fully socialenterprises need to develop strong workingrelationships with their customers and clients,the communities in which they serve, and withsocial investors with the capital andcommitment to invest in social need. Thegovernment is potentially a key customer and isincreasingly taking social value into account inits purchasing decisions5. It has also been amajor investor in the sector – both directly andindirectly. As direct investment tails offsignificantly, the government is increasinglytaking on the role of advocate, supporter andcustomer. Whilst the gap left by the withdrawalof traditional funding sources is significant andundoubtedly damaging to many socialenterprises and the communities they serve,there are, nevertheless, encouraging signs forthe sector’s longer term health.Big Society Capital (BSC) became operationalin April 2012 and has already made substantial4For further information on the history anddevelopments within social enterprise, see SE UKwebsite, including ‘Social Enterprise Explained’5See Localism Act 2010-2012 and Public Services(Social Value) Act 2012
  9. 9. 9We help social entrepreneursraise capitalinvestments in sector infrastructure6. BSC ischarged with supporting the specific needs ofthe social investment market and operates as awholesale investor in other social investmentfinance intermediaries (SIFIs). Under theGovernment’s ‘Project Merlin’ agreement7,Barclays, HSBC, Lloyds Banking Group, andRoyal Bank of Scotland (RBS), have eachinvested £50m into BSC. A further £400m hascome via dormant bank accounts, following thework, report and recommendations of the‘Commission on Unclaimed Assets’8. In time,BSC’s capital is expected to leverage fargreater sums of capital flowing from socialinvestors into social enterprises.The UK is also perceived as a global leader inthe development of the social investmentmarket. The European Commission andinternational governments are looking at theexperience of the UK as they explore how tosupport the growth of their own socialenterprise sectors.Social enterprises are beginning to competewith mainstream companies whilst alsogenerating the positive impact which isincreasingly valued and demanded by societyat large. The most forward-thinking of the FTSE100 companies are fast considering how to,and in isolated examples beginning to, workwith social enterprises to help them meet thegrowing demands of their staff and customers.Some corporations are not only consideringusing social enterprises in their supply chains,but are looking at establishing their own socialinvestment funds and support programmes asa way of engaging more directly with thissector. Trade between social enterprises is alsoincreasing as the range of organisations andservices expand.Mainstream financial institutions are alsoincreasingly interested in social investmentopportunities. This has, in part, been influencedby clients, financial instability and poorinvestment returns in mainstream financialproducts. There is also a growing awarenessamongst analysts and economists, and in6BSC, ‘How we invest’7HM Treasury (9 Feb 2011) ‘Project Merlin – Banks’Statement’8Social Investment Task Force (April 2010) ‘SocialInvestment Ten Years On’corporate boardrooms, that supporting and/orinvesting in social and environmentalsustainability may contribute markedly to theresilience and future growth of their business.Platforms for building theinvestment marketThere is a real momentum in the way thatopportunities to invest directly in businesses,charities, and individuals are becoming moreavailable to the wider public; circumventingmainstream financial services and in particularembracing technology – the ‘democratisation offinance’ as some have posited9. For example,over $300m of loans have been created onKiva (see section 3.3.iv) alone since it wascreated in 2005, and over £268m of peer-to-peer personal loans have been made throughZopa in the UK. In the past few years a wealthof specialist sector platforms and crowdfundingsites have emerged to encourage trade inshares, loans and other support in social andcommunity and projects. See section 3.3 iv forfurther insights.The demand for social investmentWhilst the flow of capital into UK socialenterprises is still very small (£165m in 201110)compared to charitable giving (£9.3bn in2011/1211) and is completely dwarfed bymainstream SME finance, the number of socialinvestment funds is growing, as are theopportunities to back financially viable mission-driven organisations. The Boston ConsultingGroup’s report commissioned by BSC predictsthat demand for social investment could growto £1bn by 201612. If we compare this withglobal estimates for social (or impact)investment opportunities over the next tenyears, which focus on the ‘bottom of thepyramid’ market (infrastructure, health,environment and education in least-developed9Professor Robert Shiller (2008) ‘TheDemocratisation of Finance’, University of Yale10The Boston Consulting Group (BCG) (Sept 2012)‘The First Billion: A Forecast of Social InvestmentDemand’11CAF and NCVO (Nov 2012) ‘UK Giving 2012’12BCG (Sept 2012) ‘The First Billion: A Forecast ofSocial Investment Demand’
  10. 10. 10We help social entrepreneursraise capitalnations), $400bn to nearly $1tn13is forecast tobe invested14.Investment readinessThe job of matching available finance toorganisations seeking capital needs a strongpipeline of investable enterprises. In reality,there are several dimensions to building aninvestment-ready market place. Firstly,entrepreneurs need to measure and conveytheir social impact to investors alongside arobust business opportunity. Secondly, theadvisory support for social sector organisationsmust be in place, providing high quality andaffordable professional advice on raising capital– to enable social ventures to access thedifferent types of finance required to fit theiroften complex needs. Mainstream investorshave begun to learn the different nuances andcomplexities of putting capital into socialenterprises – what they are investing in andwhat types of returns they can expect, bothsocial and financial.The introduction of the Cabinet Office’sInvestment and Contract Readiness Fund(ICRF) scheme provides one such route tosupport the needs of ambitious socialenterprises looking to scale and grow theirimpact. There may also be a role for grant-giving organisations to help build the supportneeded to create both investment-readyventures and investing-ready investors.Public procurement and social valueMany of the larger-scale opportunities for socialenterprises are in the delivery of publicservices. Central and local government alreadyuse Payment by Results (PbR) contracts,where social ventures can show they add socialvalue by identifying their unique selling points:that their services and interventions can makea real difference to long-term social outcomes,generating potential future savings for thetaxpayer through reduced demand for publicresources. However, there are real challengesto this, not least that the income stream forsuch provision can be very ‘lagged’ and thebenefits may not always be transferred into13JP Morgan (Nov 2010) ‘Impact Investments: Anemerging asset class’14Ibid; Monitor Institute (Jan 2009) ‘Investing forSocial and Environmental Impact’cash savings. Investors, commissioners andsocial ventures have observed with greatinterest the development of one such PbRproduct – the Social Impact Bond (SIB) – toassess whether other social services can bedelivered under such a structure of socialinvestment and public service contract.In Europe, there is wide recognition that whilstthe legislative framework does give room forconsideration of social value in procurement15,the EU’s principle is not uniformly implementedacross member states at local, regional ornational government levels. In the UK, theintroduction of the Public Services (SocialValue) Act 2012, which requires localauthorities “to give greater consideration toeconomic, social or environmental wellbeing”when tendering for contracts should reinforcethis principle. Investors looking to finance socialenterprises which provide public services willexpect to see a commitment to the principles ofsocial value in the procurement process. SocialEnterprise UK has published a guide for localauthorities16on how to engage effectively withsocial enterprises.15As outlined in the EU guide ‘Buying Social’16SE UK (Feb 2012) ‘The Social Enterprise Guidefor People in Local Government’
  11. 11. 11We help social entrepreneursraise capitalRaising capital is one of the most important, butdifficult, tasks any entrepreneur faces. Raisingfinance in the social business and enterprisesector is particularly challenging because thepool of social enterprises as well as the pool ofsocial investors is small, and the capacity tocombine financial returns is still relatively underdeveloped. Social investment is dwarfed byother forms of capital flows; for example, in2010 UK social investments were valuedaround £190m, compared with £55.3bn ofwider bank lending, £13.1bn of individual givingand £3.6bn of philanthropic grants17.An organisation might seek investment for avariety of reasons, such as:cash-flow financeworking capitalbuilding up internal capacity/recruitment ofstaff etc.expansion of activities (new activities ormore of existing activities)asset purchasestart-up costsreserve funds/safety net resourcesresearch and development or piloting aninitiativeThe purpose for which the capital will be usedmay influence the type of finance sought. Forexample, a debt-based instrument (e.g. amortgage) may be an appropriate mechanismto fund the purchase of equipment or an asset,whereas financing expansion of activities mightrequire a mixture of financial products, such as17C. Shanmugalingam, J. Graham, S. Tucker and G.Mulgan (Feb 2011) ‘Growing Social Ventures: Therole of intermediaries and investors: who they are,what they do, and what they could become’ YoungFoundationloans, quasi-equity or full equity (see section3.2). Also, the legal form of an organisation willaffect the types of capital it can take. Forexample, a company limited by guaranteecannot issue equity (see section 6.1).When looking for capital to sustain and grow asocial venture, understanding the basic types ofcapital available is essential, including what it isintended to accomplish, the advantages anddisadvantages each type of capital offers, andthe responsibilities it incurs on the investee andthe investor.The following list is a simplified overview of theoptions that are currently available to socialentrepreneurs with specific reference tosources of information which provide moredetailed information.i. DonationDonations are gifts which are typically used forcharitable purposes. For social ventures withclear charitable aims, raising donations fromfamily, friends and wider networks can be aneffective way to garner momentum. Manycharitable social enterprises have usedcrowdfunding platforms to get their projectsmoving (see section 3.3.iv).ii. GrantGrants are donated funds of money, whichunlike conventional donations, typically comewith non-fiscal commitments or conditions thatare placed upon grantees (grant recipients) andagreed prior to receiving the funds18. Grantshave a number, or all, of the following features:Time limited: often between one and threeyears to ensure that the agreed outcomesof the grant are executed.Programme specific: where funds are beingdeployed to enable a clearly definedproject.18For detailed information, see ‘Social investmentmade simple’, KnowHowNonProfit
