The presentation was a workshop at Evolve 2014: the annual event for the voluntary sector in London on Monday 16 June 2014. The presentation was chaired by Caron Bradshaw, Chief Executive, Charity Finance Group and looks at the practical issues around social investment, showcasing some of the products available, hearing from charities that have successfully used social investment and social investment providers. Find out more about the Evolve Conference from NCVO: http://www.ncvo.org.uk/training-and-events/evolve-conference Find out more about the work NCVO does around funding: http://www.ncvo.org.uk/practical-support/funding

1. Workshops
PM6: Financing your charity: how can
social investment work for you?
Chair:
Caron Bradshaw, Chief Executive, Charity Finance Group
Speakers:
Geetha Rabindrakumar, Social Sector Leader, Big Society Capital
Mike Niedzwiecki, Investment Readiness Manager, Social Investment
Business
Julian Price, Managing Director, Revive CIC
Carolyn Sims, Head of Banking, Charity Bank

2. NCVO - Evolve 2014
Financing your charity: how can social
investment work for you?
Geetha Rabindrakumar
@BigSocietyCap
grabindrakumar@bigsocietycapital.com

3. What is social investment?
• Financial returnInvestment
• Financial return
&
• Social return
Social
investment
• Social returnPhilanthropy

4. 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

5. Early considerations
• What do you need investment for?
o Purchasing/refurbishing assets
o Working capital (e.g. to support payments by results
contract)
o Bridging finance (e.g. confirmed grant)
o Expand existing work/ deliver new services
• Is there an income stream?
• What social impact are you seeking to create?
Organisation Activities Outputs Outcomes Impact

7. BSC role as investment wholesaler & market champion

8. Social Investment Finance Intermediaries
Social Funds
Social Lenders
Investment Readiness
Advisers
Social Impact Bonds
General funds
Specialised funds

9. 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 (summer 2014)
• CFG event on social investment – 27 November 2014

10. For info/discussion in Q&A

11. Stage of development
OCS Social
Incubator
Fund(£10m)
Big Venture
Challenge (>£5m)
CO ICRF
(£10m)
Stage of business growth
Commissi
oning/rev
enue
support
Secured
Loans
Unsecure
d Loans
Equity
Grant
Restricted
Grant
Social Investment Funds (~£20m)
Start up Early Growth Established
Typeofcapital
BIG
Potential
(£10m)
CO Outcomes Fund (£10m)
BLF Outcomes Fund (£40m)
Fully or partly funded by
government
Fully or partly funded by
Big Lottery Fund
Partly capitalised by Big
Society Capital
Other
Grant programmes from Charitable
Trusts and Foundations (>£2bn)
Social Banks (~£180m)
Tech for
Good
(£500K)

12. Social Impact Bonds
Financial risk transfer to investors
SIB SPV
Investment into SIB
programme
Payments
represent a % of
cost savings
Investors
Commissioner
(e.g. LA)
Delivery programme (could
include peer support, group
activity, CBT for most isolated)
Lead delivery charity
Payment metric:
Reduction in
loneliness
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
evidenceReduced loneliness

13. Becoming investment ready
Mike Niedzwiecki
Investment Readiness Manager

14. • Access to investment capital is the greatest single barrier to social
ventures’ start-up and growth.
• Government wants more social ventures creating more social impact.
• Government has sought to grow the social investment market, from
setting up BSC (supply), to opening up public sector markets
(demand).
• Many social ventures are not however in a position to:
• Raise or take on external repayable investment.
• Bid for or manage public sector contracts.
• Need to become ‘investment ready’
Investment Readiness – context and need

15. • Some organisations might need additional support
before taking on social investment for the first time –
this is called investment readiness support
• This tends to focus on key areas:
-- people (skills + experience)
-- what you do + who your customers are (market)
-- how you do things + how well (impact / track record)
-- finances (state / management)
• SIB manages two programmes – Big Potential and
the Investment and Contract Readiness Fund
Becoming investment ready: what does this mean?

