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Charity bank jeremy ince 10 7 13
- 1. Social Investment - Empty Homes 10 July 2013 A different bank for people who want a different world
- 2. Benefits of loan finance • • • • • • • Enables a project to be delivered immediately Can avoid potential increases in costs Independence Leverage Match Funding Flexible purpose – unrestricted Can be used to develop long term sustainable income Quick decision A different bank for people who want a different world
- 3. Risks/Disadvantages of loan finance • • • • • • Another stakeholder to consider Trustees generally risk averse Security required Loan needs to repaid – as such call on future income. Cost – interest, fees and charges Requirement to provide regular management info A different bank for people who want a different world
- 4. Presenting Your Case • Business Plan Background Purpose Amount Repayment • • • • • Historic Audited Accounts Latest Management Accounts Financial Projections/Budgets Details of Snr Mgmt/Trustees/Directors Governing Document A different bank for people who want a different world
- 5. Assessing loan applications • • • • • • • • Nature of the project Who benefits – social impact Contribution Past Financial Performance Ability to service borrowing Security – LTV% Quality of the applicant/key staff/governance Project Risks A different bank for people who want a different world
- 6. Case Study 1 • Leeds Action To Create Homes (LATCH) • Est in 1989 - works with homeless people and volunteers bringing disused and derelict properties back into use. • £50k loan agreed to refurbish x2 properties. • Income from properties used to fund loan repayments. A different bank for people who want a different world
- 7. Case Study 2 • Foresight (North East Lincolnshire) Limited operates throughout North to meet the needs and requirements of disabled people, their families and carers. • Charity Bank approved a £300k loan to help purchase and renovate an empty care home into 30 flats for young disabled people. A different bank for people who want a different world
- 8. Bring It On? • New source of capital in market where grants are increasingly difficult to obtain. • But…it needs to be repaid. • Mission driven? • Consider the risks! A different bank for people who want a different world
- 9. What is Charity Bank? • A Social Bank that only invests in organisations that have social purpose. • Our mission is to transform the future of charities and social businesses A different bank for people who want a different world
- 10. Charity Bank – Key Facts • • • • • • • • • Specialist Lender to Social Enterprise Mkt. Loans £50k - £1m Secured & Unsecured Rates between 5% & 7.5% Term up to 25 years Generally no penalties for early repayment Local representation Loan book c£60m Open for new business A different bank for people who want a different world
- 11. Further Information • • • • www.charitybank.org www.socialfinance.org www.philanthropycapital.org www.knowhownonprofit.org/funding/socia l-investment-1 A different bank for people who want a different world
- 12. Further Information Jeremy Ince Telephone: 07787 575023 email: jince@charitybank.org Jeremy Ince jince@charitybank.org 07787 575023 A different bank for people who want a different world
Editor's Notes
- ConclusionsSocial investment has the potential to create significant value for charities. It can help you renovate buildings, generate new income streams and win public sector contracts. It can ultimately help you function better, make valuable grant funding go further, and help your beneficiaries in the best possible way.But while social investment has proved to be a valuable tool for some organisations, it is not suitable for all charities. Investments have to be repaid, so as recipients you need a reliable income stream, and cannot count on investments to replace the income you receive from donations or contracts.Charities should only take on social investment if will help you achieve your mission. If you cannot make a clear case for how investment will make you more effective, it may well not be appropriate. Social investment also involves risk. If a charity misjudges your future income, for example, you may fail to meet repayments, putting your activities under financial pressure or, at worst, threatening the charity with closure.So you need to think carefully before taking on social investment. You need to understand the risks and, through good planning and risk management, take steps to mitigate them. You need to be clear about how the investment will create social benefit and improvethe lives of your beneficiaries. Charities also need to have support from their whole organisation, especially your board of trustees.Social investment may not be a cure for all charities’ funding problems, but it can be a useful tool to help charities achieve your mission. For charities that are confident of a future income stream, have the support of their board, and have considered the risks fully, social investmentcan be an effective way to help them do more for their beneficiaries and deliver your mission.