  12. 12. 12We help social entrepreneursraise capitalPerformance based: where funds aresecured only if agreed outcomes ormilestones are achieved by the grantee.Reporting dependent: where grantees areobliged to measure key performanceindicators and report back to the grantor toevidence that funds are being deployedappropriately.A grant, whilst not really a financial investmentbecause of zero prospect of any return, even ofinvested capital, may often come with strictobligations. Grants are primarily made availablein the UK to fulfil charitable and researchpurposes. Typically they are issued bygovernment departments and local authorities,charitable trusts and foundations, andphilanthropists. Historically, grants have been astaple source of funding to charitable socialenterprises, although in recent years economicand political pressures have questioned theefficacy and logic of grant funding as a long-term source of capital for the social enterprisesector.iii. DebtA debt is an obligation (or loan) placed on adebtor (borrower) to repay a creditor (lender)for the capital asset borrowed from them. Debtis usually provided on the condition that therewill be an expected repayment of this capitalover a reasonable period of time. Typically,although not always, the condition of a loanincludes interest: a financial compensation inaddition to the value of the loan.There are many types of debts that fulfildifferent objectives and have a variety offeatures. In the broadest sense, debts fall intotwo main categories: secured and unsecuredloans.Secured loanA loan in which the borrower pledges an asset(property which can theoretically be traded inexchange for money) as collateral (or security)against the value of the loan. The debt is thussecured against the collateral. If the borrowerfails to repay the loan (known as a default) thecreditor takes possession of the asset and maysell it to recoup some or all of the value of theloan.Unsecured loanThe opposite of a secured loan: where therepayment of the debt is not tied to any form ofcollateral. As the lender has no recourse torecoup some, or all, of the value of the loanfrom the borrower in the event of a default,unsecured debt is usually provided with higherlevels of interest. As such, interest levels onunsecured debt are calculated against factorswhich assess the likelihood of the borrower torepay, including the healthiness of cash flow,profitability, and the credit history of theborrower.Types of Debt (an indicative but notexhaustive list):a. Basic loan (term loan or bullet loan).The simplest form of debt financing –where the debtor agrees to pay thecreditor the full sum of the debt borrowed(principal sum) after a fixed period of time,along with the interest (if applicable)calculated as a percentage of the totaldebt per year. The interest may be paid infull on the date the principal sum is due, orstaggered over periodic intervals, such asmonthly or annually. The standardconvention for calculating interest is APR(annual percentage rate).b. Amortising loan or mortgage. A debtpaid down incrementally over a fixedperiod of time. The most ubiquitous form ofan amortising loan is a personal mortgagebut the same principle of fixed paymentsover a specified period of time applies toinsurance premiums, governmentsecurities and corporate bonds. Anamortised loan can be calculated using anamortisation calculator, which uses a ‘timevalue of money’ formula to calculate thepayment schedule.c. Bridging loan. A short-term form of debtwhich is intended as an interim form offinancing before an individual ororganisation can obtain the next stage offinancing. Bridging loans, being short-term,are typically more expensive than othermore conventional forms of debt, and areissued to businesses in the following mainscenarios:To inject enough cash to sustain thebusiness until more significantfinancing or expected source ofrevenue is secured
  13. 13. 13We help social entrepreneursraise capitalTo carry a distressed business while asearch for an investor or buyer isconductedAn injection of cash to carry abusiness through the immediateperiod before an expected acquisitionor flotationd. Syndicated loan. Where a debt isprovided by a group of lenders to a singleborrower. This is a common way forbusinesses to access debt financing frombanks and other institutional financialcapital providers.e. Subordinated loan (mezzanine debt). Aform of debt which ranks after other debts– should an organisation run intodifficulties and fall into liquidation orbankruptcy. In other words, a subordinatedloan has a lower priority in a hierarchy ofcreditors, and may, in the event ofliquidation or bankruptcy, not be able torecoup any, some, or all of the value of thedebt that is due. As such, subordinatedloans typically charge higher rates ofinterest conducive with the greater risk thatthe debt is exposed to.f. Bonds. A form of long-term debt which isconverted into securitised debt. The holderof a bond is the creditor, the issuer of abond is the borrower, and the interest iscalled a coupon. A bond is a formalcontract to repay the borrowed money withinterest (the coupon) fixed at certainintervals over time. To issue bonds as along-term source of debt financing requiresa “viable underlying source of revenue withwhich to pay the bond holders. As thisform of finance is still emerging in thesocial sector, there are various types ofbonds in existence.”19iv. EquityEquity is the term used to describe the ordinaryshare capital of a company20. Ordinary sharesare issued to owners of a company inexchange for a nominal value. In order to19For further information see ‘Charitable Bonds’ byKnowHowNonProfit20For detailed information see ‘Social investmentmade simple’ by KnowHowNonProfitincrease the capital in a company, businessesraise equity by issuing shares. The primaryreason for issuing shares in a company,particularly a small company, is to raise morecash to fund the growth of the businesssoperations.Should a company realise profitability, shareinvestors (depending on which types of sharesthey have purchased) are entitled to theirportion of the profits (known as dividends).Should a company fall into financial difficultiesand be declared insolvent or bankrupt, shareinvestors may lose some or all of the capitalthey have invested in the business, as theyhave the last residual claim against thecompanys assets after all other creditors(ranked in order of priority) have been paid.Should a business be sold, ordinary shareinvestors are entitled to their portion of thepayment. Ownership equity of this kind is alsoknown as risk capital.v. Quasi-EquityQuasi-Equity is a type of capital whichcombines the features of debt and equity. It isan unsecured form of debt where the interestan investor is entitled to is tied to the futurerevenue achieved by the company. Unlike aconventional loan, the return on investment isdependent on the financial performance of theorganisation. If performance is poorer thanexpected and revenues are low, quasi-equityinvestors will receive a lower return or perhapsno return at all. If performance is greater thanexpected, a higher return is paid.Quasi-Equity21, often described as a revenueparticipation loan, can be a useful source offinance for organisations with little or nocollateral, and many social enterprises withlegal structures that prohibit or limit thedistribution of share capital. With Quasi-Equity,the investor is rewarded for the greater risktheir unsecured capital is exposed to with thereturns on their investment linked to either thegross revenues or incremental revenuesgenerated by the investee. In this way, Quasi-Equity offers a way for funders and theirinvestee to share the risk and reward of sociallyentrepreneurial activities.21See CAF Venturesome’s case study in usingQuasi-Equity
