Better Society Capital’s Post

We know that the thought of taking on social investment can be daunting for charities and social enterprises but our team of specialists are passionate about helping not-for-profit organisations undertand its value and make successful applications. Do get in touch if it's something you are thinking about. Read our SWIM case study here: https://lnkd.in/ekv2D94R Better Society Capital

When you invest in social housing, your social contribution is to increase the supply of housing for low-income groups, right? Well, yes, but if you are funding the right organisation, you are also contributing to a spectrum of other social issues, like: - employment - safety and preventative health - crime - education - financial inclusion Non-profit social housing provider The Hyde Group estimates the annual social value of its social tenancies at £460 million (excluding environmental impacts), a quarter of which relates to preventative health. Which suggests that if you are an impact investor focused on preventative health (and since you can't invest in the NHS), maybe you should be focusing on the right social housing providers. And maybe the right social housing providers should follow Hyde's lead and articulate more clearly their contribution to preventative health. Given the size of the investable social housing sector, I wager we could put more capital into preventative health through that sector than through the conventional choices of healthtech, biotech and healthcare facilities. You can access a summary of "The value of a Hyde social tenancy 2023/24" at: https://lnkd.in/ezACEE8n #preventativehealth #impactinvesting #socialhousing #affordablehousing The Good Economy Andy Hulme Matt Rhodes Sarah Forster Impact Investing Institute Mark Hall

#WeekNote 16 (18-06-24) Delayed half-baked thoughts on #SocialFinance after attending the first day of the Social Finance Forum hosted by Future of Good and Common Good Solutions. My understanding heading into the forum was that #SocialImpact bonds funding social interventions/services based on the economic value of downstream money saved by actually "fixing" the problem being addressed. An initial review of SIBs related to homelessness quickly surfaced several papers denouncing their efficacy and suggesting they can end up costing more. I entered the event sceptical but open to learning. 3 good things 😁 👍 Being introduced to the concept of #SocialProcurement by Shaun Loney of Encompass Coop. Different to the investment fund-mechanism of SIBs, in Social Procurement government pays an agreed upon amount for specific #SocialOutcomes e.g., 100 less refugees on social assistance, 100 children with lower diabetes, 100 less encounters with the criminal justice system. This concept made immediate sense to me and directly addressed some of my SIB concerns. It feels like an innovative way to fund more transformative systems/services than currently possible within existing funding models. 👍Learning about the many social enterprises launched by Encompass Co-op, including Build Inc - an Indigenous building contractor that started out with the requirement to have a criminal record to be considered for a job (link in comments). Now with gov and private contracts to provide building maintenance/reno services, their social impacts include: "employs neighbourhood people, cuts crime, decreases EIA rates, and builds the next generation of the much-needed workforce". 👍Learning more about the many ways that Impact Venture Funds can be used to advance services and products in a particular problem space, e.g., Daniela Pacheco's Empodera Impact Capital which funds much needed products and services that increase #WomensHealthcare access in Latin America.  2 challenges 😬 👎It occurred to me when I was listening to the various talks that the thing that sits *most* uncomfortably to me with is that we are choosing to apply tools of the current extractive capitalist system to fix the consequences of the current extractive capitalist system. Seeing investors choose to invest in initiatives that do good is long overdue, but I question the timing of transitioning to a model that depends on economic growth when we are entering a time when #degrowth is what is needed for us to live within our planetary boundaries. Or maybe this is the type of growth, growth of the social impact sector, that is required to help us do that? Definitely more to learn 🤷  👎Keeping my weeknotes within the LI post word count 😬 Time to write longer posts elsewhere? Or figure out how to just get to the point sooner. 1 upcoming thing I'm excited about 😍 👏 Beating this week's heatwave by getting out on the kayak.