16. • About BIG Potential
• Who is eligible?
• Diagnostic Tool
• Book a business advisor session
• Choose a support provider
• Apply for a grant
Introducing Big Potential

17. • New £10m grant fund from Big Lottery Fund managed
by the Social Investment Business
• Helping organisations become more sustainable, build
capacity as well as consider repayable investment for
the first time
• For VCSEs in England aspiring to raise up to
£500,000 new investment
Introducing Big Potential

18. • Chance to skill up
• Space to consider the added value of social
investment
• Fully supported diagnostic service – including a
helpful online tool and an in-depth 1:1 session with an
expert advisor
• Grants of between £20,000 and £75,000 for specialist
business support to help raise new investment
• Brand new website with lots of helpful resources and
information about social investment
What will Big Potential offer?

19. • Not just skilling up – opportunity to actually raise new
investment
• Fully supported application process – diagnostic
service that supports organisations looking at social
investment for the first time
• Access to high quality specialist support – from the
fund’s approved providers that have a proven track
record to helping similar organisations successfully raise
new investment
What is unique about Big Potential?

20. How to apply

21. 1. Operating and working in England.
2. A VCSE organisation
3. Track record of products/services that bring about charitable outcomes or health,
environmental or education benefits.
4. Have ambition and potential to raise up to £500,000 (repayable) investment.
5. Have potential to develop activities to generate financial and social returns for
investors.
6. Be financially healthy and be able to meet their core costs during the lifetime of the
grant.
7. Not for religious or political purposes.
8. May need to make a contribution to the costs of their project
ACTION: Visit www.sibgroup.org.uk/bigpotential/eligibility to start
1. Check your Eligibility

22. • This detailed diagnostic tool helps VCSEs start thinking about how
investment ready they might be.
• It asks some key questions about five key areas of your organisation,
including its financial position, its people, governance, customers, impact
and quality of processes
• Get a quick investment readiness report at the end that identifies which
areas might need improvement before applying for investment
ACTION: Complete diagnostic tool assessment by visiting
sibgroup.org.uk/bigpotential/diagnostic.
2. Assess: Your Diagnostic Tool

23. • VCSEs will meet a support advisor to go deeper into the diagnostic tool
assessment.
• Better understand what it means to be investment ready and what you need
to do to achieve it.
• Receive a detailed investment readiness report after the 1:1 session, which
will describe the business development support needed and some
suggestions and full guidance on choosing an appropriate provider.
• Session can be done face-to-face or over Skype.
ACTION: Book and attend an intensive two-hour session with support
advisor.
3. Attend: Your 1:1 session

24. • Can apply for a preliminary or investment plan grant.
• Choose an approved provider to undertake investment readiness project
and then the VCSE makes an application to the fund.
• The investment readiness project can start with a smaller development
project, followed by a more in-depth Investment Plan project. On some
occasions VCSEs may apply directly for an investment plan grant when
they and their provider agree that an investment deal is in sight.
ACTION: Choose your approved provider to prepare the application
together but the VCSE must complete and submit the application form.
4. Apply: Find a provider

25. • Successful VCSE organisations will be offered a grant to help start their
investment readiness project.
• You will receive grant offer documents from us. Once these are completed
and returned to us you will receive your first grant payment.
• Provide on-going monitoring information. Also participate in evaluation of
Big Potential and contribute to case studies.
ACTION: Accept the grant offer and return required documents to complete
grant contract.
5. Outcome: What next?