  14. 14. 14We help social entrepreneursraise capitalvi. Community ShareCommunity shares are a form of equityfinancing where shares are issued to localcommunities rather than private investors andwealthy individuals, using the collective capitalof local people to back enterprises andcommunity initiatives. The key to raisingfinance through community shares is access to“actively committed and motivated memberswho recognise the wider benefits ofcommunities investing and engaging in theirsolutions.”22Often the regulation aroundcommunity share issuance is more permissive.vii. Payment by ResultsThe Payment by Results (PbR) financingmechanism is increasingly being used in thecommissioning of public services which createmeaningful social outcomes. By incentivisingsocial outcomes, public service providers(businesses, social enterprises, charities andcommunity groups) are contracted to provideinnovative, often preventative-orientatedinterventions, which tackle pervasive and deep-rooted social problems. Otherwise, the veryinterventions which are understood by charitiesand social enterprises to be the most effectivein tackling social problems may be overlookedin the conventional procurement process.The Social Impact Bond (SIB) is a type ofPbR financing mechanism: “a form ofoutcomes-based contract in which public sectorcommissioners commits to pay for significantimprovement in social outcomes (such as areduction in offending rates, or in the number ofpeople being admitted to hospital) for a definedpopulation.”23Through an SIB, privateinvestment is used to pay for interventionswhich are delivered by service providers with aproven track record. Financial returns toinvestors are made by the public sector on thebasis of improved social outcomes. If outcomesdo not improve beyond an agreed threshold,then investors do not recover their investment.Britain is seen as the international trailblazer inSIBs, of which there are 14 in the UK, including22Community Shares23Social Finance, ‘Social Impact Bonds’the first set up in Peterborough jail24. SIBs haveparticular value as a methodology forevaluating social impact for those socialenterprises working in the criminal justicesystem, supporting vulnerable children, andproviding health, social care, and drug andrehabilitation services. The following are someexamples of SIBs that have been implementedor are in the process of being structured:Under the Peterborough SIB thegovernment issued £5m of SIBs tocharitable trusts and philanthropists. It wascreated by Social Finance, and is used topay for interventions for offenders servingshort prison sentences (less than 12months) at HMP Peterborough. TheMinistry of Justice and the Big Lottery Fundwill pay investors so long as there is ameasured reduction in reconviction rates of7.5% relative to the experience with acontrol group of short-sentence prisoners inthe UK.The Essex SIB will fund a five yearprogramme, run by Action for Children,which will provide intensive support to 380adolescents and their families, focusing on11-16 year olds at the edge of care orcustody in Essex. Social Finance raised£3.1m from social investors, including BigSociety Capital, Bridges Ventures andCharities Aid Foundation, to fund the bond.The investors get a return if the schememeets a target of diverting around 100adolescents from entering care. Thesuccess of the SIB will be judged by thereduction in the number of days theadolescents spend in care, as well as byimproved school outcomes, wellbeing andreduced reoffending. Essex County Councilis the first local authority to award a SIBcontract.In late 2012, the Department of Work andPensions awarded two contracts worth upto £7m to Adviza in the Thames Valley, andTeens and Toddlers in North West England(both social enterprises established bySocial Finance). The Employability SIBswill fund interventions to work with around2,500 14-15 year olds who are24Patrick Wintour (22 Nov 2012) ‘Social impact bondlaunched to help teenagers in care and thehomeless’, The Guardian
  15. 15. 15We help social entrepreneursraise capitaldisadvantaged, or at risk of disadvantage,to tackle youth unemployment.Other notable SIBs include The RoughSleeping SIBs addressing homelessness, andCVAA and Baker Tilly SIB to fund adoptionservices for hard to place children.i. Angel InvestorsBusiness angel networks exist to connectwealthy individuals with young, dynamiccompanies looking for finance. In the UK thereis a well-established and vibrant business angelnetwork sector. Angel networks operatinginclude:Advantage Business AngelsAddidi AngelsAngels in the CityBeer and PartnersBeer and YoungCambridge AngelsCentral England Business AngelsCharlotte Street CapitalClearly Social AngelsConnect LondonEntrustEnvestorsThe Funding NetworkGrowth Investment Network WestMidlandsHaloInvent NetworkKeiretsuLINC ScotlandLondon Business AngelsMinerva Business Angel NetworkNortheast Business AngelsNorthwest Business AngelsOxford Early InvestmentOxford Investment Opportunity NetworkQi3 AcceleratorSeedrs LimitedSilicon Beach Business AngelsSWAIN (South West Angel and InvestorNetwork)Thames Valley Investment NetworkWK Capital LLPWren CapitalYorkshire Association of Business AngelsXenosUK Business Angels Association is amembership body representing many suchnetworks in the UK.However, there are very few angel networksthat focus specifically on the needs of socialbusinesses and enterprises and connect themwith angel investors and venture philanthropistswho wish to make social investments. Weexpect that this may change in the comingyears as the social business and enterprisesector develops and investors increasinglybegin to see the advantages in social investingboth from an intellectual perspective and due toa personal motivation to address social andenvironmental inequities. Until then, this area ofsocial finance is relatively immature andpractitioners are in short supply. Below is a listof angel networks providing capital to socialentrepreneurs and intermediaries connectinginvestors with a focus on sustainability andsocial impact:AddidiPioneers“Addidi Pioneers are a group of like-minded individuals who want to Make aDifference (MAD) by using a proportion of their wealth to invest in sustainableprojects that provide a social return, as well as projects that ‘do good’.”Focus: This network comprises of women investors who seek to invest in ormake sustainable grants to charitable projects or enterprises that develop skills
  16. 16. 16We help social entrepreneursraise capitaland help create self-sufficiency.Key Requirements: Organisations that are working towards becomingsustainable and who measure their outcomes clearly.Deal Size: Not specified. Could include non-financial support.ClearlySocialAngelsThe Clearly Social Angels (CSA) network is managed by ClearlySo. It isdesigned to facilitate the flow of capital into extraordinary businesses which helpto create positive social change.Focus: Entrepreneurs with compelling and innovative solutions to social andenvironmental problems.Key Requirements: Businesses should have a strong business proposition, acredible leadership team, be able to demonstrate positive social impact as wellas a clear description of the social or environmental issue being addressed bytheir business, and provide evidence of their ability to generate positive financialreturns and strong opportunities for growth.Deal Size: £500,000 to £2m but reviewed on a case by case basis.Go Beyond Go Beyond is particularly interested in supporting “entrepreneurs with products,services or business models that adhere to the principles of Triple Bottom LineBusiness Sustainability: People, Planet, Profit.”Focus: Environment, health, education, food, housing, services, technology orluxury. No biotechnology or pharmaceuticals.Key Requirements: Organisation must be based in France, Switzerland, the UK,Italy, Poland, neighbouring EU countries or the US.Deal Size: €100,000 to €2m.Investors’Circle(US)Investors’ Circle “is a network of angel investors, venture capitalists, foundationsand family offices that are using private capital to promote the transition to asustainable economy.”Applications are accepted on a rolling basis.Focus: Energy and environmental solutions, sustainable consumer products,sustainable agriculture, community and economic development, healthcare,biotech and wellness, social media and software.Key Requirements: Applicants should be past the concept stage and beinterested in maximising social and environmental impact as well as financialreturn. It specifically encourages minority-group and female entrepreneurs toapply.Deal Size: $250,000 average invested sums, but investors can be a part of alarger raise.
  17. 17. 17We help social entrepreneursraise capitalPymwymic Put Your Money Where Your Mouth Is Community (Pymwymic) convenes thelongest-running angel investor group in Belgium, the Netherlands andLuxembourg (see section 3.3.viii).Focus: Advises individuals and families on impact investments in private equityand matches impact investors with social enterprises.Key Requirements: Young companies and funds that will sustain theenvironment, improve global health and create social resiliency.Deal Size: Not specified.SocialImpact Co-InvestmentFundThe Social Impact Co-investment Fund is managed by Finance South East(FSE), with Resonance as lead partner, and is supported by Nesta andPanahpur. It was established to increase the supply of funding for early stagesocial impact businesses through encouraging angel investors to invest inprojects with social purpose which are also financially viable. The fund will makeloans to enterprises alongside and subject to an equivalent amount of angelinvestment.Focus: Enterprises which operate with a primary social purpose.Key Requirements: Businesses should be able to demonstrate social impact aswell as the ability to service debt and generate adequate returns for investors.The social impact must be delivered primarily in the UK.Deal Size: Loans of between £25,000 and £100,000 repayable over one to fiveyear terms.Toniic Toniic, represented by ClearlySo in the UK, operates globally and will considerinvestments in “transformational entrepreneurs, enterprises and fundsaddressing the fundamental needs of people and planet”, with no requirementson country or region.Focus: Healthcare, water sanitation, education, environment, housing andpoverty.Key Requirements: Must be addressing social and/or environmental needs.Deal Size: Enterprises and funds seeking between $50,000 and $3m.ii. Social Venture CapitalSocial venture (and philanthropy) capital differsfrom mainstream capital in that it aims to investin the debt and equity of companies that aregenerating positive social impact, with varyingrequirements of the level of financial returnssought. Typically, this capital is available tosocial businesses and enterprises (with aproven business model and trading history)seeking growth capital, but there are instanceswhere ambitious start-up social enterpriseshave secured finance via this route. Below is acomprehensive list of organisations operating inthe field.
