What is Social Investment?
It's money, but it's not a gift. Social investment is repayable finance such as a loan or shares, but investors expect to achieve some positive social outcomes from their investment in an organisation, whilst still benefitting financially. Social Investment is a potential source of funds for VCSE sector organisations if they are carrying out trading activity.
You will come across some unfamiliar words used when talking about social investment. There are a couple of good 'jargon busters' here and here that may help you understand what a particular phrase means.
Why is Voscur talking about this?
We think that Social Investment offers opportunities for some VCSE sector organisations, so we want to make sure that you are informed about what's available. In November 2015, Voscur brought together a panel to speak about the opportunities and challenges that Social Investment brings for organisations in Bristol. You can read people's feedback and the presentation slides are available to download, plus here’s a quick 6 point summary of what they said:
1. You need to know about Social Investment
We are going to have to fund social organisations in new ways in future said Melanie Mills from Big Society Capital (@mel_bigsoccap): “Social investment is one of the pieces in the jigsaw. It’s fine not to want social investment, if you have considered all the options. But it’s not fine to not know about it.” Big Society Capital champions social investment by increasing awareness, understanding and participation. View Melanie's presentation
2. It’s becoming more accessible
The median size of investment that commnuity organisations want initially is £66k. Investors find it easier to work with larger investments of more than £150k, but smaller investments are now available.
3. There are a range of social investment products that suit different organisations and scenarios.
Annie Minter from Big Issue Invest (@BigIssueInvest): “Any social enterprise or charity that is trading and is financially sustainable may be able to get social investment. The length of investment can range from 1 to 7 years.” View Annie's presentation
4. Your organisation will need to get prepared
David Hunter from Bates Wells Braithwaite (@BWBllp): “Social Investors will still expect a financial return and rigorous reporting. It’s important to understand what impact you are providing and be able to measure it. Some investors will also have additional requirements such as a seat on the board, a shareholding or security for a loan.” View David's presentation
5. Support and advice are available
Most of the social investors offer advice to help VCSE organisations to secure investment. Jeremy Pannell from Triodos Corporate Finance (@TriodosUK): “It can take around 6 months of work to help organisations get to the point where they are ready to gain investment.” View Jeremy's presentation
6. New tax incentives will create more opportunities. Further funds are on the way for Bristol
Donna from Resonance (@ResonanceLtd) “Social Investment Tax Relief (SITR) is a new tax break that provides the opportunity to get individual people to invest in organisations that have a social impact.”
Ed Rowberry from Great Western Regional Capital “Great Western Regional Capital is working to tap more investment for local organisations and we are keen to support the smaller end of the lending market.”
Where can you get further information?
Voscur held two more events on 23 February (repeated on 8 March) 2016 to explore social investment in greater depth with workshops on specific investments offered by various investors.
Click the links below to view the presentations from the workshops: