Social Finance in the UK: The Story So Far...

While much has been written about the size, characteristics and growth of the UK social investment market, up to now there has not been any publicly available data on actual transactions. The publication by EngagedX of data on a sample of over 400 loans made over a twelve year period to 2014 by Futurebuilders England, CAF Venturesome and the Key Fund has filled an important gap and, we hope, started a new era of greater transparency in social finance. This paper provides our analysis of the EngagedX data set.

It shows that, with the exception of loans outstanding for less than 12 months, the provision of social finance has not been a comfortable experience in most cases either for the borrower or the lender. Interest rates charged appear to have been higher than social organisations could afford, requiring renegotiation of terms which produced lower rates than originally expected by the lenders. Write-off ratios were high, suggesting that debt funding is not a suitable method for funding much of the social sector and raising questions about the long-term viability of the business models of some of the providers of funds, particularly when ongoing management costs are also taken into consideration. We conclude by offering some suggestions about changes that may help to ensure the development of a healthy and sustainable social investment market.   

Full report here

On profit-with-purpose businesses...

In an especially active edition of his Beanbags and Bullsh!t blog , David Floyd of Social Spider CIC initiated a good discussion on profit-with-purpose businesses.

I thought I would join in the debate. You can find my response here: Profit-with-purpose businesses blog response

Does my social enterprise look big in this survey?

Does my social enterprise look big in this survey?

The results of a recent research exercise in which we looked at social enterprises in North West England has highlighted some issues that are of relevance to anyone who uses survey data to inform decision made about organisations operating within the social economy.

While trying to analyse the capacity of the sector to be able to take on the types of funding being offered by the social finance market, we stumbled upon the realisation that survey data drawn from membership organisations such as the social enterprise networks may miss important differences between the wide range of types of organisations that make up the membership.

The key conclusion that we draw from this study is that loan funding is not a suitable way of financing the majority of social enterprises, particularly if the minimum loan amounts are £50,000 or more.

Read more: Does my social enterprise look big in this survey?

Blueprint for Establishing a Sustainable Social Enterprise

If you wanted to give yourself the best possible chance of starting and then developing a social enterprise which would eventually become sustainable and self-supporting without the need to rely on any sources of external funding, how would you go about it?

This article suggests some best practice steps and then looks at how one recently established organisation in the social world shapes up against them.

Read more: Blueprint for Establishing a Sustainable Social Enterprise