In the Spotlight: Structuring Social Investment

A hot topic right now in social finance centres on the development of a social investment wholesale bank. Is this the holy grail for the sector’s future?

In the last few weeks Office of the Third Sector’s social enterprise team visited the Eastside offices in Hackney to learn more about our work and gauge our views on how you might structure this bank. This tied in with a public consultation on the topic.

The OTS visit triggered conversation among the team and we had soon figured out that we wanted to answer a different question (we’re a bit like that!). For us it was less about structure and more about need. If government is going to invest £250+ millions from unclaimed assets into social enterprise where can it have the greatest impact? Is it into a wholesale bank, or is it elsewhere?

Bear in mind there are already funders with capital who are investing directly in social businesses (e.g. The Social Investment Business, Big Issue Invest, Charity Bank and others) as well as traditional grant bodies (e.g. Capacitybuilders, Esmee Fairburn). In fact the social capital marketplace is one of the few places where credit is still quite readily available.

At Eastside, our work is focused on the demand-side, on ensuring that there are enough social enterprises that are sufficiently robust and ready for growth.

We agree, of course, that capital being available is a good thing but capital alone is not the answer. Scaling the social enterprise sector is not just about the supply-side. We believe that you need a balance of public investment into both sides – the supply and demand.

To this end, we advocate to see greater levels of investment into infrastructure and institutions to fund the training, education, support services that social enterprises need to grow.

And the neat thing here is that the supply side will benefit too. Social investment as an industry will benefit and become more sustainable because there will be more opportunities for social funders to make good deals, to grow social enterprise and therefore to see their capital get recycled.

Social Enterprise: Regeneration-Rise

When Mo Smith, Chair of Trustees for Regenerate-Rise stood up at the Wandsworth Voluntary Sector: Surviving Recession event this week, she said:

“The best thing about our organisation is the number of clients we have who are over 90.”

RISE stands for Reaching the Isolated Elderly, and they aim to encourage and help older people to live the rest of their lives enjoying themselves with the company of other people by providing a programme of activities and outings, experiencing new adventures, visiting new places and achieving unfulfilled dreams.

Mo’s statement shows a clear example of an organisation simply meeting a need with attention, passion and determination. It is a unique quality of those who aren’t sure where the next tranche of money will come from, but who know that what they have to do is more important than waiting for the money in order to start.

Regenerate Rise have struggled through the recession: they have had to sell one of their minibuses and have seen their council funding cut. But as Mo sees it and as she said, they are committed to seeing communities and individuals transformed by the service they provide.

In talking to Mo since the event and learning more about these services there is undoubtedly a role for them to be funded in delivering them, as well as sharing their best practice understanding, events and outreach activities in a more entrepreneurial way, (particularly in the face of a growing ageing population).

And with more large enterprise funds such as The Social Investment Business, Thames Community Foundation and Big Lottery funding having the capacity and aspiration to invest in the community, there is a clearly a connection to be made.

The key point is the need to connect organisations like Regenerate Rise with the available funding, but also to help them understand what is required to access it and use it effectively. It is a connection that could allow good organisations, organisations like regenerate-rise, to make it through the recession and grow.

In the spotlight: Can the third sector deliver on large scale?

In a blog on June 1st, I posted on the development of a new consortium for the third sector that will bid for large public sector contracts in education, healthcare, and welfare.

A team of Eastsiders has spent the summer developing this initiative with our partners at
Futurebuilders. After a busy summer, this consortium - 3SC - is now legally established and more importantly has bid and won a large contract as part of DWP's Future Jobs Fund to create 3000 new jobs for the long-term unemployed. This contract is worth some £20million to the sector.

In the last few days, I've been on the road with our team visiting cities around the UK to brief the many charities and social enterprises that are creating jobs as part of 3SC's Future Jobs Fund. The range and diversity of organisations that will be creating these jobs is exciting - from small to large, spanning all regions and working with many different types of disadvantaged groups.

I learnt a lot from being on the road and hearing people's stories. Screenreader - an organisation working for blind people - told me that unemployment rates among the blind is 70%. And we know from work at Eastside that other disadvantaged groups experience very high levels of worklessness. The Future Jobs Fund then has great potential to support the transition into paid work for many people who would not otherwise be able to find employment right now.

There is another point here too. The consortium model is new and DWP - not known for risk taking - has taken something of a risk by entrusting 3SC with the delivery of a project of this scale. We now have an opportunity to show that the third sector can come together and can effectively deliver. If we do get it right then we create a bright future for the third sector to win a larger share of public sector contracts. And of course if we dont get it right, then the opposite will be true. The challenge starts now!

