Upload
ncvo-the-national-council-for-voluntary-organisations
View
213
Download
1
Tags:
Embed Size (px)
DESCRIPTION
Presented at NCVO's Trustee Conference on Monday 11 November 2014. The presentation was by Geetha Rabindrakumar, Big Society Capital, Tim Willis, Chair, London Early Years Foundation and Edward Baker, Chair, Furnistore. These slides look at what trustees need to know, how to know if it is right for your organisation and how you access it? To learn more about governance: http://www.ncvo.org.uk/practical-support/governance To find out about NCVO's Trustee Conference: http://www.ncvo.org.uk/training-and-events/trustee-conference
Citation preview
#TRUSTEECONF2014
PM6: Social investment for trustees: what do I need to know
Geetha Rabindrakumar, Big Society Capital
Tim Willis, Chair, London Early Years Foundation
Edward Baker, Chair, Furnistore
Social Investment:A brief introduction
Geetha RabindrakumarBig Society Capital Social Sector Leader
#TRUSTEECONF2014
Youth unemployment
Homelessness Reoffending
Adoption
Ageing population
Financial exclusion
Social isolation
Fragmented communities
Educational attainmentObesity
The Social Challenge
#TRUSTEECONF2014
Charities & social enterprises are dealing with some of the most challenging issues in the UK
DonationsContracts Bank finance
A growing number of social sector organisations are now looking at a more diverse funding model including repayable finance.
BUT
Innovation and growth
Payment by Results contracts
Developing sustainability
TO SUPPORT
#TRUSTEECONF2014
Finance for Dealing with Social Issues
Traditionally their income has come from:
5#TRUSTEECONF2014
What is social investment?
• Financial returnInvestment
• Financial return&
• Social return
Social investment
• Social returnPhilanthropy
Early considerations
Organisation Activities Outputs Outcomes Impact
#TRUSTEECONF2014
• What do you need investment for?o Purchasing/refurbishing assetso Working capital (e.g. to support payments by results
contract)o Bridging finance (e.g. confirmed grant)o Expand existing activities/ deliver new services
• Is there an income stream?
• What social impact are you seeking to create?
#TRUSTEECONF2014
8#TRUSTEECONF2014
Big Society Capital has been set-up to accelerate the social
investment market in the UKHSBC
Barclays Lloyds
TSB RBS
Dormant Accounts
Social Finance
Providers (‘intermediaries’)
Other investors seeking investments that create a positive social impact and
financial return
Social sector organisations requiring
capital to allow the organisation to grow to
scale
£600m capital
Why Social Investment?
For your charity, investment can:
• Be more flexible than grants
• Enable charity to direct donation income to where most needed
• Bring business discipline (effectiveness)
• Bring wider support and engagement with your cause
• Bring involvement/expertise from motivated investors
For the sector:• Recycle money available
• Attract additional funding
#TRUSTEECONF2014
• Navigating the social investment landscape – where to start?
#TRUSTEECONF2014
Challenges
• Process to secure investment will take management time (eg due diligence)
• Managing different funding relationships
• Capacity to manage investment
• Demonstrating impact
• Early discussion with management team around pros and cons and Board concerns
#TRUSTEECONF2014
Considerations for Trustees
• Risk – appetite, identification, management
• Governing documents – can your charity borrow?
• Board responsibility and decision making processes
• Taking advice (eg loan documentation)
• Additional money becoming available to charities?
#TRUSTEECONF2014
How Effective is Social Investment?
• Sustainability and financial returns?
• Social impact created?
Appendix – Slides for Further Information
#TRUSTEECONF2014
#TRUSTEECONF2014
Social investment to create positive impact for vulnerable groups
General Public / All
Long-term unemployed
Homeless
Addiction issues
Long-term health
issues, life threatening or terminal
illness
Living in poverty/are financially excluded
Learning disabilities or mental
health needs
Physical disabilities or sensory
impairment
Vulnerable young
people and NEETs
Vulnerable parents
Vulnerable children
Voluntary carers
Elderly (including those with dementia)
Ex-offenders
Experienced crime or
abuse
Employment, training and education
Housing and local facilities
Income and financial inclusion
Physical health
Mental health and well-being
Family, friends and relationships
Citizenship and community
Arts, heritage, sport and faith
Conservation of the natural environment
Outcome AreasBeneficiary
groups
Eg Social investment into CPCE programmes:
Social Funds
Social Lenders
Investment Readiness
Advisers
Social Impact Bonds
General funds
Specialised funds
Social Investment Finance Intermediaries
Other Things to Consider
• Risk understanding and appetite?
• Profile and predictability of payments?
• What level of interest cost could the activity reasonably support?
• Could social investment work alongside bank finance & donations?
• If investing into fundraising/retail – what impact will be created?
• Could the investment be taken on by the trading subsidiary?
• Could your charity offer security?
