Finance for the Social Economy in Northern Ireland

Finance for the Social Finance for the Social Economy in Northern Economy in Northern

Ireland Ireland

Colin StuttColin Stutt

Our TeamOur Team

Dr Brendan Murtagh (QUB) and myselfDr Brendan Murtagh (QUB) and myself

Belden Daniels of Economic Innovation Belden Daniels of Economic Innovation International Inc. of Boston, MassachusettsInternational Inc. of Boston, Massachusetts

Professor Peter LloydProfessor Peter Lloyd Adviser to DTI and the European Commission Adviser to DTI and the European Commission

on the social economyon the social economy

Local, US, UK and EU best practiceLocal, US, UK and EU best practice

Overview of WorkOverview of Work

Review of what happens elsewhereReview of what happens elsewhere UK & IrelandUK & Ireland USUS

Survey of 176 social economy organisationsSurvey of 176 social economy organisations Replicating Bank of England survey of 2003, which Replicating Bank of England survey of 2003, which

covered 200 companies and did not include Northern covered 200 companies and did not include Northern Ireland Ireland

Seminars, workshops, interviews, conversationsSeminars, workshops, interviews, conversations Highly interactiveHighly interactive

Main FindingsMain Findings

Northern Ireland social economy organisations are Northern Ireland social economy organisations are smaller on average and more grant dependent smaller on average and more grant dependent than their English counterparts but more of them than their English counterparts but more of them expect to have to increase borrowings in the next expect to have to increase borrowings in the next few yearsfew yearsBi-polar distribution of turnover and employmentsBi-polar distribution of turnover and employments Lots of relatively young, small organisationsLots of relatively young, small organisations

87% have 10 or fewer employees compared to 53% in England87% have 10 or fewer employees compared to 53% in England Few mid sizeFew mid size Smaller number of very well established older Smaller number of very well established older

organisations often with substantial assetsorganisations often with substantial assets

Phase 1 Conclusions (ii)Phase 1 Conclusions (ii)

There is a lack of a clear concept of the sectorThere is a lack of a clear concept of the sector Within the sector and outside itWithin the sector and outside it Characterised by lack of debate on key issues and a need for dialogue Characterised by lack of debate on key issues and a need for dialogue

to enhance mutual understandingto enhance mutual understandingNorthern Ireland has most of the kit needed for social economy Northern Ireland has most of the kit needed for social economy financefinance

UCIT, CFNI, Aspire, Credit Unions, Housing AssociationsUCIT, CFNI, Aspire, Credit Unions, Housing Associations Large, asset rich social economy organisations with strong banking Large, asset rich social economy organisations with strong banking

track recordstrack records But the various resources are not working together as a system – they But the various resources are not working together as a system – they

are funding projects in isolationare funding projects in isolationEstablished social economy organisations can bank on their track Established social economy organisations can bank on their track recordsrecords

Its much more difficult for start up social economy organisationsIts much more difficult for start up social economy organisations But, do we need more social economy organisations or should we be But, do we need more social economy organisations or should we be

consolidating and building up to scale those which we already have?consolidating and building up to scale those which we already have?

Phase 2 WorkPhase 2 Work

Application of BRIAN, a social economy Application of BRIAN, a social economy diagnostic tooldiagnostic tool Helping to articulate both the social and the business Helping to articulate both the social and the business

effectiveness of social economy organisationseffectiveness of social economy organisations

Supply side work Supply side work Establishment of sector-led working groups on Establishment of sector-led working groups on

Patient capitalPatient capital

Local bonds to fund local social economy work, andLocal bonds to fund local social economy work, and

Centre of excellence on finance for the social economy in Centre of excellence on finance for the social economy in Northern Ireland Northern Ireland

BRIANBRIAN

XYZ Enterprises91%

71% 71%

55%80%

Know How

Resources & Management

Job Insertion CapabilitySocial Capital & Quality of Life

Scope

4 Northern Ireland Social Economy 4 Northern Ireland Social Economy OrganisationsOrganisations

ABC Enterprises

96% 90%

87%74%

80%

Know How



Scope

DEF Enterprises

73% 65%

69%57%

86%

Know How



Scope

GHI Enterprises

58% 65%

78%89%

83%

Know How



Scope

JKL Enterprises

80% 55%

71%71%

91%

Know How



Scope

International PerspectivesInternational Perspectives

Our international experts point to Northern Ireland itself as Our international experts point to Northern Ireland itself as the best practice region of reference, in terms of the policy the best practice region of reference, in terms of the policy framework and structures in place and aspects of the framework and structures in place and aspects of the financial support for the social economyfinancial support for the social economyThe sector in Northern Ireland has considerable resourcesThe sector in Northern Ireland has considerable resources

Credit UnionsCredit Unions Housing AssociationsHousing Associations Enterprise AgenciesEnterprise Agencies Urban and rural development groupsUrban and rural development groups

North American best practice is evident in our social North American best practice is evident in our social economy finance institutionseconomy finance institutions

Ulster Community Investment TrustUlster Community Investment Trust – financing the social – financing the social economyeconomy

Aspire Micro-Loans for Business LtdAspire Micro-Loans for Business Ltd. – providing finance for . – providing finance for micro-businesses in areas of disadvantagemicro-businesses in areas of disadvantage

Formal Findings and Formal Findings and RecommendationsRecommendations

Findings & RecommendationsFindings & Recommendations

No general market failureNo general market failure Social economy organisations not disadvantaged compared to Social economy organisations not disadvantaged compared to

comparable for profit businessescomparable for profit businesses Established social economy organisations with track record can Established social economy organisations with track record can

receive more favourable treatment than for profit businessesreceive more favourable treatment than for profit businesses New social economy organisations face difficulties in accessing New social economy organisations face difficulties in accessing

finance comparable to other new businessesfinance comparable to other new businessesBut except in relation to community businesses there is no overall But except in relation to community businesses there is no overall policy rationale for new social enterprisespolicy rationale for new social enterprises

RecommendationRecommendation that actions should focus on training that actions should focus on training management of social economy organisations on financial and management of social economy organisations on financial and related issues, networking, mentoring, secondments and related issues, networking, mentoring, secondments and development of bank/CDFI linksdevelopment of bank/CDFI links

Findings & Recommendations (ii)Findings & Recommendations (ii)

The existence of large mature, asset rich social economy The existence of large mature, asset rich social economy organisations in Northern Ireland means that time might be right organisations in Northern Ireland means that time might be right to apply US double bottom line approach in Northern Ireland to apply US double bottom line approach in Northern Ireland

RecommendationRecommendation that a study should be commissioned that a study should be commissionedThere is more organisational rigidity in social economy There is more organisational rigidity in social economy organisations than in comparable private firmsorganisations than in comparable private firms

RecommendationRecommendation that InvestNI should work to increase that InvestNI should work to increase organisational flexibility and sharing of resourcesorganisational flexibility and sharing of resources

Demonstration project between UCIT and Aspire on how they can Demonstration project between UCIT and Aspire on how they can share resourcesshare resources

We don’t generally need new social economy organisations, we We don’t generally need new social economy organisations, we need to strengthen what we haveneed to strengthen what we have

RecommendationRecommendation that future EU support to sector should focus on that future EU support to sector should focus on helping existing social economy organisations to make the helping existing social economy organisations to make the transition to market based funding and on strengthening the transition to market based funding and on strengthening the regional infrastructure of support for the social economyregional infrastructure of support for the social economy

Findings & Recommendations (iii)Findings & Recommendations (iii)

We have considerable resources for and in the social economy We have considerable resources for and in the social economy but they do not work together as an effective, integrated systembut they do not work together as an effective, integrated system

RecommendationRecommendation for a set of actions to improve functioning of the for a set of actions to improve functioning of the system - 3 Sub Groups are already in place to devise new, joint system - 3 Sub Groups are already in place to devise new, joint approaches to patient capital, local bonds and the development of a approaches to patient capital, local bonds and the development of a sector-led centre of expertise on finance for the social economy in sector-led centre of expertise on finance for the social economy in Northern IrelandNorthern Ireland

Opportunities for the sector to fund its own development are not Opportunities for the sector to fund its own development are not being realised either at local or regional levelbeing realised either at local or regional level

RecommendationRecommendation for a series of workshops to improve mutual for a series of workshops to improve mutual understanding and examine scope for mutual fundingunderstanding and examine scope for mutual funding

Difficulty in articulating the social impact of social economy Difficulty in articulating the social impact of social economy organisationsorganisations

RecommendationRecommendation commission a review of the range of indicators commission a review of the range of indicators for the social economy, to better articulate both the business and for the social economy, to better articulate both the business and the social impact of social economy organisations; such a review to the social impact of social economy organisations; such a review to include the diagnostic tool BRIANinclude the diagnostic tool BRIAN

ConclusionConclusionThe social economy is a successful sector in Northern The social economy is a successful sector in Northern IrelandIreland

Providing real opportunities for further developmentProviding real opportunities for further development

Northern Ireland is unique in having a structure such as Northern Ireland is unique in having a structure such as the Social Economy Forumthe Social Economy Forum

The Steering Group which oversaw our work provided a The Steering Group which oversaw our work provided a partnership basis for addressing joint issuespartnership basis for addressing joint issues

In the Report our first recommendation is that a Joint In the Report our first recommendation is that a Joint Implementation Group, drawn from the social economy and Implementation Group, drawn from the social economy and from Departments, should be established to oversee the from Departments, should be established to oversee the implementation of our recommendationsimplementation of our recommendations

Providing another illustration of the benefit of working together Providing another illustration of the benefit of working together to address joint issues and problems and ensuring that the to address joint issues and problems and ensuring that the strategy is jointly owned by the sector, not imposed on itstrategy is jointly owned by the sector, not imposed on it

There is the opportunity to add considerably to the There is the opportunity to add considerably to the strength and vitality of the sector and to develop an strength and vitality of the sector and to develop an exportable strength in the management and financing of exportable strength in the management and financing of social economy organisationssocial economy organisations

