Why seek social investment?
You may have heard a lot of buzz around the term “social investment”, but be unsure exactly what it is and if it would be right for your organisation.
Social investments can help you achieve your goals in a wide variety of ways, but crudely, are for three main purposes:
- Getting money to fund something now, rather than wait until after you have fund-raised. (Perhaps you need to finance the purchase of a property, or you wish to enter into a government contract that only pays in arrears.)
- Getting money to fund a new type of service – one that is sufficiently distinct from current activities that you would have concerns using existing unrestricted funding for it. (Perhaps you see that your service delivery model could be used to service another group of people, and you wish to expand your service to encompass them.)
- Transferring financial risk from your organisation to someone else. (Perhaps you are considering tendering for a payment-by-results contract, or have significant expenses in a foreign currency.)
Common forms of social investment:
- Straightforward loans
- Social impact bonds
- Community mortgages or other financing for property
- Flexible working capital
- Project financing
Services we offer
iforchange can help you throughout your journey to getting social investment, with a tailored package of support that responds flexibly to the needs of your organisation.
Social investment training – we run workshops, seminars, and facilitated planning groups for trustees and executives. These enable organisations to understand the social investment opportunity in general, and how it can apply to their organisation. With this understanding, you will be well-informed enough to decide if social investment is something you should seek.
Planning and analysis – in going from concept to a worked up and costed business plan, potentially with financial and risk modelling, you may want some external support, whether it be as a critical friend or as a more deeply involved partner.
Becoming investor ready – seeking social investment is not the same as seeking money from donors and grant-givers; social investors often cite lack of investee “readiness” as a reason for not investing. We work with investors, and we understand what they will be looking for - and we can use this knowledge to anticipate what issues will be of concern to them – and advise on how to fix them or work around them.
Social impact – Social investors demand a clear articulation of the impact of the investments they make (as do some grant-makers), and for better or worse, the trend is towards more quantitative data to support impact claims. We can help you decide on an appropriate strategy and implement it if necessary. We have in depth knowledge of social science and statistical methods to help with this, where relevant.
Structuring the financial investment – there are many choices to be made when deciding what a social investment should be like - in economic terms and in legal terms. Depending on the choices that are made, investments will look more or less attractive to different investors. They will take into account not only the social impact of the investment, but also the implicit power and governance relationships, as well as the tax and potentially accounting implications.
Working with lawyers – ultimately, social investment agreements will need to be drawn up by lawyers. We have many years of experience in instructing lawyers with precision – meaning that their time is used efficiently and economically.
Social investors and capital raising – raising social investment is not just about the finance – it is an opportunity to engage with potential investors on a deeper level than can typically be managed with other forms of fund-raising or policy communication. Who you seek social investment from may have implications beyond the money. We can support you in deciding this strategy, and for sophisticated investors, can raise money for you.
Once you have raised social investment, and depending on the structure, there may be an on-going need for support: e.g. performance management and reporting, brokering relationships with your investors if things start to go wrong, etc.
Note that some of these activities would be regulated activities under the Financial Services and Markets Act 2000. As an Appointed Representative, iforchange may conduct these regulated activities. Please contact us for more details.