Can Social Finance meet Social Need
One of the Building Change Trust's key areas of work is Social Finance, here we look at whether this can really achieve social good.
According to a report by Tomorrow’s People, public expenditure is set to fall by around £20bn, or 3%, between 2015-2016.
There has been a wide expectation that the Voluntary, Community and Social Enterprise (VCSE) sector will play a key role in filling the gap left by diminished public services.
The reality of the situation is that more organisations have had to diversify away from offering public services in order to survive during these tough economic times.
Seeking finance has become one of the main issues for our VCSE sector. As one of the core themes of the work of the Building Change Trust, we have allocated £2 million to encourage innovation and change in the local funding landscape, and we believe that Social Finance needs to be considered by more organisations.
Social Finance is a provision of funds to the sector in a way that creates a positive social impact, a social dividend, along with an economic return. It looks to fund shorter-term output focused services with an established model that limits the risk involved.
The study by Tomorrow’s People, entitled ‘Can Social Finance meet social need?’ found that organisations with a long history in this sector had developed priorities and operational structures which may be slow to change and react to new innovations.
The researchers concluded that in many cases it is unlikely that social enterprises will change their financial behaviour and practices unless they are supported and guided by intermediaries who can provide knowledge about appropriate funding.
The Trust has commissioned Cooperative Alternatives to develop a Community Shares pilot programme in Northern Ireland. Tiziana O’Hara, the lead on the initiative, says there are over 120 successful schemes already operating throughout the UK.
Community investment is not a new system. In fact it began in the nineteenth century when many consumer co-operatives societies were created by communities who invested share capital to finance these enterprises. But gradually, during the twentieth century, the practice of community investment became less common.
More recently in Slaithwaite, the community learned that they were going to lose their local greengrocery. Together they formed a co-operative to draw together the finance of £15,000 needed to buy the fixtures and fittings and refurbish the premises.In total, 121 people responded to the community share offer.
People who use a service for a period of time, such as a local park or library service while they live in a particular area may be prepared to see modest sums of money used as working capital by a community benefit organisation in which they have a voice.
The Mutual mantra of ‘Punk Finance’ is one way to organise this. It aligns group motivations. FC United of Manchester put the first enterprise structure in place. The football club raised £1.5m from a fan base of 2,000 determined members who were opposed to the takeover of the club by the Glazer family. Together they were able to have a voice and shape the future of the club.
There are many examples out there of situations in which Social Finance has helped to meet the needs of communities around the country.
Northern Ireland may be behind the trend at the moment, but the support is now in place to drive momentum forward, to advise and encourage our VCSE sector to look at their options.
To find out more about the work of Building Change Trust in this area, click here.
If you have any questions about the Trust's work in Social Finance, please contact Nigel McKinney.