Anonymous (not verified)
18 April 2014

Environment for social investment

How to create a friendly environment for social investement - few words from Dharmendra Kanani, England Director of Big Lottery Fund, participant of the latest peer review meeting of Social Entrepreneurship Network.

As interest has grown in social investment, we at the Fund have had to think hard about how we might play our part in developing the market place. We remain as committed as ever to our general grant work, but we see a real value in helping those organisations that can, to access wider funding opportunities. So we concluded that the best role for us in this space was to help to catalyse the market, to enable it to better support VCSE organisations (volountary, community and social enterprise sector) to operate on a more sustainable footing and deliver more impact. Using this as our guiding principle, we have engaged in this space in a variety of different ways.

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Firstly, when I am out of the office talking to VCSE organisations about social investment, the biggest challenge and frustration for them seems to be around how do they respond to the complex queries and questions of investors. Because of this fact, the majority of our focus in this area has been on building the capability of VCSE organisations to submit applications of sufficient quality to attract social investment. With partners, we are attempting to build a ‘staircase of provision’, which will allow organisations to secure support at whichever stage of growth they are in. As part of this we have provided 15 Million Pounds of funding to the School for Social Entrepreneurs and UnLtd (for the Big Venture Challenge 2) to enable the provision of development support to entrepreneurs in various locations across England. 

We have also delivered the 12 Million Pounds Social Incubator Fund on behalf of the Cabinet Office; following the recent round two awards, we have now supported ten incubators, working in a number of specialist areas, from education to healthcare, across a wide geographical area, from the South Coast to Yorkshire.  Recently we have also launched Big Potential, this new 10 Million Puonds fund, delivered by a partnership led by the Social Investment Business will support existing VCSE to become investment ready, enabling them to ‘buy-in’ specialist external support with grants of 25000-75000 Pounds. I have particularly high hopes that this last fund will have a major impact on existing VCSE

Secondly, we have also looked to support the development of social investment infrastructure and intermediation, to provide the necessary support structures for the market to function as effectively as possible.

To date we have supported the Social Stock Exchange and their Kick-starter Fund to enable the production of impact reports for social ventures who can then list and also delivered our Next Steps fund. Next Steps has provided awards totalling 3 Million Pounds to 14 organisations, to support the development of new social investment products, including support for Golden Lane Housing to develop a charitable bond to provide specialist housing for people with learning difficulties; to funding for Bristol Together to develop a bond to support training and employment opportunities for ex-offenders. This fund has already leveraged over 31 Million Pounds in additional social investment.

Thirdly and the last area we have focused on is working with commissioners to open up opportunities for VCSE organisations to engage with contracting opportunities and in particular payment by results models (including Social Impact Bonds). To do this we have developed Commissioning Better Outcomes, which is a 40 Million Pounds fund, launched with the aim of growing the market in Social Impact Bonds (SIBs) and other outcomes based investment instruments. The fund is aligned with the Cabinet Office’s Social Outcomes Fund to create a total pot of 60 Million Pounds. 

Social Finance and the Local Government Association have been contracted to provide a programme of awareness raising and engagement, as well as support to clients in the early stages of developing applications.  Although this is a fairly new fund, we are hoping that it will have a significant impact on helping to stimulate the development of more SIB’s.

Despite the work above, we still feel that gaps exist in the market, which prevent a number of VCSE organisations from utilising social investment to develop trading income to increase their sustainability and impact. With this in mind, we are now working with partners to look at the potential to develop further interventions in the market – to support investment readiness, the development of infrastructure and new social investment products, and to address a gap in the market relating to the lack of low value ‘risk’ investment.

And of course, we will still continue to support hundreds of VCSE organisations with grant funding across England, via our many funding streams.

Dharmendra Kanani