Social investment: five case studiesMay 2011Rob Hodgkinson, Investment Executive, VenturesomeCasey Lord, Investment Analys...
Revenue is distinct from capital  Income / revenue    Covers the costs of expenditure of ongoing work (service    provisio...
Charities require access to capital  Charities are undercapitalised     Funding is primarily available in the form of reve...
What Venturesome offers Bridging finance Pre-funding of fundraising Working capital Growth capital
Bridging finance  Forecast cash shortfall, typically due to grant  payment in arrears  Similar to an overdraft facility; u...
Bridging finance: cashflow excluding facility 25,000 20,000 15,000 10,000  5,000       -            1   2   3   4   5   6 ...
Case study: The Andrew Lees Trust        The Andrew Lees Trust manages        programmes in Madagascar aimed at        edu...
Pre-funding of fundraising  Enables charities and social enterprises to start capital  expenditure programmes immediately ...
Pre-funding of fundraising: cashflowexcluding facility  20,000  10,000       -            1   2   3   4   5   6   7   8   ...
Case study: Wollaston Association of Youth            WAY is a collaboration of three youth            organisations in th...
Working capital  Forecast cashflow shortfall, typically due to  contractual payment in arrears  Similar to factoring  Unse...
Working capital: cashflow excluding facility 30,000 25,000 20,000 15,000 10,000  5,000      -           1   2   3   4   5 ...
Case study: Fairtrade Foundation            Fairtrade Foundation grown rapidly            since launch            Signific...
Growth capital  Organisation has demonstrated proof-of-concept and  been trading for at least twelve months  Capital requi...
Case study: FareShare             FareShare is a national charity that             redistributes quality surplus food     ...
Quasi-equity  High growth potential organisations  Substitute for equity in trading charities  Revenue Participation Agree...
Quasi-equity: income profile500,000450,000400,000350,000300,000250,000200,000150,000100,000 50,000     -          1   2   ...
Case study: Global Action Plan         GAP works for the protection and         improvement of the environment through    ...
Venturesome key facts Since 2002, we have offered £20m to some 270 small- and medium-sized charities Cumulative default ra...
Contact information  Rob Hodgkinson, Investment Executive    Email: rhodgkinson@cafonline.org    Phone: 03000 123 225  Cas...
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PDF Using Capital to Diversity your income streams, Casey Lord and Robert Hodgkinson

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A session exploring how using capital helps diversify income streams, in time of economic pressure.

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PDF Using Capital to Diversity your income streams, Casey Lord and Robert Hodgkinson

  1. 1. Social investment: five case studiesMay 2011Rob Hodgkinson, Investment Executive, VenturesomeCasey Lord, Investment Analyst, Venturesome
  2. 2. Revenue is distinct from capital Income / revenue Covers the costs of expenditure of ongoing work (service provision, projects etc.) Suppliers of income = purchasers of charities’ work Capital Money and other resources that enable organisations to deliver their service / project / work Capital funders = investors in organisations
  3. 3. Charities require access to capital Charities are undercapitalised Funding is primarily available in the form of revenue / income funding Few organisations are able to create a surplus that could then be set aside as reserves Charities require access to external capital in a variety of forms and from a range of sources
  4. 4. What Venturesome offers Bridging finance Pre-funding of fundraising Working capital Growth capital
  5. 5. Bridging finance Forecast cash shortfall, typically due to grant payment in arrears Similar to an overdraft facility; unsecured loan Facility remains undrawn in many cases Repaid in one tranche upon payment of the committed grant
  6. 6. Bridging finance: cashflow excluding facility 25,000 20,000 15,000 10,000 5,000 - 1 2 3 4 5 6 7 8 9 10 11 12 (5,000) (10,000) (15,000) (20,000) (25,000)
  7. 7. Case study: The Andrew Lees Trust The Andrew Lees Trust manages programmes in Madagascar aimed at educating and empowering local communities Required funding to complete the community radio programme and drought mitigation programme ahead of final EU grant payments Venturesome provided an £85,000 bridging loan to underpin cashflow Full loan and interest repaid upon receipt of the EU grant payment
  8. 8. Pre-funding of fundraising Enables charities and social enterprises to start capital expenditure programmes immediately and fundraise at a later date Strong fundraising team and pipeline is required Eliminates risk of contract costs increasing Unsecured loan Repaid upon receipt of fundraising income
  9. 9. Pre-funding of fundraising: cashflowexcluding facility 20,000 10,000 - 1 2 3 4 5 6 7 8 9 10 11 12 (10,000) (20,000) (30,000) (40,000) (50,000) (60,000)
  10. 10. Case study: Wollaston Association of Youth WAY is a collaboration of three youth organisations in the village of Wollaston, established to develop a more suitable building WAY already raised £170,000 for the project from a community share issue and from the County Council Venturesome provided a £75,000 facility to proceed with the building project during the summer months WAY will repay with future fundraising income
  11. 11. Working capital Forecast cashflow shortfall, typically due to contractual payment in arrears Similar to factoring Unsecured loan Repaid in equal monthly instalments over 3-5 years
  12. 12. Working capital: cashflow excluding facility 30,000 25,000 20,000 15,000 10,000 5,000 - 1 2 3 4 5 6 7 8 9 10 11 12 (5,000)(10,000)
  13. 13. Case study: Fairtrade Foundation Fairtrade Foundation grown rapidly since launch Significant working capital requirement to pay for certification costs ahead of income, particularly with large contracts with Cadbury and Nestle Approached Venturesome for a working capital facility Fully repaid Venturesome loan at end of facility
  14. 14. Growth capital Organisation has demonstrated proof-of-concept and been trading for at least twelve months Capital requirement to fuel next stage of growth; unsecured loan Typically earned income More onerous social impact indicators Repaid in equal monthly instalments over 3-5 years
  15. 15. Case study: FareShare FareShare is a national charity that redistributes quality surplus food from the food and drink industry to organisations working with vulnerable people in the community Venturesome provided a £50,000 working capital loan to FareShare in 2008. This has now been fully repaid FareShare later approached Venturesome for a £200,000 facility to expand the number of depots across the UK
  16. 16. Quasi-equity High growth potential organisations Substitute for equity in trading charities Revenue Participation Agreement: Venturesome earns percentage of future revenue Target IRR of 10%; maximum of 2.0x initial investment
  17. 17. Quasi-equity: income profile500,000450,000400,000350,000300,000250,000200,000150,000100,000 50,000 - 1 2 3 4 5 6 7 8 9 10 11 12 Total income Venturesome income
  18. 18. Case study: Global Action Plan GAP works for the protection and improvement of the environment through practical activities Two previous Venturesome facilities which were repaid in full In November 2007, Venturesome invested £75,000 as quasi-equity to double turnover in five years Venturesome paid over £60,000 with four years of future income remaining
  19. 19. Venturesome key facts Since 2002, we have offered £20m to some 270 small- and medium-sized charities Cumulative default rate of less than 5% We are currently managing a £10m fund for 14 investors We learn from our investment in charities, and share this learning with the wider social investment market. See our publications at www.venturesome.org
  20. 20. Contact information Rob Hodgkinson, Investment Executive Email: rhodgkinson@cafonline.org Phone: 03000 123 225 Casey Lord, Investment Analyst Email: clord@cafonline.org Phone: 03000 123 279

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