Financing social enterprise

guest lecture to MMU students Nov 2011

www.adrianashton.co.uk

What type of cash do you need?

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What do you need the cash for?

Dealing with failure ('rebooting' the business) fashion/credibility Validation (reassuring yourself) Set-up Development Working capital

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Factors influencing choice of money

Cash-flow Time-scale Length of time money needed for Likely results of activity/project Attitude to risk Available security ‘Peer pressure’ Contribution to mission and long-term sustainability Impact on reputation and ability to ‘lever in’ further

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Know what Investors want

Their money back (loans, equity) Financial Return (loans, equity) Social Return (grants, loans, equity) Outputs & Outcomes (grants) Security (loans) Partners (grants, loans) Exit Strategy (equity)

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Traditional sources of cash

Personal savings Family and friends 'sweat equity' Debt (bank loans, overdraft) Equity (dragons and angels) Factoring Retained profits Grants

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'social enterprise specials'

CDFI Community shares Social impact bonds Loan stock 'In-kind' crowd-funding

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Some problems with grants...

Lead time Restrictions on use Cash-flow implications Admin time/cost in monitoring & reporting Risk of 'claw back' Risk to credibility

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GOOD MONEY WILL NOT MAKE A BAD ENTERPRISE GOOD

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Further sources info & reading

Unlocking the potential – a guide to finance Social Enterprise UK

http://www.ncvo-vol.org.uk/sfp

Simply Finance Co-operativesUK

Adrian Ashton