Cllr Ammar Naqvi, Barnet Council Cabinet Member for Financial Sustainability and Reducing Poverty recently wrote in the Barnet Post about how Barnet Council is caring for people, its places and the planet. In his article he highlights how the council has been achieving its goals via its first-ever Social Investment Impact Report. The report shows the significant achievements and the progress we have made thanks to working with residents, businesses and partners to drive positive change and improve our community. https://lnkd.in/e7kUgu-Z

Some insightful metrics posted by Jamie Broderick showing the social value and impacts that investing in social housing can provide. It’s not just about the returns from providing good quality, secure and affordable homes but also the fact that social housing providers go beyond just the ‘bricks and mortar’ working with communities on projects that tackle poverty, health inequalities, employment and isolation. Further proof/justification for increased government investment in social housing as the wider returns to society (and the public purse) far outweigh the investment.

For the social enterprise sector to thrive in the UK, the government needs to create an environment where social enterprises not only sustain but also expand their social impact and economic contributions across the UK. Tax Incentives and Financial Support: Restoring and expanding tax relief schemes tailored for social enterprises, such as the previously scrapped Social Investment Tax Relief (SITR), is crucial. Expanding the Community Investment Tax Relief (CITR) could incentivise more private investment into social enterprises operating in disadvantaged areas, helping them to scale and support community needs. . Access to Finance: Social enterprises often face challenges accessing traditional financing, so extending government-backed loan guarantees specifically designed for social and community enterprises would be valuable. The Growth Guarantee Scheme, an extension of the Recovery Loan Scheme (RLS), is an example, but a dedicated fund or loan guarantee focused on social enterprise development would further ease financing barriers. Place-Based Investments and Local Partnerships: Building on place-based investment policies, the government could work with Community Development Finance Institutions (CDFIs) and local councils to target investment in economically disadvantaged areas. By supporting programs like the Local Access Partnership, which funds community businesses and social enterprises in underserved areas, the government can foster localised economic growth and job creation. Recognition and Policy Integration: Social enterprises require more explicit recognition in economic policy. Policies designed with mainstream business in mind often miss the unique needs of social enterprises, which blend profit with social impact. Developing a national strategy that integrates social enterprise objectives across departments could provide a unified framework for their growth. Capacity Building and Skills Development: Investment in skills training and development for leaders within the social enterprise sector would strengthen their operational and impact potential. Government partnerships with educational institutions and business support networks could provide social enterprise leaders with access to valuable training, mentorship, and digital resources. Did the budget deliver any of this today? Let's discuss. #SocialEnterprise #SocialEntrepreneurship #SocialImpactInvesting #ImpactInvestment #SocialFinance

Last week SEUK published an update on the recomendations from the Adebowale Commission. The Commission has highlighted important challenges in the market, not least the disparities in access to finance for social enterprises led by black and minoritised communities. Since 2022 this call to action has led to important developments such as the creation of the Pathway Fund. But there is much more to do to address these disparities. At its heart, the Commission's call is for more patient flexible and affordable finance of the sort most social enterprises need. SEUK data consistently shows that the average amount of investment sought is around £50k. To understand how this can best be done, it is essential to recognise that providing the sort of finance which SEUK rightly champions is a loss-making activity. Of course, individual social enterprises who take on social investment do an amazing job of balancing their impact, enterprise model and financial obligations. But overall, portfolios of loans to community based social enterprises will lose somewhere between 10% and 30%. A big theme of the Commission is that Better Society Capital's mandate needs to change to better facilitate the flow of this sort of finance. Choices were made when BSC was created in 2011 that the institution should seek to preserve the value of its capital, thus demonstrating that social impact investing can be a sustainable and (modest) return-generating opportuity for more investors. BSC has always sought to invest alongside others, encouraging them into the market. It is working. In adopting this approach, BSC has catalysed a 12x growth in social investing, from £830m to over £10bn. There is frequent criticism, including in the Commission, that the return expectations of BSC constrain what social investment funds can in turn offer to social enterprises. The reality is more complicated. Whether you are seeking 5% or 1% is a minor issue when the actual returns of serving this market are around -20%. For sure, different decisions could have been made in 2011. BSC could have been set up to focus much more clearly on serving this market. But there would have been significant downsides including much less capital available overall for the impact sector. BSC’s captial would be eroding over time and would need topping up. The losses would need to be paid for, presumably with further allocations of Dormant Assets. Whatever the rights and wrongs of the history, the architecture we now have, with BSC and Access working together, provides the framework to do just this. BSC focuses on demonstrating where a sustainable market can exist, delivering impact and seeking to change the motivations for investors on a macro scale. Where that sustainable market is not able to serve social enterprises on its own, we clearly identify and pay for the gap through blended finance.  Two organisations each doing a specific job, together meeting different needs for capital. (more in comments)

Our research for Better Society Capital (previously Big Society Capital) has been highlighted in a recent article in Inside Housing by Stephen Timms, MP for East Ham, on the potential of social impact investing to address the UK's temporary accommodation crisis. Our research found that social impact property funds have kept 3,367 people out of temporary accommodation over the past decade. https://lnkd.in/dMQifv32 Read the full report ➥ https://lnkd.in/dY2egxhC

Pathway Fund welcomes the Government’s recent reconfirmation as to the allocation of funds emanating from the Dormant Assets Scheme, to social investment.     Between 2024 and 2028, trading charities, social enterprises, co-operatives, and other forms of community enterprise, will benefit from £87.5 million emanating from the Dormant Assets Scheme.     Following this announcement, Pathway Fund is pleased to see that youth-focused organisations will be supported through social investment. We work, ultimately, to inspire the next generation of Black and Ethnically Minoritised leaders. Indeed, many of our programmes, including the Enterprise Development Programme – Make it Big, led by Do it Now Now – are supporting organisations that work to better youth outcomes.     With today’s announcement, at least £12.5 million of the £87.5 million social investment allocation will be utilised, to enable organisations that work to improve youth outcomes, to enhance their respective offerings and widen their impact.    This could, crucially, all allow finance to be directed to Black and Ethnically Minoritised-led charities, co-operatives and social enterprises looking to grow or diversify their business models – something we at Pathway Fund are determined to see happen. Partners from across the social investment and social enterprise sectors, with backing from civil society, philanthropy, and mainstream businesses, have developed the Community Enterprise Growth Plan which sets out proposals for deploying Dormant Assets through social investment. A three-pronged approach will deliver tailored enterprise support, increase the availability of affordable and flexible loans, and build a robust and equitable social investment market. This would all beneficially contribute to the Government’s mission-driven, purpose-driven, inclusive growth agenda, with Pathway Fund, in turn, looking forward to seeing growth of that nature realised, across the UK.    Bonnie Chiu, co-founder of Pathway Fund, said: “It’s important that we harness the opportunity offered by Black and Ethnically Minoritised social enterprises, this being an excellent opportunity for the Government to do so. Those organisations are doing great things in their communities – and we know from the Adebowale Commission on Social Investment, that they hold the key to unlocking this country’s growth potential. It’s therefore essential that we use any support in a targeted manner, providing it to those who know exactly how to leverage that change.”    #CommunityEnterprise #DormantAssets #BlackandEthnicallyMinoritisedSocialInvestment    https://lnkd.in/gAifhYsZ

Thanks to Sir Stephen Timms for spotlighting our work and showcasing the impact of social investment in channeling private funds to public benefits, from building homes for people facing homelessness to funding preventative care to cut NHS waiting lists. He details how this market has experienced substantial growth, providing positive social benefits to underserved groups across the country. He says, "We need existing resources to be spent smarter. Better Society Capital projects that a £100m government grant could, over the next decade, attract in an additional £650m from investors. This could provide housing for 23,750 people and generate £1.1bn in public spending savings." The article underscores the opportunity for an incoming government to reallocate existing funds and scale the amount of social investment in the UK. Visit the link below to read how social impact investment can deliver inclusive growth, to address regional inequalities and help all of Britain thrive: https://lnkd.in/gbYmKzj9 #SocialHousing #SocialImpact