Is social Investment the key to unlocking innovation or just charities getting into debt?

Wednesday, 21 September 2016 - 4:34pm

With resources getting tighter and the nature of contracts changing, social investment may be a way of investing in new ways of doing things.

But when we hear the words ‘Social Investment’ many people are sceptical. In our personal lives we are bombarded with news stories of scandals in the financial sector, disasters in PFI projects and public spending cuts that are about reducing debt not creating it. 

We are right to be sceptical, and used badly Social Investment may put an organisation at undue risk. But used well, it can, and has, unlocked potential for new ways of working. The key is to know what it is and how it works!

So what is it?

Firstly it’s not new!

Social investment is central to the Government’s commitment to homelessness, the voluntary sector more widely, and state commissioning. There is over 15 years of sustained policy development on social investment across central and local government, and cross-party support. The Social Investment Taskforce was established in 2000 to carry out an assessment of the ways in which the UK could achieve a radical improvement in its capacity to create wealth, economic growth, employment and an improved social fabric in its poorest communities. Since 2010 we have seen:

  • First Social Investment Bond (SIB) at Peterborough prison in 2010 - tackling reoffending followed by, notably for our sector, the Rough sleeping SIB in London and the Fair Chance Fund.
  • Social Investment Tax Relief - the Government’s tax relief for social investment which encourages individuals to support social enterprises and helps them access new sources of finance. Recent research conducted by think tank NPC for Big Society Capital shows that charities and social enterprises have received £3.4m in two years thanks to Social Investment Tax Relief.  On average these investments have raised capital of £100,000 for charitable causes, including in education, homelessness, heritage work and work in local communities
  • Access Foundation - set up by the Cabinet Office, Big Society Capital and Big Lottery Fund to increase access to social investment, providing charities and social enterprises with finance and support.

It’s important to note though that social investment is not free money or another form of grant. Social investment is the use of repayable finance to achieve a social as well as a financial return. This means that the investor will expect their money back (usually with a financial return on top), but the investor is also interested in the social impact that is created by the work that the charity or social enterprises is doing. 

The type of finance will depend on the type of project. Homeless Link has, with Big Society Capital, produced a beginner guide that gives the basis information as well as some case studies.

Social investment won’t be right for every organisation or project. It should be considered alongside other options, such as bank loans, grants and raising funds from donors. Finding out more is the start and we want to help with that. We are running events in London, Leeds and Birmingham on the topic, which will give you a chance to have your questions answered and take you through how to become investment ready. It will feature a number of social investment solutions and case studies and give you a chance to network.

For more information and bookings go to our events page here.


Introduction to Social Investment

A basic introduction for homelessness charities that want to find out more about social investment and the types of products that are available.