  18. 18. 18We help social entrepreneursraise capitalAllia Allia is a charitable social investment intermediary that creates investmentvehicles to raise finance for organisations delivering social impact. It hasdeveloped The Allia Charitable Bond which enables individuals to make anethical, fixed-return investment where the gross interest can be given as adonation to an organisation of choice. Through Allia, supporters can financiallysupport a social enterprise whilst still receiving their initial investment back in full,once the bond has matured.Focus: Poverty, unemployment, work-limiting illness or disability, familybreakdown and homelessness in developing or developed countries.Key Requirements: Must be a legally constituted organisation with charitablestatus or a not-for-profit organisation for public benefit.Size of fund: Over £20m to date.Deal Size: £100 minimum investment, but individual specific.Investees: Arcubus, Community Links, Queen Elizabeth Hospital Birmingham,Scope, Tomorrow’s People25.Big IssueInvestBig Issue Invest (BII) is a specialised provider of finance to social enterprisesand trading arms of charities in the UK that are finding business solutions thatcreate social and environmental transformation. It operates the Social EnterpriseInvestment Fund (see section 3.3.x); it does not provide grants but offers debt,participation loans (quasi-equity) and equity. BII also runs a loan fund.Focus: Job creation, education, training, health and social care, social andfinancial inclusion, environment, community development and social housing,and homelessness.Key Requirements: Must be UK-based social ventures that have beenoperating for at least 24 months (newer businesses are considered on a case bycase basis).Size of fund: £10m to date.Deal Size: £50,000 to £1m in loans, equity or quasi-equity, and may syndicatewith other social investors for investments in excess of £1m.Investees: Jamie Oliver’s Fifteen, 4Children, Cool2Care, Barnardos, HCTGroup, Pathfinder Healthcare Developments, SCA Healthcare, Turning Point,War Child26.Big SocietyCapitalBig Society Capital (BSC), launched in April 2012 by government, is anindependent financial institution authorised and regulated by the FSA.Focus: Developing and shaping a sustainable social investment market in theUK, thereby giving organisations tackling major social issues27access to newsources of finance to help them grow.25Allia’s charitable bonds causes page26BII portfolio page
  19. 19. 19We help social entrepreneursraise capitalKey Requirements: Must be a UK-registered social investment financeintermediary (SIFI)28that provides investment and other support to social sectororganisations that primarily benefit people and communities in the UK.Size of fund: £600m to date29. During 2013, BSC has set a target of investingbetween £75m and £100m in new projects.Deal Size: £500,000 to £15m.Investees: To date, BSC has committed £56m worth of investments to 20 socialinvestment projects; this includes six social impact bonds and an array of socialenterprise funds30.BridgesVenturesBridges Ventures is a sustainable growth investor which seeks to financebusinesses which deliver both financial returns as well as social andenvironmental benefits.See below for funds currently managed by Bridges.SocialEntrepreneursFundThe Bridges Social Entrepreneurs Fund “aims to address the funding gap oftenfaced by fast growing social enterprises looking to scale”. This fund offers flexibleand tailored investment in the form of quasi-equity and equity for fast growingUK-based social enterprises. It does not offer grants.Focus: Businesses with a clear social mission and demonstrable ability to scale.Key Requirements: Must have the ability to generate surpluses to repayfinancing and must be operating in England.Size of fund: £11.5m.Deal Size: Up to £1.5m.Investees: Action for Children, Teens and Toddlers, New Horizons Programme,Community Links, Care and Share Associates, HCT Group, Call Britannia.SustainableGrowth FundsFocus: Education and skills, vocational training, leisure and hospitality,consumer products and services, business and financial services, manufacturingand distribution and environmental protection.Key Requirements: Must operate in the 25% most deprived wards in the UK, asdefined by the Indices of Multiple Deprivation and listed on its website.Size of fund: Part of overall £275m under management across all its funds.27BSC invest in SIFIs providing investment and support to social sector organisations in the following areas:financial inclusion, education, employment and skills, housing and shelter, mental health, physical health, socialcohesion and well-being28SIFIs are organisations that provide affordable finance and support to social ventures. By supporting SIFIs togrow and become more sustainable they will be able to bring millions more in investment into the social sectorthan BSC could bring alone. This means that, over the long term, the social sector will have access to reliablesources of appropriate and affordable finance.29£400m from unclaimed assets and £200m from four high street banks (RBS, Lloyds, HSBC and Barclays – seesection 3.3.vi)30BSC investments case studies
  20. 20. 20We help social entrepreneursraise capitalPortfolio in 2011 held investments in 35 companies totalling £75.2m.Deal Size: £500,000 to £10m.Investees: Carduus, cloud.IQ, Historic Futures Limited, Ardenham Energy, ChillFactor, School Stickers, New Career Skills.SustainableProperty FundThe Bridges Sustainable Property Fund invests in properties in regenerationareas and environmentally sustainable buildings. It seeks strong financial returnsas well as delivering social and environmental impact through its propertyinvestments.Focus: Environmentally sustainable buildings (all UK property sectors).Key Requirements: Must be in eligible local authority, as defined by the Indicesof Multiple Deprivation and listed on its website.Size of fund: Part of overall £275m under management across all its funds.Deal Size: None specified.Investees: The Curve, Elmbridge Court, The Office, Smart Storage, The Hoxton,Credential, Whelan Refining.Deutsche BankImpactInvestmentFundThe Impact Investment Fund is as a fund of funds, investing in social investmentintermediaries that on-lend to social enterprises and charities.Focus: Employment, education and training, and social and financial inclusion.Key Requirements: Investments will be centred around three of its five globalCSR pillars: education, sustainability and social investments.Size of fund: £10m fund31. Investments will be made over three years, startingin 2011, and repaid over 10 years.Deal Size: Not specified.Investees: Big Issue Social Enterprise Investment Fund L.P., Bridges VentureIII.Finance SouthEastFinance South East (FSE) manages a series of funds and offers capital raisingsupport to investment ready businesses who can demonstrate the potential forsignificant growth. FSE also provides training, consultancy and assistance inaccessing both funding and expertise. The FSE Group operates funds totalling£33.6m. FSE Adimpetus Enterprise Investment Scheme (EIS) Fund specificallysupports start-ups which offer tax relief to equity investors. The following fundsare the most socially-oriented.CommunityGeneration FundThis is a national fund that was established in order to support the developmentof community-owned renewable energy. Both development and constructionloans are available.31£2m of the Fund already invested as of February 2013
  21. 21. 21We help social entrepreneursraise capitalFocus: Community energy in England, Wales, Scotland and Northern Ireland.Key Requirements: Main beneficiaries should rank within the 50% mostdeprived locations, as listed in latest available Indices of Deprivation(applications within the 20% most deprived locations are particularlyencouraged).Deal Size: Specific loan size not stated, but expected project size includesfeasibility/pre-planning costs of £20,000 to £150,000 maximum (depending ontechnology and scale) and construction costs of £250,000 to £2m maximum.Investees: None specified.Social Impact Co-Investment FundThe Social Impact Co-Investment Fund is managed in partnership withResonance. See section 3.3.i for details.South EastSustainability LoanFundThe South East Sustainability Loan Fund provides debt funding which must bematched against a publicly funded debt fund (Primary Loan Fund).Focus: High growth potential businesses which are developing or selling aproduct or service aimed at reducing carbon emissions.Key Requirements: Must be operating in South East England, excludingLondon.Deal Size: Loans of between £20,000 and £200,000 (on a matched basis).Investees: None specified.Key Fund The Key Fund is a social enterprise offering secured and unsecured loans,grants, equity and quasi-equity for property, asset and equipment purchases,working capital, development capital, risk capital and for other businesspurposes.Focus: Social enterprises, charities, voluntary and community organisations,social businesses, and co-operatives or mutuals.Key Requirements: Must be operating in the East Midlands, North East, NorthWest, Yorkshire or the Humber.Deal Size: £2,500 to £150,000.Investees: Bransholme Community Childcare, Chapeltown Baths CommunityBusiness, Eyes Open Creative, Newlands Community Association.Resonance Resonance works specifically with UK social enterprises to ensure that they havethe finance required to grow and develop and that they are ready to seek andsecure investment. Resonance also manages a range of loan funds which socialenterprises can access, listed below.Affordable HomesRental FundThe Community Land Trust (CLT) Affordable Homes Rental Fund wasestablished in response to the growing number of community groups looking tocreate affordable local rental housing, in areas where property prices prevent