#TRUSTEECONF2014
Social Impact Bonds Financial risk transfer to investors
Lead delivery charity
Eg: Social Finance - Investment in services to reduce loneliness – benefits of reduced service use and improved health outcomes
• Pressing social need
• Engaged commissioner
• Complex social outcome to evidence
#TRUSTEECONF2014
SIB SPV
Investment into SIB programme
Payments represent a % of
cost savingsInvestors
Commissioner (e.g. LA)
Delivery programme (could include peer support, group
activity, CBT for most isolated)
Payment metric:Reduction in loneliness
Reduced loneliness
Support to prepare for investment
• For social ventures seeking to raise over £0.5m investment
• Grant (£50k-£150k) to cover cost of capacity building support (application joint with advisory firm – over 35 approved providers)
http://www.beinvestmentready.org.uk/social-ventures/
Big Potential (new - first half 2014)
• £10m fund over 3 years• For VCSE organisations seeking to
raise up to £500k investment (or contracts)
• Diagnostic tool assessment to check whether social investment is a realistic possibility
• Advisory support (apply jointly with an approved provider):
- Preliminary grants to build organisational capability (c£25k)
- Investment plan grants (c£45k)
For Reference
• Submit online queries to BSC investment team
http://www.bigsocietycapital.com/ask-us-question• Grant support to prepare for investment:
Big Potential http://www.sibgroup.org.uk/bigpotential/
ICRF - http://www.beinvestmentready.org.uk/social-ventures/• Sources of funding currently open:
http://www.bigsocietycapital.com/sources-investment• Directory of social finance providers and advisers (can filter for specific
requirements):
http://www.bigsocietycapital.com/finding-the-right-investment• NCVO guide and tool
http://www.fundingcentral.org.uk/Page.aspx?SP=6059• Big Lottery Guide to social investment
http://www.bigpotential.org.uk/resource/social-investment-guide– Charities Finance Group event on social investment – 27 November 2014
#TRUSTEECONF2014
Social investment for trustees: case study
London Early Years Foundation (LEYF)
Tim Willis
#TRUSTEECONF2014
LEYF’s Social Mission
LEYF’s social mission is to provide high
quality childcare to children from disadvantaged
boroughs across London
#TRUSTEECONF2014
#TRUSTEECONF2014
LEYF has become the leading childcare social enterprise in London
• In 2012 LEYF won the O2 National Business Transformation Award for its change programme
• Over the last few years, LEYF’s performance has been exceptional in key metrics
• LEYF secured funding to develop its core and grow the business
• LEYF aims to increase its social impact and reach at least 5,000 children, their families and communities by 2017
• MBE for CEO in 2013
• LEYF won the Nursery World Nursery Chain of the Year in 2014
Growth so far
Average 12% a year growth over the last 6 years
Nursery revenue (£000)
Number of children
• Strong reputation• Growing capacity• Reserves, assets• Incremental/organic
growth?• Franchising?• Opportunities available• Growth is good!• Full review with help from
Social Business Trust#TRUSTEECONF2014
Options explored: SWOT
The investment
• Advice from ClearlySo• Loan from Big Issue Invest
and Bridges Ventures• Bespoke negotiated
repayment arrangements• Linked to performance
indicators for growth, revenue and social impact
• Investor board member
#TRUSTEECONF2014
What for?
• Capacity at HQ• Working capital• Nursery buildings
Leads to• More nurseries• More children• Greater social impact
(via a 4:3:3 model)#TRUSTEECONF2014
Issues for trustees
• The stewardship role, exposure to liabilities• Working with investment bankers• No assets, so based on projected future
surpluses (and social impact)• Very few benchmarks: are the bankers ripping
us off? Can we trust the expertise of our staff?• Composition of the board• Philosophical discussions
#TRUSTEECONF2014
Language
2011 we spoke of:• Sustaining the charity
model• Quality/SROI• Breaking even• Building reserves• Safeguarding• Occupancy• Reputation
By 2013 we added:• Debt servicing• Profitability• Exploiting market
opportunities• A repeatable model• Brand• Start-ups/BAU
#TRUSTEECONF2014
• Casualties• Floundering about• Trying to keep attention on BAU• Stretched relationships to the limit
– Between trustees– Between trustees and staff
• Is it still our strategy?
#TRUSTEECONF2014
Experience: negatives
• Capacity for growth• Deliver more social impact• Stimulating, challenging• Improved the quality of information coming to
the board• Hastened the reshaping of the board and
executive team• Raised the standard of board discussion• A sympathetic partner (we hope!)
#TRUSTEECONF2014
Experience: positives
Overall …
• We began the journey in 2008
• Retained talented and committed key staff
• Partners helped a great deal
• Very challenging for trustees – risk, stewardship, our personal contribution
• Outlook is very bright for LEYF
#TRUSTEECONF2014
Ed Baker
Chair of FURNISTORE
#TRUSTEECONF2014
#TRUSTEECONF2014
#TRUSTEECONF2014
#TRUSTEECONF2014
#TRUSTEECONF2014
The Issues
#TRUSTEECONF2014
#TRUSTEECONF2014
#TRUSTEECONF2014
Debentures
#TRUSTEECONF2014
#TRUSTEECONF2014
#TRUSTEECONF2014
#TRUSTEECONF2014
#TRUSTEECONF2014
Is Buying Cheaper than Renting?
#TRUSTEECONF2014
Our Stockholders
#TRUSTEECONF2014
Planning for the Future
#TRUSTEECONF2014
“Isolation is being by yourself
Loneliness is not liking it”
#TRUSTEECONF2014
#TRUSTEECONF2014
NCVO/BWB Trustee Conference 2014Developing exceptional governance