Social finance for the youth sector<br />A market analysis<br />The Young Foundation <br />7th June 2011 <br />
Introduction<br /><ul><li>11,ooo charities that comprise VCYS are under unprecedented pressure
Income streams to March 2012 reduced by a quarter
 Changes to who pays, how and what’s expected in return
Ongoing challenges to find capital to grow capacity and entrepreneurialism to respond
Interest in social finance building</li></li></ul><li>What is social finance?<br /><ul><li>Capital investment in social im...
Equity investment and loans </li></li></ul><li>Methodology<br /><ul><li>Report seeks to assess the youth sector market for...
Online survey with 97 respondents
Telephone interviews with 14 CEOs and Directors plus social investors </li></li></ul><li>The social finance market for the...
Assessing revenue: who pays? <br />N=53<br />
And in the future? <br />N=53<br />
The challenges facing the sector<br /><ul><li>Reductions in public spending on VCYS
Changing public sector commissioning approaches
Pressure on private and charitable sources of income</li></li></ul><li>The response? <br /><ul><li>Re-thinking business mo...
Telling a strong story about value
Creating new ways to work together </li></li></ul><li>How confident is the sector? <br />N=53<br />
Assessing capital: supply and demand <br /><ul><li>Strong and growing interest in social finance
1 in 10 VCYS organisations surveyed identified themselves as ready for social investment
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Social Finance for the Youth Sector

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Social Finance for the Youth Sector

  1. 1. Social finance for the youth sector<br />A market analysis<br />The Young Foundation <br />7th June 2011 <br />
  2. 2. Introduction<br /><ul><li>11,ooo charities that comprise VCYS are under unprecedented pressure
  3. 3. Income streams to March 2012 reduced by a quarter
  4. 4. Changes to who pays, how and what’s expected in return
  5. 5. Ongoing challenges to find capital to grow capacity and entrepreneurialism to respond
  6. 6. Interest in social finance building</li></li></ul><li>What is social finance?<br /><ul><li>Capital investment in social impact, as well as financial return
  7. 7. Equity investment and loans </li></li></ul><li>Methodology<br /><ul><li>Report seeks to assess the youth sector market for social finance
  8. 8. Online survey with 97 respondents
  9. 9. Telephone interviews with 14 CEOs and Directors plus social investors </li></li></ul><li>The social finance market for the VCYS <br />
  10. 10. Assessing revenue: who pays? <br />N=53<br />
  11. 11. And in the future? <br />N=53<br />
  12. 12. The challenges facing the sector<br /><ul><li>Reductions in public spending on VCYS
  13. 13. Changing public sector commissioning approaches
  14. 14. Pressure on private and charitable sources of income</li></li></ul><li>The response? <br /><ul><li>Re-thinking business models
  15. 15. Telling a strong story about value
  16. 16. Creating new ways to work together </li></li></ul><li>How confident is the sector? <br />N=53<br />
  17. 17. Assessing capital: supply and demand <br /><ul><li>Strong and growing interest in social finance
  18. 18. 1 in 10 VCYS organisations surveyed identified themselves as ready for social investment
  19. 19. 20% expect to receive up to 5% of their income from social finance in three years
  20. 20. Translates to up to £5 million worth of social finance</li></li></ul><li>Providers and types of social finance<br /><ul><li>High street banks (RBS, Barclays etc): mainly overdraft facilities, some secured lending - but generally do not understand the charity sector
  21. 21. Specialist banks (mainly secured bank lending, mortgages etc): Triodos, Unity Trust, Charity Bank, Coop Bank.</li></ul> <br /><ul><li>Social investment funds: offer semi-commercial loans and (quasi-)equity for returns: CAF Venturesome, Big Issue Invest, BridgesVentures
  22. 22. Venture philanthropy funds : offer capital grants with capacity-building advice: Impetus Trust, Social Business Trust, UnLtd, CAN-Breakthrough, VPF , Private Equity Foundation
  23. 23. Social finance advisories: Social Finance Ltd, UnLtd Ventures, and others.</li></li></ul><li>Three main social finance needs for the sector<br /><ul><li>Start up: finance for innovation and start ups
  24. 24. Scale up: finance for acquisitions and mergers
  25. 25. Cash flow: finance to provide working capital </li></li></ul><li>Is the sector ready? <br /><ul><li>For the vast majority, social finance is some way away as a viable option
  26. 26. Four common challenges</li></ul> - Understanding <br /> - Capability<br /> - Capacity <br /> - Security <br />
  27. 27. Conclusions <br /><ul><li>Interest and openness to social finance
  28. 28. Existing investors only cater to a proportion of the youth sector
  29. 29. Social finance cannot be a ‘cure all’
  30. 30. VCYS organisations need support to establish new business models and demonstrate impact
  31. 31. Working in collaboration and consortia
  32. 32. Social finance needs to evolve to fit the needs of the sector </li></li></ul><li>Where next? <br /><ul><li>Proactive support to the sector to build capacity and capability
  33. 33. Seek out and support innovative organisations – stronger impact but higher degrees of risk
  34. 34. Provision of non-financial support </li></ul> - understanding social finance<br /> - addressing internal capacity/capability issues <br /> - telling a strong story about impact and value<br /> - diversifying income streams <br />
  35. 35. Questions…<br /><ul><li>Do the findings ring true?
  36. 36. What does this mean for the youth sector?
  37. 37. What does this mean for investors?</li></li></ul><li>Contact <br />Bethia McNeil <br />Bethia.mcneil@youngfoundation.org<br />0208 980 6263 <br />
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