  22. 22. 22We help social entrepreneursraise capitalmany local people from being able to afford accommodation. The fund is beingdeveloped in partnership with Community Land and Finance. It is hoped thatoffering 100% of the capital required to finance new builds will enable theseorganisations to manage community housing and offer affordable rental housingin their local areas.Focus: Any CLT or other community-led group seeking finance for affordablerental housing.Key Requirements: The planning consent must include a suitable Section 106Agreement32and a mortgagee-in-possession clause.Size of fund: £2.5m target fund size.Investees: None specified.Community ShareUnderwriting FundCommunity share issues are an effective way of mobilising retail investors toback social enterprises that they have a connection with, e.g. to acquire pubsand village shops, for affordable housing, sustainable energy and communityforestry/agriculture initiatives.Projects approved for support from the fund will be able to draw down up to 50%of the community share issue target, with the benefit of advertising thisunderwriting support on launch of the share issue. This is designed to boostconfidence among potential retail investors and encourage higher take-up of theshares.Focus: Community projects of all types which are planning to raise capitalthrough a community share issue.Key Requirements: Project fundraising target between £100,000 and £1m.Size of fund: £2m target fund size.Deal size: £25,000 to £500,000 (average size expected to be £300,000).Investees: None specified.Real LettingsProperty FundResonance is working alongside Broadway, a London homelessness charity, todevelop The Real Lettings Property Fund. This will be the first property fund tobuy accommodation to support homeless people.The fund will seek to bulk buy units from developers and landlords, then leasethem to Real Lettings who will guarantee rent and take on management andmaintenance risk, helped by the specialist residential developer United House. In2013 the fund aims to raise £30m from a growing pool of impact investors,mostly housing associations and charitable foundations.Social Impact Co-Investment FundThe Social Impact Co-Investment Fund is managed in partnership with FSE. Seesection 3.3.i for details about this fund.32s106 Town and Country Planning Act 1990 allows a local planning authority to enter into a legally-bindingagreement or planning obligation with a land developer over a related issue.
  23. 23. 23We help social entrepreneursraise capitalSocialEnterpriseLoan FundThe Social Enterprise Loan Fund provides loans exclusively to organisationsoperating with a charitable purpose.Focus: Organisations operating in one of the 25% most deprived boroughs inEngland.Key Requirements: Must demonstrate the ability to repay loans without creatingfinancial difficulties.Size of fund: Not specified.Deal size: Working capital loans of up to £50,000, fixed asset loans of up to£100,000 and land and building loans of up to £250,000.Investees: Dove Recycling, Sunlight Development Trust, Unique Coffee Bar,Whole School Meals.Social ImpactVentureCapital TrustThe FSE Group (FSE) and Social Finance launched the first ever Social ImpactVenture Capital Trust (VCT) to raise up to £20m of onward investment in socialenterprises and socially-motivated businesses. It is the first diversified,professionally managed, fully listed social investment product available for UKretail investors. Social Impact VCT will be jointly managed by FSE via its FSA-authorised subsidiary, FSE Fund Managers and Social Finance.Focus: Social enterprises and socially-motivated companies that engage withpeople who are marginalised, vulnerable or disadvantaged, work in localcommunities to support cohesion, promote socially motivated brands andimprove health and education provision.Key Requirements: Must be established, socially-driven companies looking toexpand their geographic or product reach and/or whose revenues areunderpinned wholly or partially by confirmed delivery contracts. It will not investin start-ups. Example companies include HCT Group (bus and communitytransport provider), Bromley Healthcare (social care company) and CareersDevelopment Group (Welfare to Work employment contractor).Size of fund: £20m target fund size.Deal size: Not specified.Investees: Not specified.SocialInvestmentScotland(CDFI)Social Investment Scotland (SIS) provides business loan finance to charities,community organisations and social enterprises that might find it difficult toaccess finance from mainstream providers. Repaid loans are recycled to providefurther support to other organisations and rates are fixed throughout the loanperiod. It offers all-purpose loans, bridging loans and property loans (propertyloans are offered in partnership with Triodos Bank (see section 3.3.v).Focus: Third Sector organisations (charities, community and voluntaryorganisations, not-for-profits and social enterprises) operating in Scotland.Key Requirements: Any profits made by an organisation must be reinvested forcommunity benefit.Size of fund: Not specified.Deal Size: £10,000 upwards. Assistance with buying property may be
  24. 24. 24We help social entrepreneursraise capitalconsidered in some circumstances (maximum loans of £250,000). Loans arerepayable over a maximum of ten years.Investees: Udny Community Wind Turbine Co, Glasgow City Mission, RecycleFife, Fare, Callander Youth Project33.TruestoneGlobal ImpactFundTruestone Impact Investment Management runs a Global Impact Fund whichfocuses on delivering market rate returns from social and environmentalinvestments in the UK, Africa and Asia. The fund offers a long-term investment,50% of which is held in private equity and the remaining 50% in open liquidstructure34.Focus: Social and environmental projects in the UK and globally.Key Requirements: Offer profit-seeking investments where the managers alsoaim to generate social and environmental benefits.Size of fund: £10m.Deal Size: £25,000 minimum. No maximum.Investees: None specified.33Social Investment Scotland case studies34A detailed overview of the Fund is given in the Global Impact Fund Summary
  25. 25. 25We help social entrepreneursraise capitaliii. Venture Philanthropy CapitalThis type of capital focuses on the socialreturns generated by its support and investorsare characterised as ‘impact first’ in theirperspectives. Typically, the original capital isprovided on a philanthropic basis, but financefrom the fund to organisations may either beoffered as a grant or on a repayment basis.Venture philanthropy often combines financewith mentoring and other support services (seesection 4).Acumen Fund The Acumen Fund uses donated capital to invest in businesses that addressthe needs of those at the ‘base of the pyramid’ (BoP). The fund offers patientcapital in a range of financial instruments including debt, equity and quasi-equity.Focus: Water, health, agriculture, energy, housing or education in EastAfrica, West Africa, India or Pakistan.Key Requirements: Must demonstrate social impact, financial sustainabilityand ability to scale.Finance Available: $300,000 to $2.5m.Type of Finance: Debt (predominantly), quasi-equity and equity.Investees: Waterhealth International, Jassar Farms, Books of Hope35.CAFVenturesome“CAF Venturesome provides affordable loans to charities, social enterprisesand community groups when grants may not be available and access totraditional financial institutions is difficult.”It also runs the CAF Social Impact Fund: a social investment fund thatprovides debt and equity-like finance, often to provide working or bridgingcapital, to help charities and social enterprises deliver on their mission. Todate, the CAF Social Impact Fund has offered 25 loans, with growing supportfrom CAF Charitable Trust clients36.Focus: Debt-based or quasi-equity finance for charities, social enterprisesand community groups.Key Requirements: Organisation must be UK-registered but activities canbe anywhere in the world, must have clear charitable purpose and socialimpact (though does not need to be a registered charity), and must giveevidence of at least one year of income (whether from donations or trading)Finance Available: £25,000 to £250,000.Type of Finance: Secured and unsecured loans and quasi-equity.Investees: Motivation, KIDS, Interhealth, Torridge Training37.35Acumen Fund portfolio36CAF Social Impact Fund July to September 2012 Report37CAF investees case studies
