What we mean when we say Social Finance
It is one of the Trust’s key themes but what do we mean by Social Finance?
Social finance is the provision of finance to voluntary and community organisations, as well as, social enterprises to create a positive social impact while also generating an economic return.
A focus in this area was a primary objective of the Trust in its original business plan with the Trust Board allocating £2 million towards this area of work.
We believe innovation, and change, in the funding and financing of the Northern Ireland community and voluntary sector are inevitable and desirable.
We have worked with Charity bank and other social finance providers to support research into the supply and demand for social finance products, the need for government and others to strategically support change through stimulating development and use of new products such as grant/loan hybrid models and unsecured lending, and too invest in developing organisations investment readiness.
In Northern Ireland, the focus has traditionally been on grant aid to finance the sector’s activity with some uptake of secured loans mainly for capital projects.
Historically, the in Northern Ireland sector has a cautious approach to debt, and there has been limited development of alternatives to grant aid, as well as, a limited focus on the actions needed to develop the capacity of the sector to consider and use different forms of finance.
Globally, the attitude to social finance is less conservative and, as such, we have seen the development of products and the range of initiatives they support grow and develop.
In the UK, the success of FC United of Manchester and other ‘community owned, community lead’ projects such as the restoration of the Hastings pier have seen the community shares market grow.
In fact, at the Trust, we have carried out a successful Community Shares pilot in programme with Cooperative Alternatives which has went from strength to strength, supporting NI Community Engergy present its 2nd share offer in April 2016.
Further afield, we have seen social finance be used in a wide range of sectors and areas of interest such as environment, fisheries, energy, agriculture, medical, water, emerging markets and infrastructure projects.
In Northern Ireland we are yet to reach these ambitious levels but at the Trust, we have engaged in research projects into the social finance possibilities in the Environment and Arts Sectors in Northern Ireland – including potentially putting money into a small unsecured loans fund.
We hope the learning from this, and our other interventions, will help foster an environment of innovative and ambitious work in the realm of social finance.