Investment for social value, fergus lyon, social investment for 21st century


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  • Inflation of ratios
  • Investment for social value, fergus lyon, social investment for 21st century

    1. 1. Hostedby:Fundedby:Investment for social value –overcomingchallenges for measuringProfessor Fergus LyonMiddlesex UniversitySocial Investment for the 21st Century5th November 2012Strathclyde Business School
    2. 2. Current loan finance• What does ‘access to finance’ mean?– Confusion of loan finance, grant finance and income• Demand for grants, £50-£250K long term capital• 18% of Social enterprises get bank loans– but 60% of those over £1m (SEC- State of SE 2009)• 25% social enterprises seek loan finance, halfsuccessful ( SEUK, 2011)• 26% of SMEs seek finance and half unsuccessfulor get less than requested
    3. 3. Is there demand?• Willingness to take on debt by some charities• 8% of National Survey of Charities and SEwere dissatisfied with access to loan finance• Investment readiness?– Strength of business propositions– Presentation and pilot testing of propositions• Capacity building, confidence, networking andrelationships especially in early stages• The debt burden on those that ‘inherit’ frominvestment friendly social entrepreneurs
    4. 4. Supply of social investment• Who are the suppliers?– Charitable, Private, Public funds• £192m ‘social investment’ compared to£3.8bn loans to charities, £13bn giving and£55bn of small business lending• Most investors unwilling to finance innovation• Innovations in investment?– Equity investment– Community investment– Social impact bonds
    5. 5. Social Impact Bonds• Organisations raise finance from private orcharitable investors.• They have contracts from the state todeliver services and get Payment by Resultsfrom which they repay investors• But how to set payment, when to pay, howto avoid cream skimming and can thegovernment borrow more cheaply
    6. 6. Measuring the impact• Measuring the impact of an organisation ishard• How can social investment use social impactmetrics- can you compare project versusproject• Measuring the impact of many investmentswithin a fund is harder• So how can the Big Society Capital measurethe impact of many different funds?
    7. 7. •Socially inclusive fee structure•Flexible, innovative and responsiveto filling gaps•Strong community roots•Intergenerational programmes•Focus on quality of provision•Training and qualification offer•Consideration of environmentalimpact (e.g. procurement)London Early Years Foundation
    8. 8. Knowing your impact• External pressure from investors,commissioners and funders ( reactive)• For learning• Proactive decision to sustain or grow activity– To attract investment or funding– To win contracts– To break an image– To create a new image– As a sign of change of character of organisation– To be ‘professional’ and ‘businesslike’
    9. 9. Challenges for social investors• Setting measurable outcome indicators• What data required and which method• The cost of measurement in applications• Balancing setting indicators with innovation• Allowing SEs to use discretion in measurement• Interpreting (and trusting) the results• Dangers of comparing the uncomparable• Encouraging the reporting of smart failure
    10. 10. Ensuring trust in approachesto social accounting• Search for a common approach but stillcompetition between approaches• Use of trusted professionals for socialaccounting• Under- reporting to ensure no loss oflegitimacy and trust• Auditing procedures – but these are opento interpretation
    11. 11. Six questions you should askabout any impact measurement1. What indicators?2. Who was asked?3. How many people asked or what data used?4. How has the value been measured? Howmonetised?5. Has it looked at what would have happenedwithout activity?6. What reported (and what left out)?
    12. 12. Conclusions• Social investment can provide finance fordelivering social benefit• However it is not a substitute for other formsof support and capacity building• Is it filling a gap or a cure in search of a disease• Questions of how to measure the ‘social’ andwhy organisations measure• Do we need different approaches to measuringfor different purposes?