Spark and Sparklers = Social Enterprise Dynamite!

Over the course of Wednesday and Thursday this week, the Eastside team and partners managed a fantastic investment event for 15 social enterprises and 5 aspiring entrepreneurs in the field of homelessness.

Spark, for those who don’t yet know, is a pioneering investment programme that engages cross-sector leaders to allocate cash of £640,000 and in-kind prizes worth a further £1 million to organisations building social enterprises that tackle homelessness.

But Spark is about much more than the prize money. It is about the people, the passion, the connections, and real business partnerships that are created by bringing together leaders from across different sectors to talk to each other and engage.

Highpoint in Leicester provided the perfect backdrop for this engagement and as a flagship social enterprise for The TREES group, not only understands the impact social business can have but in their service, gave every single participant a truly high-end conference and venue experience (thank you Alison and Rachel!).

Our investment panel – consisting of John Montague, TREES group, Val Hibbert from the Department of Communities and Local Government, Kate Welch of Acumen, Nigel Kershaw of Big Issue Invest, Steve Mather from Places for People, Douglas Johnson-Poengsen of BT, and Philip Wright of PricewaterhouseCoopers - spoke highly of the passion and belief behind the 15 Spark winners’ business ideas.

For the first time, we also selected a number of aspiring entrepreneurs – individuals that have themselves experienced homelessness – to join the Spark programme. These ‘Sparklers’ brought a whole load of colour, vibrancy and inspiration to everyone that was attending. It’s great to find out they also found huge value in taking part, as Michael Goodison of Comedius wrote today: “I didn’t sleep a wink last night. I don't know how to explain how I am still feeling right now. I know its a cliché, but it still seems surreal. I am still feeling the rush of adrenalin.”

With Spark prize allocation announced on July 8^th, we look forward to being able to report further on the journies of all the participants from across the programme, and encourage you to sign up to the newsletter. There are no doubt many exciting partnerships and places that these social enterprises will go in the future, so watch this space!

Written by Rachel Edmunds, Marketing & Communications Manager

Leaders for a new economy

I liked Kai Peter’s article in the FT that business leaders of tomorrow need a new bag of tricks to succeed in the current times of complexity as the transition to a mixed economy with multiple stakeholders takes place.

I was also interested to read Kai’s observation that traditional business education is not meeting this educational challenge.

It’s heartening to read as it gives credence to the new types of leadership initiatives we’re trying to develop at the Eastside Foundation.

We’re not a business school but we do believe that a great way for business professionals to develop new leadership skills is to work with peers from other sectors on strategic initiatives.

So in the last year we have pitted together teams of professionals from private sector firms (PricewaterhouseCoopers and BT) with social enterprises.

Take one example: A team of 5 business managers from BT were challenged to assist the management of Bikeworks – an East London based social enterprise employing homeless people – to put in place a corporate sales strategy.

The BT team worked on this intensively over 3 days to tight deadlines. Each team member pursued personal learning goals and each also learnt about social enterprise, homelessness, partnerships and relationship-building. The levels of engagement and feedback were very positive.

On a deeper level, the experience provided participants with insights into new types of business models and enabled each BT member to have hands-on experience of working in a mixed economy scenario.

Since then, BT has gone on to set up joint-ventures with other social enterprises.

If you would like to find our more about this initiative or get involved in some way then please get in touch with Tim Hartley.

Scaling social enterprise: Let’s get together

In an earlier blog in the year, I concurred with Craig Dearden-Phillips’s notion that 2009 is going to be the year of the merger.

Well - five months on - I want to make a slight shift in prognosis and declare 2009 neither being the year of the merger, nor the Ox for that matter, but the year of the partnership.

Last week, I spoke at a kick-off meeting for a Third Sector Consortium. This initiative aims to bring together third sector organisations in partnership to deliver publicly-funded welfare, employment and healthcare contracts.

The logic is that third sector organisations are being squeezed out of many public sector contracts because they are too small – and yet it is these organisations that are best placed to deliver some of the (up to) £30bn worth of services being commissioned in the next 12 to 24 months.

The Consortium aims to connect a number of large third sector organisations to act as a primary contractor, and commission out delivery through a network of local social enterprises.

Can it work?

Well, most people I have spoken to are positive – although are also quick to point out its challenges.

There will be many hurdles ahead. But, I think this is an intervention worth our attention. It’s a very positive sector-led response and will help build the capacity of social enterprises to deliver more of their services to meet the growing needs of the times.

It appeals to me because it’s disruptive and has the potential for widespread change.

For this reason, we will be getting involved and partnering with Futurebuilders to develop this initiative further.

If you would also like to get involved or have any questions then please do get in touch…