Financing Social Enterprises in the UK – 2011 report

The Social Investment Consultancy has published a briefing paper that examines both the funding available to social enterprises/social purpose businesses and the funding mechanisms open to philanthropists, investors and foundations interested in engaging with such organisations. You can download the PDF here and also read the forward below.

Financing Social Enterprises in the UK
Financing Social Enterprises in the UK
tsic-2011-q1-briefing-financing-social-enterprises-in-the-uk.pdf
Version: 2011 Q1 Briefing

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Foreword

Social enterprises, or socially-driven businesses, often face greater difficulties accessing finance in comparison to purely commercial small and medium-sized enterprises.  Often, their social mission overrides the fact that they are also resilient businesses; during the recent tough economic climate in 2009, 60% of social enterprises reported a profit, and a further 16% were breaking even.

Fortunately, there is an emerging pool of investors who are willing to take a long term view and areprepared to blend financial returns with social impact, as well as a growing number of intermediaries helping to connect investors with worthy ventures.  However, this marketplace is fragmented and is currently structured to suit the preferences of investors rather than the social enterprises that it was developed to benefit.

The Social Investment Consultancy (TSIC) has written the attached brief, which I hope you find of interest, in order to share with you some of our insights on financing social enterprises.  We believe that the formation of a social investment marketplace is an encouraging step, but the size and type of resources that are offered often do not reflect the needs of the majority of social enterprises.

Having incubated the social enterprise Future First (www.futurefirst.org.uk), as our own corporate responsibility programme, TSIC understands the struggle with accessing finance in this sector. In two years, Future First has progressed from grant funding through to soft loans and into commercial angel investment. However, we would not have been able to do this without our own financing to fill that ‘missing middle’ range, where funding is most scarce. Future First is now influencing policy and running programmes at a national level – at TSIC we are intent on supporting the social investment marketplace so that other enterprises may achieve the same.

On a positive note, our own research into high net worth individuals in 2010 uncovered a vast opportunity to better engage this group in the social sector.  We want social enterprises to take full advantage of these opportunities in order to amplify their positive impact on our society. To achieve this, we need to offer support packages that cater to the needs of social enterprises in different stages of growth, and offer social visionaries both the capital and advice they need to succeed.

Jake Hayman
CEO
The Social Investment Consultancy

www.tsiconsultancy.com

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