Social Investment in Govanhill, Glasgow without the Hype

During April 2013, there have been two significant and high powered Social Enterprise events:

Sandwiched between these illustrious events, last week in Scotland it was such a relief to hear about the typical problems faced by Social Enterprise and Third Sector Organisations discussed in a thoughtful, down to earth and constructive way at:

By no means was this a dull or boring conference. It was well attended by most of Scotland’s big funders, intermediaries and project managers.

Huckfield in this posting summarises the presentations made, all of which add up to Scotland’s very different approach to Social Enterprise and Third Sector funding. No one mentioned “structured investment products” all day!

Pat Armstrong, Chief Executive, Association of Chief Officers or Scottish Voluntary Organisations

Pat gave a rounded welcome to all those attending. For each of her interventions she had a memorable quotation. Huckfield and others noted that in tone and style, her presentation and approach were very different from her counterpart in England!

Jackie Killeen, Scottish Director, Big Lottery Fund

Jackie explained that among 3000 Big Lottery grants last year, there were £63mn Strategic Grants, £13.8mn in small grants and £7.4mn in mid grants.

There is a Social Investment strand in the 2013-2015 budget, the main focus of which is stimulating a pipeline. Projects needed support on impact measurement. The Budget included £6mn for Social Investment from 2013 till 2015. So this did not represent a wholesale shift. The focus would be:

  • Stimulating the Pipeline
  • Supporting Investment Readiness
  • New models of Community Investment
  • Investing in Research

Compared with the usual Social Investment announcements from the London Bubble, where nothing from Big Society Capital happens without an expensive media launch and cast of thousands, many of us thought that this was Social Investment put rightly in context.

Ken Ferguson, Director of Robertson Trust

Ken explained that the Scottish Government’s Christie Commission Report in June 2011 had emphasised early intervention with longer term horizons and relationships before seeing results. With a tightening of funds, funders were looking at core not just supplementary funding. Grant making Trustees had difficulties in making forecasts for longer periods involved. There was also more demand for revenue rather than capital funding and increasing pressure on smaller charities.

In an impressive funding matrix he analysed some funding models on offer and the issues these raised:

  • Social Impact Bonds. These were a rare species in Scotland and would be described later by Jane Newman from Social Finance.
  • Public Social Partnerships were funded by the Scottish Government. Further evaluation was needed and there were potential problems with longer term tendering and sustainability of services. PSPs were more attractive when there was genuine social change. A PSP might act as a barrier against Third Sector involvement since the provider could lose Intellectual Property and three years’ work. Large organisations could gain entry on the back of this.
  • Allia Bonds. Allia offers a range of bonds. Through on lending at a fixed rate to a social housing provider, the Charitable Bond allows the yield to be discounted either in part or full at the choice of the investor and paid upfront to the investor’s nominated charity.
  • Covenants, loans or other bonds might carry more risk. There were generally not resources for tracking risk and investors couldn’t set losses against investment.

Whereas Public Social Partnerships were worked out with the public sector, with SIBs and other investment, providers had more freedom to develop new delivery models. Social Impact and Allia Bonds had a more prescriptive approach. Social Impact Bonds could either cost too much or nothing.

Outcomes needed to be understood, especially to assess what delivered change. More independent assessment was needed of outcomes.

Following a detailed presentation, Ken’s conclusion was that, regrettably, currently in Scotland there was no clear route map for going forward.

David Hardie – Head of Venture Philanthropy at Inspiring Scotland

David described his role in Venture Philanthropy at Inspiring Scotland. He is also Senior Corporate Partner at Dundas & Wilson LLP.

The European Venture Philanthropy Association defined ‘Venture Philanthropy’ as ‘a field of philanthropic activity where private equity/venture capital models are applied in the non-profit and charitable sectors. 64 ventures were currently receiving investment from Inspiring Scotland.

Funding came from those investors which sought social change, including some attending the conference. An external review had shown that Inspiring Scotland was increasing efficiency in investment and maximising its return, creating more sustainable ventures and delivering outcomes which could change lives.

Jane Newman – International Director at Social Finance

Jane was keen to distinguish between Social Impact Bond projects under the Department of Work and Pensions Innovation Fund and the Social Finance fully developed approach, starting from social issues. Social Finance played a key role in the Peterborough Young Offenders Social Impact Bond Project. She offered an overview of future developments for an approach which she thought had potential.

In reply to a question from Huckfield on “sector blindness” and lack of guidance on sector eligibility under the Cabinet Office Social Outcomes Fund, in which Social Finance has a significant advisory role, Jane felt that the Cabinet Office would probably apply a filter process to encourage Social Enterprise and Third Sector organisations.

Ian Marr from YMCA Scotland and Adrian Bell, Partner at Morton Fraser LLP

Ian spoke on setting up the employability Social Impact Bond at Perth YMCA and Adrian described work in his firm to produce required documentation. He sought to produce a ‘regular package’ which was usable elsewhere.

Rachel Searle-Mbullu, Foundation Scotland and Carole Patrick, Life Changes Trust, Foundation Scotland

Huckfield and others found presentations from Foundation Scotland, formerly the Scottish Community Foundation, innovative since they described setting up Trusts for Jessica Scotland and Resilient Scotland. Where community organisations were distant from the market, their involvement in a Trust or Foundation might lend weight and credibility.

Carole spoke about Next Generation Trusts. The Life Changes Trust has £50mn from Big Lottery over 10 years and is working to help those leaving care and with dementia. Life Changes is an Independent Trust with Founding Partners. All this represents an innovative route forward, including development funding for new partnerships.

John Devine, Regeneration Manager for NG Homes

John was keen on Housing Associations providing supporting roles beyond housing provision. NG Homes had set up a Social Enterprise, training and jobs. The Association’s “School of Hard Knocks” Rugby initiative would feature on Sky TV. John’s video presentations drew significant applause.

Paul Bannon, Scottish Charity Finance Directors Group

Paul’s description of the intricacies of Scottish Charity Law and its operation was impressive. This was one of the sessions which would probably have merited closer and smaller discussion.

Chic Brodie MSP, Convenor of the Holyrood All Party Social Enterprise Group

Chic made his usual “onwards and upwards” windup for which he is renowned.

Pat Armstrong then closed the Conference – with yet another quotation – and expressed sincere thanks to presenters and attendees.

And, Finally

Huckfield concluded that the day was neatly summarised, when, just before leaving, he was asked by an Edinburgh Youth Club Worker what the day had achieved. The questioner described worries from his English colleagues about impact measurement increasingly required by funders, some of which they felt was not really relevant.

Huckfield’s response was that if the same conference had taken place in England, especially somewhere in the London Bubble, the whole event would have been overpopulated by Investment Bankers and Financial Advisers, talking nonstop about equity investment and impact measurement. Above all, the Conference had showed that Scotland is different and prepared to work things out for itself – without the hype and the bankers.

Huckfield caught the No 31 bus back into the City.