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Getting ready for social investment - Paul Davis, Charity Bank and Olof Williamson, NCVO
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Transcript of Getting ready for social investment - Paul Davis, Charity Bank and Olof Williamson, NCVO
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Paul Davis: Charity BankOlof Williamson: NCVO
Sponsored by:
Getting Ready for Social Investment
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a different bank for people who want a different world
Paul Davis
• Regional Director of Charity Bank, covering London and the South
• 20 years’ experience lending to businesses and now using that experience in the third sector.
• 10 years as treasurer of a local charity with revenues of about £100k pa and over £1m raised in grants.
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a different bank for people who want a different world
Charity Bank
Our vision - A world where social purpose organisations have the financial resources they need to create a better society for all.
Our mission - To attract share capital from social investors, take savings from socially conscious individuals and lend solely to social purpose organisations, and, as a result, be the most admired bank in the UK.
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a different bank for people who want a different world
Charity Bank
Established in 2002
Takes deposits from anyone
Lends only to charities, social enterprises and community groups
More than a 1,000 loans so far
Lends from £50,000 to £2,000,000 for up to 25 years
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a different bank for people who want a different world
Are social enterprises new?
A business model made of chocolate
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a different bank for people who want a different world
The Cadburys’ objectives
Reduce poverty
Treat people fairly
Run a successful business
(Sounds like a social enterprise to me!)
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a different bank for people who want a different world
What is a social enterprise?
There’s no legal definition…but the Government seems to go with…
An organisation that applies commercial strategies to maximize improvements in human and environmental well-being, rather than maximizing profits for external shareholders.
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a different bank for people who want a different world
What is social investment?
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Capital that gives social sector organisations the capacity to deliver returns
Capital: money invested
Capacity to deliver: enables fruitful activity
Returns: to the investor
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a different bank for people who want a different world
Is there anybody out there?
No data currently exists on the overall stock of social investment
But…probably
£150m invested in 2011
£200m invested in 2012
Not a huge figure, but it is going the right way
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a different bank for people who want a different world
Is there anybody out there?
Finance gap according to NESTA £300m
Finance gap according to CDFA £1,000m
So if £200k was invested in 2012, there is something like £1 of investment available for every £4 demanded
So you had better look like you are in the top 25% of social enterprises!!!
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a different bank for people who want a different world
Who is getting the investment?
The five biggest recipient groups in the BSC report…
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a different bank for people who want a different world
Who are these investors?
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a different bank for people who want a different world
Banks
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a different bank for people who want a different world
Government
But the £350m quoted in the previous slide is from a few years ago and it has now all but dried up
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a different bank for people who want a different world
Trusts and foundations
Charitable foundations report that, even those with large endowments, often have small staff teams, which makes it difficult for them to get involved with social investment
The Esmée Fairbairn Foundation alone may be responsible for nearly half of all the social investment from this source
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a different bank for people who want a different world
Big Society Capital
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Big Society Capital gives only through
Social Investment Financial Intermediaries (SIFIs)
These are listed at
http://www.bigsocietycapital.com/finding-the-right-investment/
And these are probably the best ready source for social investment
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a different bank for people who want a different world
Otherwise
Universities are leading the way for proactive social investment in the US. The UK Unis are following, but you probably need to be in a field that lights their lamps
Institutional investors are the key to scale with $90tn of capital, but apparently not much appetite
Individual “Angels” again, if you are in a sector that appeals to them and if you can find them!
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a different bank for people who want a different world
Financial investmentWhy do you need to get ready for it?
To present a compelling argument for why the social investor should put his money with you
To work out what you are prepared to pay
To make sure you have a suitable organisation
This means having a good business plan, which means you need to do some good planning
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a different bank for people who want a different world
Planning and proving you’ve planned
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“Ike” Eisenhower 1957
Plans are worthless, but planning is everything
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a different bank for people who want a different world
Business plans
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a different bank for people who want a different world
Business plans
If you don’t have, maintain and use a business plan
You are not running a business
You are having an adventure
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a different bank for people who want a different world
Business plan light - the teaser
Saves everyone time
Divides investors into two camps:
• This looks right up my street – tell me more and• Sounds great, but it’s not for me
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a different bank for people who want a different world
Business plan – the full panoply
It proves you have thought about:
• The marketplace you are operating in
• Your products and their place in that market
• The competition
• Pricing and reward/return
• Whether you have the right people
• Your regulatory environment
• What might go wrong
• What might go right
• Everything the investor might think of
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a different bank for people who want a different world
Business plan – the full panoply
At brass tacks level:
• What the investor will get while their money is in• How sure they can be of getting it back again
You need to show you are a sound business
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a different bank for people who want a different world
Business plan – the full panoply
It must include – Section 1
• A clear front page• A good index• An introduction – perhaps re-use the short form• The proposal – what you want – key terms
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a different bank for people who want a different world
Business plan – the full panoply
It must include – Section 2
• What the organisation does now• What amazing things the organisation is going to do
once it gets the investor’s money• What the investor is going to get in return• The people – who you are – what you know – why
you are just the people for the job
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a different bank for people who want a different world
Business plan – the full panoply
It must include – Section 3
• All the dull stuff at the back:• Historic accounts, budgets, projections (base case and
stressed),
• Detailed terms for the investment
• Lists of your professional advisers, bank, etc
• Copy of the NDL if appropriate
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a different bank for people who want a different world
Business plan – essentials
• Tell a story – use plenty of pictures• Keep the narrative part clean and concise• Stick all the dull facts and figures in the back• Index it well• Be prepared to have several versions if you are
approaching different types of investor – the changes probably only need to be minor
• Be scrupulously honest and realistic but not over cautious
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a different bank for people who want a different world
Be the right type of organisation (Or at least know what you need to set up when the time comes)
A bog standard company (perhaps as a subsidiary)
Can issue shares, loan stock, borrow
Community Interest Company (CIC) limited by shares
Can do anything a purely commercial company can do (but with some limitations on dividend size)
Anything else
But can probably only borrow
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a different bank for people who want a different world
Prepare to put the hours in
Research
Keep checking developments
Networking
Events
Shoe leather
Chasing up
Have a Plan B
Keep smiling – you are doing good
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a different bank for people who want a different world
Paul DavisRegional Director – London and the [email protected] 07585 808309
The Charity Bank Ltd 194 High StreetTonbridgeTN9 1BE01732 774040 www.charitybank.org
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