  26. 26. 26We help social entrepreneursraise capitalCANBreakthroughCAN Breakthrough “provides grant funding and management support to helpestablished social enterprises scale up and maximise their social impact.”This fund is currently closed to applications.Focus: Charitable social enterprises.Key Requirements: Organisations with a minimum turnover of £500,000,three years’ trading history and a scalable business model.Finance Available: £25,000 to £200,000.Type of Finance: Grant.Investees: VoiceAbility, Cool2Care, HCT Group, FareShare, Teach First,Training for Life, Belu Water, WebPlay, British Youth Council, Build Africa38.Impetus – thePrivate EquityFoundationImpetus Trust and the Private Equity Foundation are merging to form a newcharity, Impetus – the Private Equity Foundation. The new entity will focus onenabling charities to help society’s most deprived children and young people.It will be able to spend between £10m and £12m on programmes every year,and have the flexibility to commit more pro bono business skills andmanagement expertise, alongside funding, to charities or social enterpriseswhile still backing a wider portfolio of organisations that show potential.Impetus and PEF hope to launch the completed merger in spring 2013.Impetus Trust Impetus Trust invests financial and human resources in charities and socialenterprises that address economic disadvantage and poverty. It does notinvest in individual projects but into building up the overall capacity oforganisations.Focus: Charities and social enterprises.Key Requirements: UK-registered charity or social enterprise helping thepoorest 20% of the UK population, with a minimum turnover of £250,000 andat least three years’ trading history.Finance Available: £50,000 to £500,000.Type of Finance: Grant.Investees: Ripplez, IntoUniversity, Working Chance, Blue Sky39.The Private EquityFoundationThe Private Equity Foundation (PEF) was established to support children andyoung people in achieving their full potential.Focus: Charities and social enterprises reducing the number of young peoplenot in education, employment or training (NEETs), particularly organisationsdelivering government services under PbR contracts.Key Requirements: Social enterprises that work with NEETs.38CAN supported organisations39Impetus Trust portfolio
  27. 27. 27We help social entrepreneursraise capitalFinance Available: Not specified.Type of Finance: Grant and equity.Investees: City Year, Skills Force, ThinkForward, Place2Be40.InspiringScotlandInspiring Scotland uses philanthropic capital to provide long-term funding anddevelopment support for charities based in Scotland. Within any one of itsthematic funds, it develops a partnership of complementary organisations.Grants are paid out as milestones are reached.14:19 Fund The 14:19 Fund is aimed at increasing the number of young people who areable to make the transition into further education, training or employment afterleaving school.Focus: Organisations supporting young people after leaving school.Key Requirements: Ventures working to reduce the number of people notmaking a successful transition from school.Finance Available: Determined on a case by case basis.Type of Finance: Grant.Investees: Hot Chocolate Trust, Street League, Move On41.Early Years EarlyAction FundThe Early Years Early Action Fund is delivered in partnership with theScottish Government and aims to enable vulnerable young children toachieve their potential through supporting voluntary organisations whoprovide services for children and their families.This fund closed for applications in July 2011.Focus: Organisations providing services to young children and their families.Key Requirements: Not specified.Finance Available: Not specified.Type of Finance: Grant.Investees: Barnardo’s Scotland, Smart Play Network, Circle42.Go2Play The Go2Play Programme is an initiative to invest in play organisations inScotland that provide opportunities for young children in disadvantagedcommunities.Focus: Organisations with new ideas for providing play services that willpositively impact children in Scotland.40PEF portfolio4114:19 Fund portfolio here42Early Years portfolio
  28. 28. 28We help social entrepreneursraise capitalKey Requirements: Please refer to the Go2Play criteria document.Finance Available: Up to £15,000.Type of Finance: Grant.Investees: Jeely Piece Club, Playbusters, The Zone43.Link Up Link Up aims to develop opportunities for communities to come together andencourage mutual community support, particularly in deprived areas. Link Upis working in partnership with a host organisation in each community.Focus: Deprived communities in Scotland.Key Requirements: No further requirements specified.Finance Available: Determined on a case by case basis.Type of Finance: Grant.Investees: Larkfield Community, hosted by Action for Children44.LGT VenturePhilanthropy“LGT Venture Philanthropy supports organisations in their growth andexpansion phase which implement an effective solution to a social orenvironmental problem”.Focus: Organisations in Latin America, Africa, India, Southeast Asia, Europeand China that work in education, health, nutrition, renewable energy,resource management, water, and markets for social investments.Key Requirements: Organisations must have a proven model, anestablished track record and be looking to scale their impact.Finance Available: $200,000 to $1m.Type of Finance: Grant and equity.Investees: CO2 Bambu, Educate Girls, Rags2Riches, streetfootballworld45.Impact VenturesUKBig Society Capital has committed £10m to Impact Ventures UK (IVUK), across-sector impact investing fund co-founded by Berenberg Bank andmanaged by LGT Venture Philanthropy, providing growth capital to socialenterprises in the UK.Launching soon.Shared Impact Shared Impact is a newly-launched debt re-financing platform to supportcharities and social enterprises using venture philanthropy funds. Please seeits website for more details as they emerge.43Go2Play portfolio44LinkUp portfolio45LGT portfolio
  29. 29. 29We help social entrepreneursraise capitalKey Requirements: Not specified.Finance Available: £20,000 to £250,000.Type of Finance: Loans (unsecured and secured) and quasi-equity.Investees: Not specified.SocialBusiness TrustSocial Business Trust works with social enterprises capable of scaling uptheir operations on a regional and national level to become investment readyand attract funds from its corporate partners. Through its corporate partners,the Social Business Trust works with social enterprises to take a long-termview towards financial sustainability, skills development, due diligence, andinvestment. The trust aims to invest in five social enterprises per year.Focus: To help transform the impact of social enterprises and therebyimprove the lives of over a million of the UK’s most disadvantaged people.Key Requirements: Predominantly UK-based registered charities ororganisations that demonstrate a clear charitable purpose that help at least1,000 people a year through its goods or services (directly or indirectly), havea minimum turnover of £1.5m and at least one year’s trading history.Finance Available: £10m of cash and in-kind support over three to fiveyears.Type of Finance: Grant.Investees: Timewise, Inspiring Futures, Bikeworks, London Early YearsFoundation46.VenturePartnershipFoundationThe Venture Partnership Foundation (VPF) works exclusively with socialenterprises to help facilitate growth in order to maximise social impact throughfunding and professional guidance from the private sector.Focus: High impact social enterprises.Key Requirements: Organisations with a proven concept which addresses asocial need, nearing growth stage and prepared to engage in partnership withother members.Finance Available: Grant between £15,000 and £35,000 per annum for threeto five years, and social investment (estimated amount is not specified).Type of Finance: Grant and investment.Investees: MyBnk, Beatbullying, Homeless International, Riders for Health47.46Social Business Trust portfolio47VPF portfolio
  30. 30. 30We help social entrepreneursraise capitaliv. CrowdfundingCrowdfunding (or crowdfinancing, crowdsourcing) is where individuals and organisations raise fundsand/or leverage support from their friends, professional networks and the wider public. Throughcollective cooperation and the pooling of small sums (whether through non-financial pledges,donations, revenue sharing arrangements, debt finance or equity investments), crowdfunders use thegoodwill, excitement, and enthusiasm for their endeavour to raise funds and support from as manypeople as possible. This process of ‘democratising finance’ is increasingly used for a variety of socialand cultural causes from humanitarian relief, political campaigns, micro-finance, artists seekingpatronage, to fans buying stakes in their sports clubs, citizen journalism or funding a start-up socialventure.The Financial Services Authority (FSA) regulations governing lending and borrowing throughcrowdfunding are complex and developments in the sector are changing at pace. Thus, beforeconsidering this route as a finance mechanism for your social venture, it is well worth seeking legaladvice where necessary. The European Crowdfunding Network48(ECN) and the EuropeanCrowdfunding Association49(ECA) united in November 2012 to become one single body that intendsto foster a transparent environment for crowdfunding within the EU. This sole European body willallow for an improvement in customer protection standards and will help contribute to a growth ofopportunities for crowdfunding platforms trading within the EU.The following list of platforms illustrates the rapid growth of this mechanism. To learn more about thisfield visit Crowdsourcing.org.33needs “People powered investing.”Region: Global (US bias).Industry: Any.Focus: Investments for social ventures, particularly revenue share deals andgifts or exclusive deals in kind.Abundance “The first regulated community investment platform that makes it possible forpeople to earn cash return by investing in renewable energy projects in the UK.”Region: UK.Industry: Renewable energy.Focus: Linking up communities and individuals with renewable energy projects.Babyloan “The first European social micro-lending platform.”Region: Global.Industry: Small businesses.48ECN was formed in 2011 by crowdfunding industry professionals and platforms, in order to bring the EuropeanCrowdfunding Stakeholders together. It has local representation (so-called Ambassadors) in more than 10countries in Europe, and gathers crowdfunding platforms and subscribers from the entire EU.49ECA was conceived in early 2012 by a group of entrepreneurs and investors with the intention of providing aunified voice promoting crowdfunding as a source of capital to support the development and growth of for-profitbusinesses, social enterprises and other projects.