26. • Online: www.sibgroup.org.uk/bigpotential
• Phone: 0207 842 7788
• Email: bigpotential@sibgroup.org.uk
• Twitter: @TheSocialInvest
Get your copy of the Big Potential programme guidance
now!
Start your Big Potential journey

27. • £10m from the Cabinet Office.
• April 2012 – March 2015 (3 year Fund).
• £50,000 to £150,000 grants
• Applications open till at least September 2014.
• Social ventures have to work in partnership with an
approved investment / contract readiness provider.
Investment and Contract Readiness Fund (ICRF)

28. • Social ventures seeking to raise investment of at least
£500,000 or win contracts of at least £1million.
• Social ventures :
• Tackle social problems.
• Financially sustainable.
• Aim to scale what works.
• Charities, social enterprises, community and voluntary
orgs, social businesses, mutuals.
• Grants of £50,000 - £150,000 to purchase specialised
support and to cover some of the costs of putting the ICR
plan into action.
• England only.
Criteria: who can apply

29. Discuss proposal
Approved provider
Application
Process
Social ventures
looking to grow
and business
advice providers
with a track
record in
investment or
contract
readiness work
can apply.
Apply
Find a
provider
Apply for approval
Experience in
providing
investment/contract
readiness services?
Looking to raise
£500K investment or
win £1m contract?

30. General fund statistics
Approved 94 grants averaging £100,000 each and spent £8.9 million.
• 42 investment readiness grants worth £4 million
• 51 contract readiness grants worth £4.8 million
• 1 for investment and contract readiness
• Some 74 ventures are still actively carrying out their business support
programmes.
High level statistics (to date)
Top sectors (value of grants)
1. Education / training
2. Health and social care
3. Children and young people
4. Crime and offending
5. Disability
6. Older people
7. Counselling / advocacy
8. Environmental
9. Arts / cultural
6%
4%
13%
27%
4%
9%
11%
6%
11%
9%
East Midlands
Eastern
England wide
London
North East
North West
South East
South West

31. Reasons for applying to ICRF
0
20
40
60
# of respondents
910
45
25
54
11
19
39
22%
64%
53%
12% 11%
29%
13%
46%
18
10
22
33 37
61 64
44
27 40
28
28 24
20 20
44
50 50
39 39
18 16
11
55
100
0
20
80
40
60
% of respondents
Neither agree
nor disagree
Disagree
Agree
What were your primary goals when
applying to the Investment and Contract
Readiness Fund (ICRF)?
'Prior to our ICRF application, our organisation
had the skills and knowledge to effectively...'
64% of survey respondents were
looking to raise investment
Ventures were less confident on
technical issues (law, governance etc.)
Note: Left hand chart, n = 85, right hand chart n varies from 54 to 9
Source: BCG ICRF Feedback Survey

32. Half of ventures 'Strongly agree' that they would have
been unable to carry out the work without the ICRF
73%
88%
61%
72%
18%
10%
29%
15%
9% 10% 13%
100
80
60
40
20
0
'Our provider's work is of
consistently high
quality.'
2%
'The work of our provider
has met or exceeded the
level of support
proposed in our
application.'
% of respondents
'Our organisation
would have been
unable to pursue the
work carried out in
the business support
phase without funding
from the ICRF.'
'Our provider's
work represents
good value for
money.'
Note: n = 82
Source: BCG ICRF Feedback Survey
Disagree
Neither agree
nor disagree
Agree

33. Ventures are already benefitting from support, with some
looking for more support in the future
7%
100
80
60
40
20
0
% of respondents
Other positive outcome
Yes, directly helped us
win contracts
Yes, directly helped us
raise investment
No outcome yet, expected
to directly improvement
investment readiness
No outcome, none
expected as a direct result
20%
16%
56%
2%
7%
7%
100
80
60
40
20
0
% of respondents
Funded the work ourselves
or re-applied with
increased self-funding
Sought other sources of
funding and not proceed
without external funding
Attempted to reapply
with a different provider
Attempted to reapply
with the same provider
Not pursued this work
13%
24%
48%
What is the quantifiable
outcome of the business
support provided to date?
In practice, the length of
our business support phase
is:
If our application had been
unsuccessful, we would have
most likely:
40% have already had
clear impact
28% would prefer
support for longer
80% would have reapplied
or found other funding
Note: Left hand chart n = 53, middle chart, n = 61, right hand chart n = 54
Source: BCG ICRF Feedback Survey
100
40
80
0
20
60
58%
Unable to comment
on length at this time
Longer than necessary
for our objectives
2%
Appropriate for
our objectives
Too short to
meet our objectives
% of respondents
28%
11%

