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Social Investment Mechanism 12 03 09

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Social Investment - Capital Partnerships and other animals....

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Social Investment Mechanism 12 03 09

  1. 1. “ Not for Loss” Social Business Finance Capital Partnerships and other Animals Social Investment Mechanism Workshop Chris Cook , Bristol 12 March 2009
  2. 2. There are two ways of raising finance...... 08/06/09
  3. 3. ....Credit and Investment 08/06/09
  4. 4. Investment is either through a Limited Company.... 08/06/09
  5. 5. ....a 19 th Century legal dinosaur 08/06/09
  6. 6. ...or loans secured by legal claims eg mortgages 08/06/09
  7. 7. But there’s a new furry animal out there.... 08/06/09
  8. 8. ...the 21 st Century Limited Liability Partnership (LLP) 08/06/09
  9. 9. An LLP is a corporate body with limited liability.... 08/06/09
  10. 10. ...and...errrr...that’s it!... 08/06/09
  11. 11. As far as the Tax Man is concerned it is a Partnership 08/06/09
  12. 12. It’s an “Open” Corporate where we can work with each other 08/06/09
  13. 13. ... even without a written agreement 08/06/09
  14. 14. It enables “Peer to Peer” Finance: P2P Credit and P2P Investment 08/06/09
  15. 15. Peer to Peer Credit – the Guarantee Society Buyers 08/06/09 Pool Service Provider Services Fee Fee Guarantee Guarantee Fee Value Credit Sellers
  16. 16. A mutual guarantee of P2P “trade” credit backed by payment into a Default Pool 08/06/09
  17. 17. A Credit Clearing Union alternative to unsecured bank credit 08/06/09
  18. 18. P2P Investment - Capital Partnership Capital Partnership Investors Customers Custodian % % £ 08/06/09 Managers
  19. 19. Capital Partnership – direct Peer to Peer investment in productive assets 08/06/09
  20. 20. “ Equity Shares” - % age shares in revenues or production... 08/06/09
  21. 21. ...or Units - redeemable in production 08/06/09
  22. 22. Example: “The Art of Flirting” – a film incorporated as an LLP 08/06/09
  23. 23. The actors received “nth’s” of the gross revenues... 08/06/09
  24. 24. ...I got 5%...and the producer the rest... 08/06/09
  25. 25. ...except that we needed lights, cameras, pizza, coffee...... 08/06/09
  26. 26. Two Capital Partners invested £10k for 20% of revenues.... 08/06/09
  27. 27. ...if there are any 08/06/09
  28. 28. Art of Flirting LLP Art of Flirting Partnership Financial Capital (Investors) Viewers Custodian % % £ 08/06/09 Human Capital (Actors, Producer, Me)
  29. 29. Everyone was on the same side 08/06/09
  30. 30. Example: Albion Trust...a charity 08/06/09
  31. 31. ..who provides affordable office space for social enterprises 08/06/09
  32. 32. ...due to demand they bought a disused church next door 08/06/09
  33. 33. ...and plan a £4m development 08/06/09
  34. 34. But if they borrow, the rents will be unaffordable 08/06/09
  35. 35. Solution? An Albion Partnership? Albion Partnership Investors Tenants Custodian % % £ 08/06/09 Managers
  36. 36. Example: a community wishes to build a wind turbine...
  37. 37. Energy Pool Turbine Investor Community Custodian Energy Energy Energy Manager
  38. 38. Managers receive %age of production
  39. 39. Suppliers may invest equipment & materials: must invest agreed % profit
  40. 40. Investors provide development Capital by purchasing redeemable Units
  41. 41. Outcome: turbine financed by selling <40% of production. 08/06/09
  42. 42. Example: a mapping company 08/06/09
  43. 43. ...converted to a mapping LLP... 08/06/09
  44. 44. ...to bring in marketing and development partners.. 08/06/09
  45. 45. ...unfortunately, the partners fell out... 08/06/09
  46. 46. ...and it all went Pear-shaped 08/06/09
  47. 47. The Capital Partnership aligns stakeholder interests.... 08/06/09
  48. 48. ...but it’s not a magic bullet 08/06/09
  49. 49. Conventional Finance requires binding contracts.... 08/06/09
  50. 50. ....partnership finance requires consensual agreement... 08/06/09
  51. 51. ...but there may be no magnetism.. 08/06/09
  52. 52. A Capital Partnership is not an Organisation ... 08/06/09
  53. 53. ...it does not own anything, do anything, employ anyone, or contract with anyone... 08/06/09
  54. 54. ...it is simply a framework within which the stakeholders self organise ... 08/06/09
  55. 55. There is no Profit and no Loss within a Capital Partnership 08/06/09
  56. 56. I believe it achieves Yunus’ Not for Loss Social Business ideal 08/06/09
  57. 57. Thank You 08/06/09

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