Reflections from US Reflections from US Study TourStudy Tour

Findings from Our JourneyFindings from Our Journey

Some of the specifics of the US experience is not Some of the specifics of the US experience is not capable of transfercapable of transfer

e.g. some of the deals levered by specific tax credits which we e.g. some of the deals levered by specific tax credits which we just do not havejust do not have

Although there is a start to tax credits in the UK, we have little Although there is a start to tax credits in the UK, we have little experience in using the credits and the market is very immatureexperience in using the credits and the market is very immature

However, the fundamentals are very transferableHowever, the fundamentals are very transferable Strong projects based on sustainable market-based cash flowsStrong projects based on sustainable market-based cash flows Market based disciplines, not public administration of grantsMarket based disciplines, not public administration of grants Development and transfer of skills in the sectorDevelopment and transfer of skills in the sector Specialisation and collaboration, rather than competition in the Specialisation and collaboration, rather than competition in the

sectorsector

Comparative ReflectionComparative Reflection

The projects are much the sameThe projects are much the sameExcept that housing tends to be dealt with through different Except that housing tends to be dealt with through different structuresstructuresWe have recognised the need to integrate housing into our We have recognised the need to integrate housing into our community finance structurescommunity finance structures

We have much of the kitWe have much of the kitAn effective commercial banking sector, willing to invest in bankable An effective commercial banking sector, willing to invest in bankable projects in the sectorprojects in the sectorMany CDC-equivalents with substantial unencumbered assetsMany CDC-equivalents with substantial unencumbered assetsIn UCIT a specialist double-bottom line fundIn UCIT a specialist double-bottom line fundIn Aspire an outstanding micro-finance fund with potential to evolve In Aspire an outstanding micro-finance fund with potential to evolve into a leading business investment fund for inner citiesinto a leading business investment fund for inner cities

But we are not yet sparking real changeBut we are not yet sparking real changeContinued operation of the grant economyContinued operation of the grant economy

But coming to an endBut coming to an endLack of strong experience – we are making a startLack of strong experience – we are making a startFailure to work as an integrated, effectiveFailure to work as an integrated, effective system system for community for community investment investment

Proposed ApproachProposed Approach

Coalitions-based approachCoalitions-based approach Making much better use of the institutions Making much better use of the institutions

which we already have by developing the which we already have by developing the habit of working togetherhabit of working together

Comparable with objectives of the Alliance for Comparable with objectives of the Alliance for Economic DevelopmentEconomic Development

Learning from best practiceLearning from best practiceIntegrating best practitionersIntegrating best practitioners

IntegratedIntegrated

A regional alliance for community investment

Alliance & CoalitionsAlliance & Coalitions

A regional coalition or alliance for community investment

CommunityEmpowerment

Coalition



Fund Development

Coalition


Coalition



PolicyEnvironment

Coalition

Fund Development

Coalition


Coalition



PolicyEnvironment

Coalition

Fund Development

Coalition


Coalition


PolicyEnvironment

Coalition

Fund Development

Coalition


Coalition

PolicyEnvironment

Coalition

PolicyEnvironment

Coalition

Fund Development

Coalition

Fund Development

Coalition


Coalition


Coalition


Interaction with government, communities, the private sector and local leaders to increase knowledge & understanding of community investment across Northern Ireland

PolicyEnvironment

Coalition

Fund Development

Coalition


Coalition

PolicyEnvironment

Coalition

PolicyEnvironment

Coalition

Fund Development

Coalition

Fund Development

Coalition


Coalition


Coalition

Alliance & CoalitionsAlliance & CoalitionsInteraction with government, communities, the private sector and local leaders to increase knowledge & understanding of community investment across Northern Ireland

Constant iteration and evaluation on basis of results and evolving best practice in Northern Ireland and internationally

PolicyEnvironment

Coalition

Fund Development

Coalition


Coalition

PolicyEnvironment

Coalition

PolicyEnvironment

Coalition

Fund Development

Coalition

Fund Development

Coalition


Coalition


Coalition



Clear time-bound action plans for each coalition and for the overall alliance

PolicyEnvironment

Coalition

Fund Development

Coalition


Coalition

PolicyEnvironment

Coalition

PolicyEnvironment

Coalition

Fund Development

Coalition

Fund Development

Coalition


Coalition


Coalition




Developing international alliances

PolicyEnvironment

Coalition

Fund Development

Coalition


Coalition

PolicyEnvironment

Coalition

PolicyEnvironment

Coalition

Fund Development

Coalition

Fund Development

Coalition


Coalition


Coalition

CoalitionsCoalitionsInteraction with government, communities, the private sector and local leaders to increase knowledge & understanding of community investment across Northern Ireland Constant iteration and evaluation on basis of results and evolving best practice in Northern Ireland and internationally


Aiming to be the European best practice region.

Developing international alliances

PolicyEnvironment

Coalition

Fund Development

Coalition


Coalition

Documents

Finance for the Social Economy in Northern Ireland