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Funny Money. Peter Ramsden
- 1. Funny Money Peter Ramsden, Freiss Ltd , London UK and AEIDL Laura Colini, PhD Tesserae gbr and IRS Leibniz research Institute, Berlin DE
- 2. Money makes the world go around: the old cofinancing model
- 3. Social investment: Supply, demand and intermediaries
- 4. Bandwidth of different funds
- 5. Urban regeneration funds Also known as Jessicas Source: EU urban 50 cases Poznan, LGF London, Kredex Estonia
- 8. Nottingham science park Award winning scheme
- 10. Kredex housing loan jessica
- 12. Who benefits from Jessica, what type of results? • Succeeds in financing individual projects (buildings) that are elements of a ‘physical’ integrated approach • Usually only the revenue generating parts (science parks, workspaces, CHP systems, energy efficiency) • Less able to finance public realm or disadvantaged neighbourhoods • Revolving funds should be a more efficient way of spending ERDF • Malmo social investment approach could be interesting
- 13. And some major downsides • Transparency: Cities and especially citizens do not decide or sometimes even know which investments are selected • These take a long time to set up 2 - 5 years • Accountability: managed at the regional level by fund managers • The most revenue generating projects are not always the most needed (e.g.end of pipe) • Heavy transaction costs for setting up and running these funds (EIB, fund managers etc)
- 14. New Possibilities But be careful what you wish for…… Source Ramsden 2013 New approaches to financing and delivering on long term unemployment OECD
- 15. Interesting developments in financing • Peer to peer and micro finance, diaspora finance • Alternative currencies – time banks, air miles, local exchange trading systems, plastic money, internet money • Impact investing and exotic products like Social Impact Bonds • Crowd funding • Challenges (Bloomberg challenge)
- 16. Crowd funding • What is it? • Is it new? Mark Twain, Beethoven, Mozart used crowd funding • How does it work? (Kickstarter etc) • How could cities use crowd funding?
- 17. Facts on kickstarter • Kickstarter is a platform for funding independently created projects: films, games, music, art, design, and technology. • Since their launch in 2009, 4.9 million people pledged $800 million, funding 49,000 creative projects. • Creators and backers make projects happen together. • Funding on Kickstarter is all-or-nothing —44% of projects have reached their funding goals. • Creators keep 100% ownership of their work. • Backing a project is more than just giving someone money. • Kickstarter is a for profit company
- 18. Social Impact Bonds SIBS • A public private financial circuit • Bond holders get a return if they achieve target social impacts • First example is the Peterborough Prison Bond • Recidivism on short term sentences is over 60% • Reduction by 7.5% to achieve return • ‘Through the door’ services delivered by two social enterprises (St Giles and Ormiston) • £5million initial scale, now copied at Rikers Island and others for homelessness
- 19. A Faustian pact?
- 20. How to judge whether finance will be good? • Is it transparent? Is it accountable? Do you understand it? Will others? • Does it meet real human needs? what types of projects does it deliver on the ground? • Who benefits and who loses? • How long will it take to set up? Can and should a city do this? (legally, morally, practically, financially) • Can it work with ERDF or ESF?
- 21. Thank you for your attention! Peterramsden2@gmail.com