Social investment andemployment/skills delivery

March 19, 2013Daria Kuznetsova– 19 March 2013

Social investment is for social and financial return.

Charities and social enterprises are particularly suited to social investment. They can deliver strong social returns but struggle to access capital via mainstream markets

Range of products – social investment provides a range of products such as secured loans, unsecured loans and equity

Social investment is not a grant – there is an expectation of repayment of the finance, plus a return

Growing demand- £165m of done deals in the UK in 2011 with potential demand reaching £1bn by 20161

Social investment is the provision of finance to generate social and financial returns

2First Billion (2012) Boston Consulting Group

3

2000 Social Investment Task Force launched 2006

Government sets up the Office of the Third Sector

2007Commission on Unclaimed Assets

2012 Launch of Big Society Capital

We’ve been long in the making!

2008

Dormant Accounts Act

2010Final report of the Social Investment Task Force

2011The Big Society Investment Fund under Big Lottery

Big Society Capital – building a sustainable social investment market in the UK

HSBC Barclays Lloyds

TSB RBS

Big Society Capital

Dormant Accounts

Social Investment

Finance Intermediaries

Investors seeking investments that create a

positive social impact beyond financial return

Social organisations requiring capital to allow the organisation to grow

to scale

£600m capital

Operating Principles

Independent Transparent Wholesale Self-sufficient

What is an Intermediary?

InvestorInvestor

Intermediary

Frontline

InvestorInvestor

Frontline Frontline Frontline

Who is an intermediary?• Investment Readiness Providers•Social Funds•Social Lenders/Banks•Social Impact Partnerships•Market Infrastructure

What does an intermediary do?•Select investments•Monitor social and financial performance•Diversify risk•Raise capital for future investments

Already the market is changing – in 2011 there were only a few places to go if a social organisation needed capital

Social Funds

Social Enterprise funds

Specialised funds

Social Lenders

Social Impact Bond Partnerships

Investment Readiness

At the start of 2013 there were many more

Social Funds

Social Enterprise funds

Specialised funds

Social Lenders

Social Impact Bond Partnerships

Investment Readiness

ResultsFund

Social Incubator Fund

Social Investment Market CIC

We have made £56m of commitments of 4 broad types

Operating intermediaries– provide support to social sector organisations

General funds – increase supply of capital available to social ventures

Specialised funds – invest with themes such as sectors or regions

Social Impact Bonds – provide upfront capital for social ventures delivering services under PbR contracts

NESTA Impact Investment Fund

Franchisingworks License Fund

Capitalise SIB Social Stock Exchange

Invests in social enterprises that use technology and innovation to solve social issues

Provides finance to purchase franchise contracts and enable unemployed and financially excluded people in Manchester to set up their own franchise businesses.

Nesta The Shaftesbury Partnership

Supports a programme to helps address the root causes of low attainment in schools in the Cardiff and Newport area, such as literacy problems and low self-esteem/belief.

3SC

Connects socially motivated investors with social purpose businesses that need capital.

Social Stock Exchange

E.g.

SIFI

Appr

oach

We see several areas of opportunity for social investment in employment and skills delivery

• Academic success: school based interventions to improve attainment

• Vocational preparation/employability: preparing individuals for employment, developing skills that contribute to economic well-being

• Improved skills for jobseekers: supporting jobseekers to enter employment through development of work specific skills, attainment of relevant work experience and improving motivations

So – when is social investment appropriate and how do you get it? There are at least 3 steps…

Define arevenue model

• Trading business

• Public sector contracts

• Buying an asset

The investment process itself

• Investment readiness support

• Approach social investors

• Investment due diligence

Develop a businessand impact plan

• Business plan with financial model

• Evidencing social value

Are you seeking social investment?

Social Sector Organisation

Directory of Intermediarieswww.bigsocietycapital.com

Social Finance Intermediary

Online Expression of Interest

www.bigsocietycapital .com

Ideaswww.bigsociety

capital.com