How can social investment help to end homelessness?
It is well known that funding has decreased for organisations working in homelessness over the last few years. With a decline in grants for new affordable homes and an increase in people sleeping rough, some of you may be approaching a stage where you may not be able to afford to rent accommodation to people experiencing homelessness or offer services which support other needs, such as education, training or finding employment.
Given the additional pressure from reduced funding and increasing demand, some of you are beginning to look for alternative and more innovative ways of sourcing funding.
In partnership with Homeless Link, Big Society Capital recently held two events in London and Birmingham to showcase how social investment is offering an alternative funding solution to help tackle homelessness. Social investment is the use of repayable finance to achieve a social as well as a financial return. With a growing number of social investors and funds offering finance to charities and social enterprises across the UK, more organisations are turning to social investment to help them achieve their social missions.
In London, we heard compelling stories from St Mungo’s Broadway who worked with social investors, Resonance, on the Real Lettings Property Fund to provide transitional accommodation in London. The fund has seen significant growth with the number of people housed rising from 36 to 233 in the last year. Over 240 properties are now committed across London and they aim to place approximately 600 people into these homes.
We also heard from Commonweal Housing who had obtained a loan from Bridges Ventures to deliver the Peer Landlord Project. This scheme involved partnering with Catch 22 and Thames Reach on a shared tenancy basis and is currently supporting 53 people with affordable private accommodation. These organisations made it clear that having a social investor who cared just as much about their social missions as well as the financial return was extremely beneficial and made a difference in helping them to assess their social impact.
In Birmingham, YMCA Birmingham shared their story of taking on a £1.9m secured loan from Charity Bank to create 34 units of transitional housing, while Midlands Together shared their innovative model of using a charity bond to raise money to support ex-prisoners. They raised £3 million through the bond to set up a programme to train and employ people to refurbish empty properties and create new homes for sale. With organisations like P3 Charity taking on new initiatives such as Social Investment Tax Relief (a 30% tax relief for individuals wanting to invest in charities and social enterprises), it is encouraging to see a number of diverse and creative ways that homelessness charities are using social investment to increase their impact and support their work in a tough economic climate.
However, approaches like these might not work for every organisation.
Is social investment right for you?
As Richard Nicol, CEO of Midlands Together, said: “It’s easier to socialise the commercial, than commercialise the social.”
Taking on social investment involves creating a robust business plan and a heavy due diligence process. It may not necessarily be the right route for everyone and we are working to make sure there is more simplification of the products available and greater clarity when there are other more appropriate routes to finance.
But as one Birmingham delegate suggested, perhaps social investment could provide an opportunity for organisations to unlock creative and “hair-brained” ideas. Even more importantly, perhaps it could support innovative early intervention projects which could ultimately avoid long-term costs.
Find out more about social investment at www.bigsocietycapital.com.
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Communications Co-ordinator - Big Society Capital
Esther provides communications support to Big Society Capital’s social and financial sector engagement teams.