  31. 31. 31We help social entrepreneursraise capitalFocus: Generating micro-loans to support small scale businesses.Bank to theFuture“The world’s first ‘peer-to-peer’ market to allow businesses to raise debt, equityor donations from consumers and investors in one place.”Region: Any.Industry: Any.Focus: Bringing finance and investment to entrepreneurs, business andinvestors.Better Place “betterplace.org is a large online donation platform.”Region: Global.Industry: Any social sector organisation.Focus: Providing a fundraising platform for social sector projects.Buzzbnk “Positive people backing great ideas.”Region: UK bias.Industry: Any social venture organisation.Focus: Raising donations and loans, as well as non-financial support for socialventures.CrowdCube “The world’s first equity-based crowdfunding community dedicated to businessinvestment.”Region: UK.Industry: Any.Focus: Raising equity for UK businesses.CrowdMission “The world’s first equity-based crowdfunding platform for socially-drivenbusinesses.”Launching soon.Region: UK.Industry: Social and environmental.Focus: Raising equity for socially-driven businesses.
  32. 32. 32We help social entrepreneursraise capitalEthex “Non-profit ethical investment club.”Region: UK.Industry: Ethical businesses with share capital.Focus: Generating equity investment for ethical businesses.JustGiving “The UKs first online fundraising business.”Region: UK.Industry: Any.Focus: UK-registered charities or organisations with a GiftAid number,including schools, churches, community amateur sports groups and scout andguide groups.Funding Circle “Fast, flexible business loans.”Region: UK.Industry: Any.Focus: £5,000 to £500,000 fully flexible business loans for well-established UKbusinesses.Indiegogo “The world’s funding platform.”Region: Global.Industry: Any.Focus: Raising funds for campaigns.Kickstarter “Fund and follow creativity.”Region: US and UK.Industry: Creative and media.Focus: Artists, designers, filmmakers, musicians, journalists, inventors,explorers, etc.Kiva “Loans that change lives – connect people through lending to alleviate poverty.”Region: Global.Industry: Any.Focus: “Empowering people around the world with a $25 loan.”MarketInvoice “Flexible working capital finance – on the best terms.”
  33. 33. 33We help social entrepreneursraise capitalRegion: UK.Industry: Any.Focus: Companies generating revenues between £250,000 and £50m.PleaseFund.Us “Fundraising for creative ideas.”Region: UK.Industry: Creative.Focus: Music, film, fashion, technology, publishing, etc.Seedrs “Makes investing in start-ups simple and rewarding.”Region: UK.Industry: High-growth technology-driven ventures, retail stores, restaurantsand professional services firm.Focus: Raising up to £150,000 in equity capital for new businesses.Spacehive “Spacehive helps communities transform their local public spaces.”Region: UK.Industry: Projects for the community.Focus: Projects based in a public space or somewhere freely accessible to thecommunity.Sponsume “A creative way of funding creativity.”Region: Global.Industry: Creative.Focus: Raising funds and support for creative and entrepreneurial projects.Start SomeGoodConnects social entrepreneurs, changemakers and not-for-profit organisationswith people who want to help.Region: Global (US bias).Industry: Any.Focus: Raising donations and support for social entrepreneurs with brightideas.Ulule “Make good things happen.”Region: Global (Europe bias).
  34. 34. 34We help social entrepreneursraise capitalIndustry: Creative, innovative or community-minded projects.Focus: Raising funds for creative and innovative projects50.Zopa “A marketplace for money.”Region: Global.Industry: Any.Focus: Peer-to-peer lending.v. Social Banks and Ethical LendersThere are certain lenders who seek to provide finance to those organisations which aim to make adifference to society and focus on lending to businesses established in disadvantaged areas, and/orto charities, voluntary organisations, community groups, social enterprises and businesses.One such group of lenders is Community Development Finance Institutions (CDFIs) which lendmoney to businesses, social enterprises and individuals who struggle to get finance from high streetbanks and loan companies. They help deprived communities by offering loans and support at anaffordable rate to people who cannot access credit elsewhere.51There are over 50 CDFIs spreadacross the UK. The Community Development Finance Association (CDFA) is the umbrella body forCDFIs and provides a comprehensive resource on their website to help you find the rightorganisations to contact for your social venture. Investors into CDFIs may benefit from CommunityInvestment Tax Relief.Visit the Finding Finance resource tool for more information on CDFA lending.The Global Alliance for Banking on Values is an independent network of banks using finance todeliver sustainable development for unserved people, communities and the environment.Additional social and ethical lenders, some of which are also CDFIs, include:Charity Bank “Charity Bank finances social enterprises, charities and community organisations,with the support of depositors and investors who want to use their money tofacilitate real social change, while earning a financial return.” The bank’s ultimatemission is to maximise impact on society, not to maximise profit.Focus: Third sector organisations requiring funds to further social change52.Key Requirements: Organisations that are constituted with social objectives andare non-profit distributing to private individuals; or for-profit companies if the loanis exclusively for charitable purposes.Deal Size: £50,000 to £1m loan funding (larger facilities may be arranged inpartnership with other lenders).50Ulule successfully funded projects51Community Development Finance Association52Charity Bank 2012 portfolio
  35. 35. 35We help social entrepreneursraise capitalEcologyBuilding SocietyThe Ecology Building Society provides specialist mortgages for projects whichminimise environmental impact or help promote sustainable living.Focus: Environmental organisations using green techniques or carrying outrenovations in a sustainable manner53.Key Requirements: Established businesses, registered charities and voluntaryorganisations, community-owned enterprises, fair-trade businesses andecological property developers. It will not provide loan finance to start-ups.Deal Size: £1m maximum.Shared Interest Shared Interest is an ‘ethical investment co-operative’ providing finance tobusinesses in Europe, the US, Australia and the developing world. It is currentlythe world’s only 100% fair-trade lender.Focus: Loan finance and credit facilities to fair-trade producers and buyers54.Key Requirements: Businesses should be members of WFTO (or a local orregional affiliate) or FLO-certified, have at least three years’ trading history and apositive balance sheet.Deal Size: Loan sizes are not outlined, but there are limits on how much can belent to certain regions, countries or products, which will determine the loan size atthe time of any one application.TriodosTriodos is a socially-driven bank, investing solely in ethical businesses, socialenterprises, charities, and community and voluntary groups that deliver positivesocial, environmental and cultural change. As of February 2012, Triodos haslending and commitments in excess of £625m, making its social banking activitiesthe most extensive in the UK.Focus: Individuals and organisations striving for a more sustainable futurethrough nature and the environment, culture and society, or social business55.Key Requirements: Organisations that benefit society and the environment.Deal Size: £25,000 to £15m loan funding per project (may consider largeramounts on a case by case basis) and equity investments in sustainablebusinesses through ‘Triodos EIS Fund’56and renewable energy opportunitiesthrough ‘Triodos Renewables’57.53Ecology Building Society commercial mortgage portfolio54Shared Interest portfolio55Triodos portfolio56Triodos EIS Fund portfolio57Triodos Renewables portfolio
  36. 36. 36We help social entrepreneursraise capitalUnity TrustBankUnity Trust Bank is a specialist provider of financial services to civil society, socialenterprises, councils, trade unions, community interest companies (CICs)58andsmall businesses. It provides a diverse range of flexible financial products andservices, from bridging loans to property development funding.Focus: Civil society, social enterprises, CICs, councils and trade unions.Key Requirements: Some loans require organisations to be a registered charity,umbrella organisation or development organisation.Deal Size: £250,000 to £6m loan funding.Please also cross-refer to Social Venture Funds in section 3.3.ii and the following section onCommunity Banking for additional sources of social and ethical lending.vi. Community BankingThere has been an increase in the level of engagement in providing finance to organisationsgenerating social impact from the mainstream banks recently. Under the terms of Project Merlin,Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland have agreed to invest permanentequity of £50m each in Big Society Capital (BSC) (see section 3.3.x) They made this commitment inthe context of wider discussions (known as the ‘Merlin’ agreement) with the government on“increasing their positive contribution to society and to economic recovery”. Specific social funds andinitiatives of retail and investment banks are listed below.BarclaysCommunityFinance FundThe Community Finance Fund aims to provide CDFIs with the capacity todeliver affordable credit to SMEs that are otherwise unable to obtain credit. Aspart of the fund, Barclays will award £200,000 to UK community financeorganisations throughout 2013.Application deadline is 11thApril 2013.Finance Available: Grants up to £50,000.Key Requirements: Organisations must be a CDFI or credit union (i.e. amember of Transact), an operational business or has received final FSAapproval to begin operations and operational in the UK.Co-operativeGroup LtdThe Co-operative Group Ltd has a wide variety of retail businesses and it isco-operatively run and owned by its members. It is the largest organisation ofthis type in the UK, with over six million members.Co-operativeCommunity SharesFundThe Co-operative Community Shares Fund provides underwriting services tocommunity-owned enterprises seeking to raise investment through acommunity share issue (see section 3.2.vi).Co-operative Bank The Co-operative Bank has a long history of ethical finance, co-operative58See CIC regulator
  37. 37. 37We help social entrepreneursraise capitalCommunityBankingbusiness support and community finance services. Community Directplusgives charities, community groups, voluntary organisations and socialenterprises an ethical way to bank for free.Finance Available: £500 to £1,000 from the Customer Donation Fund59.Key Requirements: Applicant must be a Community Directplus accountholder.Co-operative andCommunityFinanceThe Co-operative and Community Finance provides supportive loan finance tohelp people take control of their economic lives and create social benefit.Finance Available: Loans from £10,000 to £75,000, with a £150,000 totallending cap.Key Requirements: Organisation owned and democratically controlled by itsmembers (i.e. either employees, customers or members of a community).LloydsBanking GroupSee section 3.3.ix Lloyds Banking Group and School for Social EntrepreneursProgramme.Royal Bank ofScotlandGroupMicroFinanceFundThe RBS Group MicroFinance Fund (MFF) has been set up to provide loansto potential and existing social entrepreneurs who do not qualify formainstream bank lending. The fund offers financial support for the purpose ofstarting or expanding a community-based business.Finance Available: £30,000 to £1m in loan funding.Key Requirements: Charities, social enterprises, CICs and co-operativesthat are sustainable, deliver high levels of social value and are investmentready. Organisations must have clear social or environmental objectives andreinvest profits for a social purpose; be established, located and trading in theUK; and have been declined a loan by a mainstream bank.Inspiring WomenEnterpriseInspiring Women Enterprise offers grants to help build the capacity oforganisations that encourage and support women who are not yet in businessto explore enterprise. It will support both new and existing programmes led bynot-for-profit organisations.The next round of funding opens 3rdJune 2013.Finance Available: Annual funding pot of £500,000. Grants up to £50,000.59Co-operative Customer Donation Fund winners
  38. 38. 38We help social entrepreneursraise capitalKey Requirements: UK organisations with innovative ideas to inspire womeninto enterprise.Inspiring YouthEnterpriseInspiring Youth Enterprise invests in both new and existing programmes, ledby not-for-profit organisations, supporting young people aged 13-30 years old.The next round of funding opens 4thMarch 2013.Finance Available: Grants up to £50,00060.Key Requirements: UK organisations with innovative ideas to inspire youngentrepreneurs.vii. Foundations and TrustsA growing number of charitable trusts and foundations are showing interest in social enterprise, andsome have made social investments as well as conventional grants. However, much of this work isembryonic and limited primarily to the work of a few notable foundations.Despite this growing interest and the revisions made to Charity Commission guidance CC14 whichhelps to clarify the types of investment strategies that charitable foundations may undertake61, thevast majority of trusts and foundations are not yet engaged in social investment and need significantinformation, resources and reassurance on their fiduciary duties to do so.Below is a non-exhaustive list of foundations that have either begun to invest in social enterprises orhave expressed an interest in doing so. Also included in the list are those foundations which haveawarded grants to charitable social enterprises in recent years.Specific advice on accessing grant funding from charitable foundations is available in ‘Applying to acharitable trust or foundation’ from the Association of Charitable Foundations (ACF). However, in allcases, please determine the exact procedure for applying to these Foundations as most do notwelcome unsolicited approaches for funding.A TeamFoundationFocus: Improving food access, quality, education, research and environmentalstewardship through funding inspired projects and charitable organisations withlike-minded goals.Key Requirements: Funding will be granted to registered charities, not-for-profit and non-governmental organisations (NGOs), universities and colleges inthe UK and Ireland. The Foundation looks to support a mixture of practicalprojects, research and policy work. Proposals should incorporate methods formeasuring impact, monitoring and evaluation and demonstrate the possibility oflasting impact on policy or practice.Finance Available: Not specified.Type of Finance: Grant.60Inspiring Youth Enterprise successful first round organisations61K. Hill (July 2011) ‘Investor Perspectives on Social Enterprise Financing’, ClearlySo (prepared for the City ofLondon Corporation, City Bridge Trust and the Big Lottery Fund), p52 para 2
  39. 39. 39We help social entrepreneursraise capitalDeal Size: Not specified.Grantees: 2011 Food Issues Census.ArthurGuinness FundFocus: Identify and support social entrepreneurs across the markets whereGuinness operates.Partners: Ashoka, Social Entrepreneurs Ireland, UnLtd, British CouncilIndonesia, Virgin Unite, UP Singapore.Key Requirements: Not specified.Finance Available: €7.4m.Type of Finance: Grant.Deal Size: Not specified.Grantees: The March Hill Co-op, TCA, CV Outreach, CV Fruitanol62.BarrowCadbury TrustFocus: Supporting vulnerable and marginalised people in society. The Trust’swork is divided into three programme areas: criminal justice, migration andEurope, and poverty and inclusion63.Key Requirements: Programme dependent.Finance Available: £3.5m for social investment64.Type of Finance: Grant, loan, social impact bond (SIB), equity and quasi-equity investment.Deal Size: £50,000 to £250,000 investment.Grantees/Investees: Social Justice Centre, Nationwide Learning, Anawim,Key Birmingham, Women Acting in Today’s Society, Peterborough SIB.Bill & MelindaGatesFoundationFocus: Global development (agriculture, financial services for the poor, water,sanitation and hygiene, urban poverty, and emergency response), globalhealth, and US programmes such as high schools, homelessness and libraries.Key Requirements: Impactful and well-run social ventures.Finance Available: Social investment fund with £252m to invest.Type of Finance: Grant and investment.Deal Size: Not specified.Grantees/Investees: Inigral, Sidai Africa Ltd65, Liquidia Technologies.62Arthur Guinness Fund case studies63Barrow Cadbury programmes64Just over £1m has been committed, at time of writing65FARM Africa Annual Review 2010-2011, p10

×