34. ICRF engagement has left a positive impact on ventures,
which are less likely to need further support
70
22
7
60
80
20
40
100
0
Agree
Neither agree
nor disagree
Disagree
% of respondents
59
20
21
100
80
60
0
20
40
% of respondents
Agree
Neither agree
nor disagree
Disagree
'Our experience with the ICRF has given us
the knowledge and skills to require less
external support in the future.'
'Our experience with the ICRF will have a
positive, long-term impact on
our organisation.'
70% of ventures are more self-reliant 60% have had a lasting impact
Note: Left hand chart n = 54, right hand chart n = 81
Source: BCG ICRF Feedback Survey

35. • Grant £95,836
• Covered: market analysis for new services,
business/growth plan
• Investment raised: £1.3 million (£1.1m 25 year loan and
£200,000 asset finance deal)
• Towards:
- construction of new facilities
- buying and refurbishing accommodation
- equipment for refurbished community building.
Investment readiness case study:
Foresight (North East Lincolnshire)

36. NCVO – Evolve Conference 2014
Financing your charity – how can social investment
work for you?

37. Charity Bank
“I do not have very
much money to
invest or to give and
Charity Bank
enables me to
contribute to good
projects despite this
difficulty.”
Quote from a Charity
Bank depositor

38. Loan Finance – the benefits
• Enables a project to be delivered NOW
• Can avoid potential increase in costs
• Unable to obtain grant funding
• Lending against pledges/retrospective grants
• Independence

39. The providers:
• Social lenders
• CDFIs
• Community Foundations
• High Street banks
• Specialist lenders
A different bank for people who want a different world

40. What information to provide:
• Details and skills set of trustees
• Background information
• Three years annual accounts (if available)
• Management accounts
• Budget / forecast profit & loss account
• Details of loan requirement
40

41. What do we look for:
• Evidence of social impact
• Ability to repay
• Well thought out plan
• Robust financial projections
• Buy in of both management team and trustees
• Market testing / competitor analysis
• Third party support of project
41

42. Matters of concern (1)
• Number of trustees
• Appropriate skill set of trustees
• Quality of management
• Over reliance on key individuals
• Loss of public sector funding
42

43. Matters of concern (2)
•Diversified income streams - community
cafes are not necessarily the answer
•Proper transfer of risk in contracts
•Stress testing business plans
•Pension liabilities
•Optimism over realism

44. Loan Finance – the small print
• Loan term
• Secured or Unsecured
• Secured on property or other assets
• Loan to value
• Borrowing rate
• Fees
• Covenants

45. Points to be aware of:
• Trustee guarantees
• Pre-drawdown conditions
• On-going financial covenants
• On-going information requirements
• Breakage costs
• Events of default
• Cross default clauses

46. Carolyn Sims – Head of Banking
csims@charitybank.org

52. Community Interest Company
• Not For Profit (4.1
the company is not
established for private
gain: any profits or assets
are used principally for
the benefit of the
community)
• Environmental
• Assist Young
People & the Long
Term Unemployed
in to Employment

53. Loan Finance Experience

54. Before the loan
• Charity Bank
• Lender needs to know your business
• Critical friend
• Loan application focuses business idea
• Business Plan
• Why will your business idea work
• Prove your idea will work
• Relevant skills and experience of people involved

55. After the loan
• Continue to develop the relationship with your
lender
• The real work starts
• Stick to your plan
• There will be challenges
• Learn from the experience
• You might need further finance

57. Evolve 2014